Mechanical Stock Picking and Market Timing

Mechanical Stock Picking uses stock screeners to build portfolios that have proven to consistently provide superior performances.

Market Timing improves your Reward/Risk ratio by being in the market only during favorable periods.

What if you could combine the superior returns of mechanical stock picking with the lower risk of Market Timing ?

Well, you can do that !

The following table shows many examples combining these 2 winning strategies.

The examples use different timing systems (all simple ones) and different stock picking strategies to fit most investors.

Click on the link in the 1st column to access the various strategies in detail.

Link Page Stock Picking System Market Timing System
Stock Picking & Market Timing Part 1 Value Investing Beating the Dow with Bonds
Stock Picking & Market Timing Part 2 Growth Investing Monetary (Interest Rates)
Stock Picking & Market Timing Part 3 Value, Growth, Momentum Presidential Cycle
Stock Picking & Market Timing Part 3b Value, Momentum Best 6 months
Stock Picking & Market Timing Part 4 Momentum Investing Moving Averages Crossover
High Beta Stocks Any

Conclusion on Stock Picking and Market Timing

After you've read the above various Stock Picking / Market Timing combinations, you'll be able to conclude by yourself that Market Timing improves the performances of mechanical stock picking.

Specifically, it can lower risk of most stock selection strategies. The following provides a high level summary:
  • Value Investing can be combined with almost any Market Timing system,

  • Growth Investing is best when interest rates are decreasing
    • (Monetary Market Timing) or during the years 3 and 4 and the US presidential cycle,

  • Momentum Investing is best with Trend Following systems (Market Timing with Moving Averages, Technical Analysis)
    • ,

  • All Investing styles perform much better during the years 3 and 4 of the US presidential election cycle.

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