Bollinger Group Power (AIQ Systems, Inc.). John Bollinger's industry groupings arranged for use with AIQ's TradingExpert. by John Sweeney
Lately, group analysis has
become more of an issue,
with investors becoming
more sophisticated in their
trading of stocks, as opposed to buying and holding stocks.
What were once one-industry decisions
(high-tech first, last, and foremost) have
become more difficult as the bull market
has hesitated in late 1998 and defensive
positions with equity upsides are
more difficult to find.
Academic studies have long differentiated
between return and risk due to
the market versus those due to company
capabilities. Analyst John Bollingerís
review of such studies places the return
from stocks even more precisely: 50% is from the industry group. He assigns
the remaining return to the market at
about 30%, and the stock itself at 20%.
To make such an analysis concrete, Bollinger, who is best known as money
manager, analyst, and newsletter publisher,
has created his own industry
groupings based not only on the line of
business of each company but also the
trading pattern of its stock. He has examined
the correlation between stocks
to see that they are not only in similar
lines of business but also trade with
similar price patterns. ...