View Full Version : The Big $$ is in the Big Moves

09-11-2007, 08:38 PM
"The stock market is a study in cycles; when it changes direction, it remains in that new trend until the momentum weakens - a body in motion tends to stay in motion. Remember, don't buck the trend. Don't fight the tape." - Jesse Livermore, World's Greatest Stock Trader, pg. 303

Years ago I started a simple strategy... Invest in the TSP fund that had performed best over the previous 12 months. More than likely that fund will do the best or nearly do the best of the other funds over the coming 12 months. This is called Relative Strength. It is the basis for the system used in Investor's Business Daily. It worked for me.

If someone doesn't want to move their funds very often then this may be a good strategy to suggest.

09-12-2007, 10:01 PM
That works well when the market is in a steady direction, as is was from the beginning of this year, up until May.

As they say, the trend is your friend.

However, when we reach a period of choppy ups and downs, it is time to find another approach to continue to make money.

09-13-2007, 08:22 AM
You might want to shorten your length from 12 months to 6 months. Then, as James has said, in a non-trending market you'll have to play the swings.

09-24-2007, 11:08 AM
Actually Relative Strength is a measure of a particular stock's strength in relation to the overall market. It's no secret, but IBD has their own formula to compute this number on their charts daily. IBD's Relative Strength is not to be confused with the RSI tool in charting as they are completely different.