In the Seeking Alpha version of our post titled Get the Beta Right a reader asked a question that pointed to a concept I’m just starting to learn about called outcome oriented solution which as the name implies focuses on the result delivered versus a particular mix of assets. I gave the example in the comments of a 4% yield while targeting a very low and measurable volatility. A follow up question then threw in and staying slightly ahead of inflation.
To Zweig’s article; to the extent no strategy can be the best for all times, a 28% return that includes an above market dividend (without loading up on mortgage REITs and closed end funds) kind of sounds like a free lunch with dessert to me. To the reader comment above; yield, low volatility and staying way ahead of inflation (in the case of 28% as implied by Zweig for 2013) would obviously get the job done provided the investor/client has an adequate savings rate.
Once you and your clients accept that no strategy can be the best for all times (repeated for emphasis) it becomes a little easier to remain disciplined to whatever strategy that you at some point came to believe gives you and/or your clients the best chance to meet long term financial goals.
Most dividend strategies and low volatility strategies are valid long term methods along with plenty of other strategies. Of all the valid strategies that you can name; one will be the best performer for the year, next five years and next ten years. One of those valid strategies will turn out to be the worst for those respective time periods but they are all still valid and can all help achieve long term financial success.
This article was written by AdvisorShares ETF Strategist Roger Nusbaum.