Does Stewart’s ‘Common Sense’ approach really make money?

WSJ: How to Time The Market by James B. Stewart. Interesting read, but does it really work?

Here is how the system works: When the market is dropping, I buy stocks at intervals of 10% declines from the most recent peak. When it is rising, I sell at intervals of 25% gains from the most recent low.

Several comments with the column doubt how well the strategy works. He has advocated it before and others have also reviewed the strategy in the past.

CXO Advisory: Analysis of James Stewart’s “Common Sense” Stock Market Timing Strategy

In summary, the Common Sense buy-low/sell-high strategy appears not to be an effective asset allocation approach because it is somewhat out of phase with momentum and value return horizons.

Stwart’s Common Sense column also appears in Smart Money.

Regardless, it is a good weekend read.

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