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Mullooly Asset Management

Mullooly Asset Management

Fiduciary Fee-Only Financial Planner | Investment Advisor in Wall, NJ

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Relative Strength Can Help You Beat The Market

September 24, 2007 by Thomas Mullooly

One of the best tools we have at our disposal is something called “relative strength.”

Look, you can’t beat the market, unless the investments you own ARE beating the market. In other words, hanging onto something “just because” will always drag down your overall performance.

We should not get “married” to a stock.

Relative strength “signals” are long-term in nature — they often last two years or more on average.

Relative strength “buy” signals: these investments tend to go up FASTER than the rest of the market — and when the market is in trouble, they often go down slower than the rest of the market.

Relative strength “sell” signals: tend to go up SLOWER than the rest of the market — but when the market gets shaky, these investments often go down faster than the rest of the market. In fact, they usually crash — badly.

So when we’re on defense (like we have been recently), we dropped all stocks or mutual funds with relative strength sell signals.

The stocks and mutual funds that we’ve held onto lately (while on defense) have been the stocks with the best relative strength. Yes, they can (and often do) go down — but they tend to go down slower than the rest of the overall market.

Tom

Thomas Mullooly
Mullooly Asset Management LLC
Our Only Business Is Fee-Only Investment Advice
www.mullooly.net
support@mullooly.net

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Filed Under: Asset Management, Point and Figure Tagged With: buy signals, relative strength, sell signal

About Thomas Mullooly

Thomas Mullooly is owner and founder of Mullooly Asset Management, Inc. In 2002 Tom opened Mullooly Asset Management, a fee-only investment advisory firm. As an investment advisor, and not a broker, Tom works strictly for his clients. With the help of point and figure charting, Tom builds a realistic game plan for clients.

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2052 NJ-35, Suite #203
Wall Township, NJ 07719
Phone: (732) 223-9000
Fax: (732) 223-9600
Email: support@mullooly.net

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