What Relative Strength can do:

  1. When applied to asset classes it can identify and keep you in the best performing asset classes
  2. Using cash investments as a proxy, it can keep you from significant losses, like 2008
  3. Help keep your emotions in check and give you a process to follow to avoid bad decisions

What Relative Strength won’t do:

  1. Absolutely avoid loss. Until reverting to low-beta asset classes, some losses are possible
  2. Most likely you won’t experience severe losses like the high beta asset classes in 2008
  3. Cause emotional panic since the system is fixed

Author: Brian Kasal