Continuing the Debate from The Economist
An interesting write-up from Abnormal Returns
One of the persistent themes on Wall Street is that investing strategies go in and out of favor on a regular basis. Oftentimes this has to do with the performance of the strategies, sometimes based on the structure of markets and always having to do with the media hype surrounding a strategy. Most strategies that reach the level of public consciousness are likely.
The fact of the matter is that even the most well-crafted investment strategy will have periods of underperformance. As Jeff Miller at A Dash of Insight writes:
Your system will not always work!
The most recent investment strategy to take its hits in the eyes of the public is “buy and hold.” This shouldn’t be all that surprising given the generally dismal performance of the US equity market over the past thirteen years, which for most investors is all they can remember. Given the volatility of the markets all manner of strategies that advocate various levels of active investing have been proposed to help alleviate the risks of continued exposure to the equity markets.