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.