One way to develop an investment strategy

I have been using the business cycle to teach businessmen how to develop business strategies and make decisions in tune with economic conditions.

I also used it to show portfolio and hedge fund managers how to develop investment strategies and time investments.

Business activity grows at an above average pace (phases 2&3) or grows at a below average pace (phases 4&1). Markets behave in a uniques way in each of these phases.

The investment strategies implemented when the economy grows at an above average pace are totally different from those when the economy grows at a below average pace.

I am going to give an exercise (once an educator always an educator!).

Take the following ETFs: XRT, KIE, KRE, PSP, XLY, XLP, XME, XLE, and GLD. Compare their performance since January 2010.

Do you recognize a pattern? Which sectors are strong and which ones are weak? What is their performance telling you about the business cycle? If the economy is going to slow down, which sectors are more likely to outperform.

By the way, these are the kind of issues I deal with in each publication of The Peter Dag Portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

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