Unloved Bull Markets

Chapter 12Strategies

To investors, all money managers may look alike. They wear business suits. They go on TV and get asked the same questions and generally give the same answers. But they are not all alike. In fact there are some significant differences. If you asked different managers how they do what they do, you would immediately see extreme differences as they described their own strategy.

In the early 2000s, we were involved in research that categorized managers of mutual funds by their stated investment strategy. Strategy is how a manager goes about analyzing, buying, and selling stocks. We developed a very expensive and patented algorithm, now the intellectual property of AthenaInvest, which scans the strategy portion of a prospectus looking for elements. Elements are tools a manager uses or standards that must be met for stock selection. Examples would be a P/E ratio, management quality, an economic forecast, or return on equity. We identified ten very different and specialized strategies. Here are the ten investment strategies with brief definitions and descriptions. After introducing those, we will look at strategy performance from 1980 to 2008, before the recent bull market, then 2009 to 2020 during the bull market. It will explain why some managers and investors performed better than others.

Ten Investment Strategies

Here are definitions and description of the ten different investment strategies.

Competitive Position

Fund managers seek companies with traits ...