Five Simple and Low Maintenance Investing Strategies: Seeking an Automated Investing System

Abstract

The purpose of the paper is to examine five different investment strategies which are known to be easily implemented by ordinary investors: (1) S&P 500 strategy, (2) No OTC & No ADR (NoOtcAdr) strategy, (3) Warren Buffett’s stock market indicator-based strategy, (4) Federal Reserve Bank’s monetary policy-based strategy, and (5) Joel Greenblatt’s magic formula strategy. Among a large number of minimal maintenance strategies available, we investigate the efficacy of these five investment strategies because these strategies are extremely simple to implement and require little time commitment for investment research. Once they are set up, they will be maintenance free. Based on our findings and analysis, we propose a pair of options to retail investors, depending on their time commitment and risk tolerance level. Among five investment strategies, investors with high-risk tolerance may find merits in the Fed’s monetary policy-based strategy, whereas investors with low-risk tolerance may find Buffett’s stock market indicator-based strategy attractive.

Keywords: Low maintenance investing strategies; Fed funds rate; Greenblatt’s magic formula; Sector rotation, Warren Buffett stock market indicator

DOI: 10.7176/RJFA/11-2-01

Publication date: January 31^st 2020