This is the last of the Lazy Man correlation posts. My goal over the past couple weeks has been demonstrate that a more holistic approach to trading the markets such as the Lazy Man composite signal can deliver reliable and consistent returns. This methodology is obviously a trend following system and won’t deliver the high drama returns of higher beta stocks but . . and this is a big BUT, the risk exposure of this strategy is very limited and, by employing adaptive money management tools like an equity curve violation stop, drawdowns can be effectively curtailed. To further contain potential drawdowns its best to trade a basket of highly correlated Lazy Man ETFs such as the previously detailed IWM, DIA and SMH.
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