V. 21:7 (70-75): Combining Long And Short Funds by Norman J. Brown

Combining Long And Short Funds by Norman J. Brown

Obtain better profits and reduce your risks by using this method to select mutual funds for trading.

In the June 2003 issue of STOCKS & COMMODITIES, in my article “A Mutual Fund Trading Method,” we saw some excellent trading results using just one mutual fund. The method I used was a one-day, one-fund daily ranking that determined buy and sell entry points. When not invested in the ranked fund, you were either out of the market or in a money market fund until another buy signal was triggered.

This time, I’ll use the previous one-day, one-fund daily ranking (OR) and expand it to allow replacing the money market fund with a “short” (beta = -1) version of the basic “long” fund. I will refer to the long process as “ORL,” investing short (only) will be “ORS,” and the combination will be “ORLS.”