Dual momentum investing, a strategy popularized by Gary Antonacci, merges two compelling momentum concepts—relative strength and absolute strength—into a cohesive investment approach. This method seeks to capitalize on the tendency of assets with strong past performance to continue outperforming, while also avoiding downturns by ensuring investments are made in positive trends only.
Gary Antonacci’s dual momentum framework emphasizes the importance of both a stock’s performance relative to its peers and its absolute performance against a risk-free asset, such as treasury bonds. By analyzing these dual components, investors can strategically rotate their assets towards those exhibiting superior strength, thus potentially increasing returns while minimizing risks.
The essence of dual momentum investing lies in three fundamental steps:
- Identify Relative Momentum: Compare the performance of various assets over a specified period. Invest in the top performers.
- Evaluate Absolute Momentum: Ensure that the selected assets are trending above a risk-free benchmark.
- Rebalance Regularly: Maintain the strategy by frequently assessing and adjusting portfolios based on the latest market data.
Antonacci’s research, detailed in his book “Dual Momentum Investing,” provides empirical evidence supporting this strategy’s efficacy across various market environments. Investors utilizing dual momentum can benefit from increased resilience during bear markets and enhanced performance during bull markets.
Ultimately, dual momentum investing as advocated by Gary Antonacci encapsulates a robust strategy that seeks to harness market trends while protecting against losses. This dual approach empowers investors to make informed decisions based on historical performance, aligning risk and reward effectively.