I lead a group of active-rebalancing momentum / autumn abstinence mutual fund investors who have achieved average returns of 17% per year, since 2001 until this year, during which we are presently down 10%.

I believe that the recent economic forces that led to a star fund’s recent out-performance will typically continue for a reasonable period of time– (three months)– thereby allowing us to use a combination of recent out-performance, and long-term performance as a good (but not perfect) predictor of future performance for three month periods. This is often referred to as momentum investing.

We rebalance every three months because the short-term trading rules for mutual funds allow this; and if we use a discount broker we pay no commissions or fees,– except for the hidden MER which we attempt to keep to the minimum, by choosing low MER funds whenever feasible.

We also get right out of the market in Sept and October,– which works well more often than not, — and which saved our backsides this year.