Le Double Momentum : Une Stratégie Performante !

Introduction

In this tutorial, we will explore the Double Momentum strategy, a proven investment approach that has historically outperformed the S&P 500 by 7.9 times over a 45-year period. This method emphasizes an active management style and can be a valuable tool for investors looking to enhance their portfolio's performance.

Step 1: Understand the Concept of Momentum

• Definition of Momentum: Momentum refers to the tendency of an asset's price to continue moving in the same direction. In investing, this means buying assets that have been performing well and selling those that have been underperforming.
• Double Momentum: This strategy combines two forms of momentum:
  • Absolute Momentum: Focuses on the performance of an asset relative to its past performance.
  • Relative Momentum: Compares the performance of one asset against others within the same category.

Practical Tips

• Review historical performance data to identify trends.
• Use analytical tools or financial software to track momentum indicators.

Step 2: Identify Suitable Assets

• Selection Criteria: Look for assets with strong historical performance over a certain timeframe (e.g., 3 to 12 months).
• Types of Assets: Consider stocks, ETFs, or mutual funds that exhibit strong momentum characteristics.

Common Pitfalls to Avoid

• Avoid chasing after assets solely based on recent performance spikes without analyzing the underlying reasons.
• Ensure diversification to minimize risk.

Step 3: Develop a Trading Plan

• Entry and Exit Points: Define clear rules for when to enter or exit a position based on momentum indicators.
• Risk Management: Implement stop-loss orders to protect your investment.

Key Elements of a Trading Plan

• Duration of investment (short-term vs. long-term).
• Percentage of portfolio allocated to each asset.

Step 4: Monitor and Adjust Your Portfolio

• Regular Review: Continuously monitor the performance of your assets and make adjustments based on market conditions.
• Rebalance: Periodically rebalance your portfolio to maintain alignment with your investment goals.

Real-World Applications

• Use platforms like Trading 212 or Value Investing Screener to track asset performance and make informed decisions.

Conclusion

The Double Momentum strategy offers a structured approach to active investing that can yield significant returns. By understanding momentum, identifying suitable assets, developing a solid trading plan, and continuously monitoring your portfolio, you can enhance your investment strategy. As always, conduct thorough research and consider consulting with a financial advisor before making investment decisions. Happy investing!