Contrarian strategy (counter-cyclical investing)
In a contrarian investment strategy investors try to ignore the broad masses and take the opposite position from the mainstream, i.e. act countercyclically. When market sentiment is poor, people tend to buy and when market sentiment is good, they tend to sell. The underlying assumption is that the majority of market participants are frequently wrong. The majority of investors buy securities at prices that are no longer fundamentally justified. They act just as irrationally when it comes to sales. Out of fear, investors sell securities even when they are already trading below their “fair value”. This strategy is also called the mean reversion strategy and is only suitable for investors with strong emotional discipline and the ability to remain confident during periods of market uncertainty.
Long/short strategy
The "Long/short equity" strategy is one of the most popular hedge fund strategies. The characteristic of this strategy is that undervalued stocks are bought while at the same time overvalued stocks are sold short. The investor speculates that the companies purchased will perform better in the future than those sold at the same time. The positions entered into can also be financed with borrowed capital. However, this increases the risk of the strategy considerably.
Global macro strategy
This investment style has almost no restrictions. The decision-making is based on the forecast of overall economic developments, the so-called global macro trends. George Soros is considered the most famous representative of this strategy. In 1992, Soros speculated with his Quantum Fund against the economically excessive exchange rate of the pound within the European Monetary System (EMS). Great Britain's attempt to stabilize the pound exchange rate through support purchases failed and the British pound had to depreciate, which brought the Quantum Fund around a billion dollars in profit.
Low five dividend strategy
The low five dividend strategy is an equity investment approach designed to outperform the broader market by selecting stocks based on their dividend yield. The strategy focuses on companies offering attractive dividend payments and seeks to generate better long-term returns than a passive investment in a benchmark index. Historically, this methodology has often delivered stronger performance than investments that simply replicate the overall market.
Gebert stock market indicator strategy
The Gebert indicator provides investors with a signal as to whether or not they should invest in the German stock market (DAX).
The following investment options exist:
- Long Dax (buy)
- Short Dax (sell)
- Do not invest (100% cash) at the beginning of the strategy (i.e. before the first signal)
It consists of four components, which are aggregated in a points system:
- Euro interest
- Inflation rate
- EUR/USDollar exchange rate
- Seasonality , based on the market adage: “Sell in May and go away”
The indicator can reach a maximum of four points, the minimum is zero. Falling euro interest rates bring a point. Falling inflation rates and a falling EUR/USDollar exchange rate year-on-year (last 12 months) have a positive effect and also bring one point each. A seasonality point is added for the period November to April. A buy signal occurs when the sum is three or four points, zero or one indicates a sell signal. Two points are neutral and leave the current score unchanged.
Author
Dr. ther Kornfellner, CFA, CAIA
Derivate Trader, Bybit EU