Leverage for the Long Run

https://pensionpartners.com/leverage-for-the-long-run/

wow. just wow.

Table 6: Unleveraged Buy and Hold versus Unleveraged Moving Average Timing(October 1928 – October 2015)

When the stock market is in an uptrend (above its Moving Average), conditions favor leverage as volatility declines and there are more positive streaks in performance. When the stock market is in a downtrend (below its Moving Average), the opposite is true as volatility tends to rise. 

We found that being exposed to equities with leverage in an uptrend and rotating into risk-free Treasury bills in a downtrend can lead to significant outperformance over time. For investors and traders seeking a destination with higher returns who are willing to take more risk at the right time, systematic leverage for the long run is one way of moving there, on average.

Law of Percentages

Very frequently, the common fella has more of an affinity for the absolute numbers; figures for measure, for quantification,  for constraints, for limits.

While it is all very correct and true for a variety of situations; number of demerit points for suspension of licenses, as a fixed KPI for bonus/awards, fixed pricing for purchases.

Sometimes, in a longer time horizon, for an ongoing event like determination of a measure of performance, it is better to defer to the use of percentages.

Simply, if you have got a key statistic; say an increase of 20 people going through your store doors each day, this improvement is made more indicative expressed as a percentage such 5% or 10% etc.

Just beware of the pitfalls of percentages.