You’ve heard it all. There are lots of ways to analyze a stock and decide how it might fit into your portfolio. Well, from our humble experience, there’s really only one property of a stock that accurately assesses the instantaneous value of it – the price.
The Brockmann Method doesn’t predict the peak, or the trough of a stock’s natural cycle. The research doesn’t depend on developing deep insights into the company fundamentals or insider trades. We believe that all of the dimensions of an S&P100 stock are already reflected in the actual price of the stock at an instant in time.
The research of Tobias Moskowitz, a professor at Yale School of Management shows that stocks that have increased over the past 6-12 months are LIKELY to continue increasing for the next 6-12 months and stocks that have decreased over the past 6-12 months are LIKELY to continue decreasing for the next 6-12 months.
The idea is that good money generally follows good money… and we want to be where the good money goes. No more waiting for solid companies with bad luck to rehabilitate themselves. No more timing theatrics. Just the best companies we can find, owned for as long as they perform relative to others in our universe of possibilities – the S&P 100, which are the best managed companies in the world.
HOW IS PRICE MOMENTUM USED IN BEYOND ETFs?
This is the basics of the Brockmann Method. The relative Price Momentum is used to determine the daily rank-order of the stocks of the S&P 100. From that rank order the model determines the top ten stocks to be in the BUY* zone, the next 15 to be in the DON’T BUY MORE zone (cleverly named, eh?) and the remainder to be in the AVOID zone.
The model buys those stocks in the BUY* zone and hangs onto them until they pass through the SELL Threshold, which is the position below 25. Once a stock arrives in the Avoid zone, signals are sent (push notification, visual cues in the app) to indicate which stock is to be sold. Proceeds are used to purchase some or all of those BUY* zone stocks not already owned.