Dual momentum investing boiled down to the simplest view involves only seeing if the S&P 500 outperformed USA t-bills for the last year. If so, invest in an low cost S&P 500 fund. If not, invest in a high quality short duration bond fund.
There are many different tweaks to this idea. Dual Momentum Investing by Gary Antonacci does a good job of exploring this idea and providing evidence on historical returns using this method. 3 big advantages of this strategy are
- Simplicity – easy to implement and it takes nearly no time each year
- Low cost – uses low cost index fund and has very limited transaction costs (direct or tax costs from sales) as it averages fewer than 1 trade a year)
- Good performance historically – the book details performance and the low risk nature of the strategy in backtesting.
There are ways to adjust the strategy that increase the complexity a bit for those looking to increase returns or reduce risks.
It is something worth reading in my opinion. The book isn’t the easiest to read but it is decent and worth reading.
Gary Antonacci also has a blog worth reading.
Related: Curious Cat Investment Books – Famous Stock Traders: Nicolas Darvas – Market Inefficiencies and Efficient Market Theory
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