Overview
Like drug side effects, investing side effects can cause clients to stop using the “medicine,” which can take them back to square one, or even make them worse off than when they started.
Using systematic investing to focus on asset prices (trend following) is a process some believe can lessen those side effects.
To examine this, we analyzed the results of using a very basic form of systematic investing, which is to own stocks when their price is above the previous 200-day average (aka “uptrend”) and to sell or be out of stocks when they are below their 200-day average (“downtrend”).
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