Having multiple adaptive methodologies with different buy and sell metrics creates return streams that are not correlated with each other. This works based on the following market dynamics:
Tactical management evaluates which time frame to look at to determine the trend of the market. Other investment management approaches choose only one time frame, often ignoring the fact that different time frames work better in different types of markets. In tactical management, diversification is achieved by mixing multiple time frames as the market dictates. For instance, shorter time frames work best in straight up or straight down markets; longer time frames work better in choppy markets.
Tactical management time variation factors include:
Concentrating on only one time frame can cause an investor to miss opportunities. This can result in a strategy that underperforms in markets that are not ideal for the time frame selected.
Investors must always be able to protect the wealth they have accumulated. Tactical investment management incorporates these concepts in a dynamic management process which can adjust to changing market conditions, recognizing the need to effectively position assets to stay in harmony with market trends and countertrends.
Please review the Disclaimer Page for important information on this item.