Under normal circumstances, this system invests in very large stocks, all with a market capitalization of many billions, known as big caps. If there is significant turbulence on the stock markets, the capital is invested wholly or partly in a bond ETF or converted to cash as a protective measure.
The stocks in which investments are made are selected from a pool of approximately 70 highly stable stocks. These must all meet a number of fundamental criteria. These are criteria that have had a positive relationship with price increases for decades. The composition of the basket of 70 stocks is adjusted periodically.
The system gives a signal between 14 and 28 days if the selected shares (usually 3 to 5) or the ETF need to be exchanged in whole or in part. This is done on the basis of the relative strength of those shares. The relative strength used is a combination of indicators from the Quantitative Analysis.
Returns are important in this system, but so is risk management.
The risk of declines is limited by switching all or part of your shares to a bond ETF or cash. This happens if:
· Volatility on the stock markets becomes too high
· Bonds yield a higher return than the stocks in the selection.
