How Relative Strength Turned My Heckler Into a Believer
My first conference in Albuquerque got off to a rocky start.
It was 2008. My first book, Smarter Investing in Any Economy, was gaining traction. To promote it, I was on a conference tour giving talks about my strategy.
As soon as I introduced myself at the American Association of Individual Investors conference, an older gentleman started heckling me. He had a snide comment for every slide I shared.
“What are you here to sell us?”
“Why do you guys in suits always want our money?”
After five slides, I’d had enough. I jumped ahead to the end, and showed him the results of my research…
Each row shows the performance of a simple trading strategy based on the concept in the “Method” column, as opposed to buying and holding stocks from 1989 to 2007.
All of them outperformed buy-and-hold, with most more than doubling the returns of the S&P 500. While not tradable on their own (the drawdown is still too high) each provides a strong base to work from.
I explained that if he stopped interrupting and started taking notes, he could adapt any of these formulas to create a market-beating strategy. He reluctantly agreed to give me a chance.
Just an hour later, my former heckler said I deserved a Nobel Prize. (I don’t think he’s on the nominating committee, because I’m still waiting on it.)
This experience showed me both the upside and the downside of the Smarter Investing strategy…
The upside is that it works, and it works well. The downside is that many individual investors are unwilling to give it a chance.
That’s why, after nearly 15 years of time reflecting on it, I’ve found a way to boil this market-beating strategy down to the simplest method imaginable.
My “Nobel Prize-Worthy” Retirement Manual
I wrote Smarter Investing as a “how-to” manual — specifically, how to use relative strength (RS) to bolster any retirement plan.
RS was first defined in a Barron’s article in 1933. In 1967, a PhD research paper showed it beat the market in the long run. By the 1990s, academics had proved it worked around the world.
Today, professional investors rely on relative strength. I see it mentioned in reports from every major Wall Street firm.
But when I wrote Smarter Investing, RS still wasn’t accessible to everyday Americans. That’s what I set out to change with my book.
I knew I’d achieved my goal when I went back to that same conference center two years later…
It was 2010, and traders were still recovering from the Great Financial Crisis.
A few seconds into my presentation, a woman in the back jumped in. I prepared myself for the same old shtick.
But she wasn’t heckling me. Instead, she said she attended my speech back in 2008. She did what I said, and it saved her retirement.
Her husband agreed. He said they spent 10 minutes a week applying what they learned, and were able to make money during the bear market.
I’ve been there a few times since. No more hecklers. Just people who understand how to use relative strength.
I’m glad I wrote the book. It was a small step toward leveling the playing field.
But, as I quickly realized, individual investors weren’t the only ones reading it…
This Trillion-Dollar Firm Studied Smarter Investing
In 2013, I sat in the back row while Fidelity’s Director of Technical Research gave a presentation. He didn’t know I’d be attending.
He was discussing how he and his team analyze stocks. He said they never looked at a chart without an RS line.
Fidelity is a huge company, managing trillions of dollars. They can’t afford to take large positions in stocks that aren’t showing strength against the market.
Then, he brought up a slide with a quote from Smarter Investing: “…buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”
I got that quote from Will Rogers. He had misattributed it to me.
But in that moment, I realized Smarter Investing had been a great use of my time. Professionals were reading it to find better ways of investing. And more importantly, individuals were benefitting from it.
Unfortunately, though, I knew full well that many Americans were still missing out on the benefits of relative strength…
See, I’d sent my mom a copy of my book as soon as it was published — and she never made it past the foreword. She assumed it’d be “too complicated.”
I want to dispel that myth today.
I’m giving away a free copy of Smarter Investing when you sign up for Market Leaders, my newest research service.
It applies the same RS strategy I used when I managed money more than a decade ago.
Well-heeled investors paid a high fee to access it then. But right now, you can join for just $4 a month — and claim your free copy of Smarter Investing.
But I’m going a step further than that.
In Market Leaders, you’ll see how I apply the Smarter Investing strategy in real time with a rebalanced portfolio of the market’s strongest stocks every single month.
That’s on top of a monthly options play, designed to profit from the relative strength of one or more of these names.
To get immediate access to a game-changing retirement strategy, click here now to learn more.
Regards,Michael Carr, CMT, CFTeEditor, True Options Masters