Dual Momentum Investing

by Gary Antonacci

For whatever reason, I've seen more than a few books of late about trend investing. While this one comes up with a bit of a different title, the gist of the strategy that is proposed here is the same: Buy what’s hot and sell what’s not. The author, Gary Antonacci, won an award for a paper that became the heart of this book. He developed a simplified strategy for moving money between three investments based solely on their momentum: the S&P 500 index, All Country World Index, and the ACWI excluding US based stocks. He adds some meat to the bones of this strategy by using not just simple momentum, but what he calls absolute and relative momentum – the “Dual Momentum” of the title. The strategy itself ends up being called the Global Equity Momentum or GEM strategy.

Assuming the author’s supporting charts and data are accurate, there is a good case to be made for this being an effective investment strategy, but I do see some drawbacks. As simple as the strategy is, its execution will take a lot of research and constant monitoring to be sure to know when the hot investment is cooling down and cool investment is heating up. The author suggests a number of ways of doing this, including using a (free) website he has set up. And like most simple investment strategies, this one can be made more complex by taking other investment trends and factors into consideration, such as simple moving averages, P/E ratios, 52-week high proximity, and the like. Personally, think incorporating some of these indices would be a good idea, but I can also see how this would take up a lot of time. Personalization versus time/cost ratios will come down to the individual investor.

The biggest drawback of this book is that the author spends the first half of the book quoting a slew of research papers and economic articles in support of the strategy, including its timing, allocation percentages, and investment types. Only around page 95 of this 150-page book, does he actually introduce the strategy. The buildup to a one page flow chart for implementing and maintaining the strategy is, I thought, a bit extreme, but in all honesty, the strategy is about one of the simplest, and possibly effective, investment strategies I've ever seen.

While I can see giving the dual momentum investing or GEM strategy five dollar marks for simplicity and ingenuity, the book itself, being full of quotes from a 13-page bibliography, is just a little too sluggish to rate that high, so I give the whole package four dollar marks.

Retirement GPS

by Aaron Katsman

Boy, it's been a while. Even so, the holidays have got me tied up, so, I'll just post a short version of a review that I've also put up on Amazon. Enjoy!

I was happy to accept a gratis copy of this book from the author, as I had just finished reading and reviewing You Can Retire Earlier Than You Think and I was interested in finding more information about retirement investing with a mind toward retiring, either early or comfortably or both. I thought the GPS of the title would sort of provide some guidance for determining one’s financial position (right?) as it pertains to retiring. What Mr. Katsman has actually written, however, is more of a generic global investing guide that does not necessarily limit itself to retirement investing. There is no guidance for deciding anything about your ability to retire, but there is still a lot of valuable information in this book.

Mr. Katsman is an American who lives abroad and primarily (only?) invests overseas. The GPS of his book stands for “Global Portfolio System” and is mainly concerned with getting average investors to diversify internationally and consider a number of “normal” investments (mutual funds, bonds, etc.) in countries other than the United States. The author considers this to be a great retirement investing strategy, but I felt it wasn't a retirement strategy so much as an international investing strategy. retiring. The strategies and suggestions are interesting and sound and certainly worth considering from an investment standpoint, but they could be for retirement investing, income investing, growth investing, or just portfolio building outside of retirement funds. I would even argue, that for people who are still investing but have already retired, they might want to avoid some of Mr. Katsman’s strategies, as they involve different sorts of risks such as exchange rate risk, geopolitical instability, and factors that elderly investors are probably better off avoiding entirely. (I certainly can't picture someone like my 74 year old retired parents trying to buy Argentinean bonds or Chinese renminbi mutual funds or the like. 

To his credit, Mr. Katsman applies his vast overseas investing experience and shares a lot of the nuts and bolts of such investing in this book. The overall tone of the book is friendly and chatty, which is good for the most part, but some of his personal anecdotes need considerable stretching to tie into his discussion of investments. This book is still very readable and comprehensible. I learned a lot about a wide range of subjects, from the Chinese stock market, to the intricacies of European bonds, to exchange rates, and of course, the economic strengths and weaknesses of a large number of overseas economies. The world is a big place, however, so anyone who agrees with Mr. Katsman better be prepared to do a lot of their own research beyond this book, not only on the instruments they plan to purchase, but also the nature of the markets and country where those instruments are being sold. (I haven’t got the stomach for it, myself.)

All in all, this is a well-written, detailed, well-informed book on international investing. The global portfolio system is a neatly developed concept and strategy that is useful for retirement and long term investing, with possible applications to short term investing and out-and-out speculation. Mr. Katsman’s strategy alone rates four dollar signs, and with the lucid execution of this book to explain it, I think the overall package rates four dollar signs as well.