Michael O’Higgins’s ‘Absolute Return’ Strategy Tries to Beat the Market

O’Higgins has authored two investment books: Beating the Dow and Beating the Dow with Bonds. Both methods were successful, but the financial meltdown of 2008 prompted him to find a more consistent, diversified strategy that could weather even the perfect market storm.

Enter MOAR: Michael O’Higgins Absolute Return. MOAR is a diversified, indexed portfolio with a contrarian twist, designed for investors who want decent returns and a good night’s sleep.

This is how it works: first, rank the world’s stock markets using O’Higgins’s method, soon to be available on his website (www.ohiggins.com). Next, select the bottom five indexes—the dogs of the world. Combine those with other investments to create the following portfolio:

25% Dogs of the world
25% Platinum or gold
25% Long-term government bonds
25% Mid-term government bonds

Following this strategy ensures you are greedy when others are fearful, and fearful when others are greedy. The suggested portfolio would have gained 27% in 2009 and 12% in 2010, after losing less than 1% in the terrible 2008. In the past 39 years, it would have suffered only three mildly down years, without a single year’s loss exceeding 5%.

Last year, the MOAR strategy gained 8.6% while most of the world’s stock market indexes had double-digit losses.

Passive investing strategies like this one make sense. Few professional investors can beat the market after fees and bid-ask spreads. If nothing else, O’Higgins has proven that dismal market outlooks can produce generous investment returns.

To read Andrew Hallam article: Michael O’Higgins’s Absolute Return’ Strategy Tries to Beat the Market

Tagged as: Government bond, Investment, Passive management, Portfolio (finance), Stock market, Stock market index, Strategy