How to deal with noisy markets

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How to deal with noisy markets
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Some lessons for those investors tempted to chase the Trump trades

The writer is senior adviser at Engine AI and Investa, and former chief global equity strategist at Citigroup Market noise has dialled up to 11 as global equities have raced to price in Donald Trump’s sweeping election victory. Bank share prices are up. Alternative energy stocks are down. Some of these moves will be justified, some will not. Only time will tell.

This eccentric way of looking at the equity markets hard-wired a lagged momentum strategy into his portfolio. It reflected his underlying belief that equity markets are noisy in the short-term but persistent in the long term. I recall another famous portfolio manager who used a more quantitative approach to help separate signal from noise. He liked his stocks to show positive share price momentum over the first 11 of the past 12 months.

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