Timeless Investing Tactics: Six Proven Strategies to Outperform the Market

Imagine the world in 1820.

A time when James Monroe was the fifth president of a young United States

The concept of electricity was still a distant dream.

Life expectancy was a mere 30 to 40 years.

In short, the world was a very different place.

Fast-forward 200 years, and a trio of Dutch researchers examined data that spans two centuries, taking a deep dive into investment strategies.

Their findings?

A select few investment strategies have consistently outperformed the market over the past two centuries.

They concluded that "Global factor premiums are not driven by market, downside, or macroeconomic risks."

It turns out, instead, that what you invest in matters far more than how you move your pieces in the endless live video game that is the financial markets.

This revelation challenges the foundations of Wall Street analysis and financial commentary.

To put it bluntly, it values market timing and macro tourism at approximately zero.

Strategies That Have Stood the Test of Time

1. Trend Following: The age-old adage, "Buy what's going up and sell what's going down," rings true. This straightforward approach has consistently outperformed across various markets.

2. Momentum investing is a close relative of trend following. It focuses on assets that are performing well relative to their peers.

3. Value: Benjamin Graham championed the principle that cheap stocks tend to outperform their expensive counterparts over time, which is the cornerstone of value investing.

4. Seasonality: Certain asset classes shine at specific times of the year. For instance, the stock market often performs best between November and May.

5. High Yield: Investing in higher-yielding assets has historically proven to be more profitable than settling for lower yields. After all, a bird in the hand is worth two in the bush.

6. Low-Risk Assets: Contrary to popular belief, investing in low-risk assets can yield the highest returns over time. Defensive, high-quality stocks often outperform their more speculative counterparts.

Now, What Does This Mean for You as an Investor?

Here are three takeaways to consider:

1. Think Beyond Index Funds: For active investors, looking beyond conventional index funds is crucial.

History shows that the abovementioned strategies can lead to significant outperformance over time. Even a 1% or 2% annual edge can compound into substantial gains.

2. Embrace Trend-Following and Momentum: Although some on Wall Street dismiss these strategies as simplistic, they have consistently delivered strong returns.

3. Stay the Course: Don't abandon a lagging strategy. Investment strategies ebb and flow in popularity. Value investing, for instance, may be out of favor now, but history suggests it will make a comeback.

The conclusions drawn from this research are straightforward.

But implementing them can be a different story.

I have found that what starts at 2% per annum gradually decreases to 1% or less in practice.

And let's not forget the exchange-traded funds (ETFs) that aim to capitalize on these strategies.

The reality is that many ETFs have lagged behind the market since their inception.

That said, my QVM - Quality, Value, Momentum- approach to investing, which I used in Global Guru Premium, covers three of the six factors.

The performance of stocks I’ve recommended have compiled an impressive market-beating track record (see NicholasVardy.com for more details)

As George Soros' CIO once remarked, "If beating the market were easy, meter maids would be doing it."

So, while finding a market-beating strategy may seem simple, the real challenge is executing it effectively.