CMG Capital Management Group CEO Steve Blumenthal was featured recently in the Investor’s Business Daily story Investing Tactically In A Shaky World Doesn’t Mean You Bet The Farm. Steve was asked a series of questions about the markets and investing.
IBD: What does tactical investing mean to you?
Blumenthal: We view tactical two ways:
- The first is strategic tactical asset allocation. Think of this as how much to strategically allocate to equities, fixed income, alternatives and cash. It’s also deciding which investment categories to overweight, equal weight or underweight.
- Then there are tactical investment strategies, such as trend-following and relative strength.
Trend-following compares the short-term price action of a security against the same security’s longer-term price trend. Comparing recent price action vs. a longer time period can help identify trends for all types of securities.
Relative strength compares the price momentum of one security against another security or a select group of securities. The security with the strongest relative strength price momentum is selected. Sector rotation is a common relative strength investment strategy. Individual equities can be ranked to identify the strongest price leaders. For example, IBD posts a Relative Strength Ranking of all of the stocks it follows and ranks them by percentile. Relative strength seeks to identify the securities with the strongest price leadership and position accordingly.