Winning Strategies

[DOTTT]

I hope we can get some good ideas in this thread. If you any investment strategy that is profitable please post it here. I'll get the ball rolling.

The 4% Rule

I read about the 4% rule in Martin Zweig's Winning on Wall Street. It is part of Zweig's "the trend is your friend" theory. The 4% rule can be used with any market index or mutual fund you like. All you need to construct the model is the weekly closing price for your chosen investment vehicle.

A buy signal is given on any weekly close 4% (or higher) above any recent weekly closing low.

A sell signal is given and the money can be moved to an interest bearing account on any weekly close 4% (or more) below any recent weekly closing high.

From 1966 to 1988 Zweig's 4% rule, using the Value Line index, returned 14.9% per year, versus a buy and hold of 2.4% per year. The hit rate was 52%, with being on the right side of all the big moves responsible for the big gains.

You can be as aggressive as you like with this strategy. You can trade the QQQQ, use leverage, or trade futures. I would love if someone can run the numbers on how the rule would perform on the sell side.

I have a couple more strategies I'll share later.