What’s the Optimal Way to Measure Momentum?

July 24, 2018

Did you see Mark Hulbert’s latest Marketwatch article about momentum investing, “This is the ideal time frame to own a ‘momentum’ stock”?

The article cites new research on how to measure momentum, and it turns out that our momentum-based Upgrading approach is “close to the sweet spot.”

One recent study found that “the typical uptrend or downtrend lasts between 12 and 18 months.”

“This finding is consistent with the performance of the investment strategy pursued by NoLoad FundX, the momentum-based investment newsletter I monitor that has beaten the stock market over the past four decades,” Hulbert writes.

Our strategy tracks momentum over the trailing 1, 3, 6, and 12 months, and we end up holding funds about an average of about seven months.  

Click here to read the article.

Longtime FundX members likely remember that Mark Hulbert from his Hulbert Financial Digest, which ran from 1980 to 2016. Hulbert has continued to independently verify investment newsletter performance at HulbertRatings.com.

Others may know Hulbert from his articles in the New York Times, Wall Street Journal and MarketWatch.

Please note: Mark Hulbert is not affiliated with NoLoad FundX. Mr. Hulbert owns Hulbert Ratings, LLC and Hulbert Financial Digest, independent data services that track the performance of investment newsletters. The performance returns attributable to NoLoad FundX in the article were calculated by Mr. Hulbert. NoLoad FundX is a newsletter published by FundX Investment Group and incorporates the firm’s Upgrading strategy.

The performance results listed in the article reflect model portfolio performance results and do not represent actual trading. The results do not reflect the deduction of management fees, taxes, and other expenses.  The deduction of the fees and expenses would have the effect of lowering the performance results.  Hulbert debits a commission on all transactions, the rate of which is based on average commissions at the nation’s largest discount brokers on average-sized transactions.

The average annual return reflected in “The Big Mo” performance chart is the average annual return for NoLoad FundX Class 3 Star Box model portfolio for the period shown.  Class 3 is invested primarily in stock funds seeking long term capital appreciation.  The “12.2% annualized return” stated in the article is the annualized return calculated by Mr. Hulbert for an “average portfolio” comprised of all NoLoad FundX model portfolios (Classes 1-4 Star Boxes, Monthly Upgrader Portfolio and Monthly Fixed Income Portfolio) for the period shown.  These classes are described at www.FundX.com.  The statement in the article that the investment strategy pursued by NoLoad FundX “has beaten the stock market over the past four decades” is subject to the disclosures above.  As with all historical data, past performance is not an indication of future results.

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