Some argued for “Momentum” and we routinely get those advocating “technical analysis”.
We have “factor investing” and “Algo trading”
And possibly the biggest beast of the last 10 years “Passive v Active”.
I have noticed in the last few months what may be a new theme, though I have seen its advocates coming from a number of different directions.
This I would call “avoiding duds”. The basic premise is that finding truly great companies is very hard. But spotting truly awful ones is much easier. Based on the US only about 30% of shares will generate a positive real return over a 10 year period. The other 70% will generate in real terms a negative return. But if you are able to eliminate the bottom 25% of the market you can move the return on your portfolio from 8% to 14%. A noticeable benefit.
Whilst not described as “avoiding duds” I have seen this sort of approach being advocated by a hedge fund with a buy a basket of good companies and short the bad ones to cover. This was in crypto with the fund not being sure what would end up working, but was very sure about some not succeeding.
It was in part reinforced by and interview with a short seller, who made the case that shorting is not as hard as it may seem. Yes there is a limited upside with an unlimited downside (too risky for me), but spotting a truly dud company was much more certain than thinking you had found a really good one that others had missed.
I have also on a couple of US podcasts heard people advocating on a portfolio management basis that spotting good was difficult but spotting bad was relatively easy and so on a sector by sector basis you can eliminate the duds. This may not give you any super shares, but quite probably would deliver higher returns than a standard passive approach that led you to buy the dogs. The rationale for sectors is that few of us have the money to do a full S&P 500 trawl where we might buy 200 shares.
This is not a strategy for the go-go 20% a month sector of the market but it might be worth keeping eyes and ears open for semi-Passive managers who can offer this, or for those of us with a diversified portfolio being prepared to really look for the bad ideas in our portfolio and cutting them more ruthlessly.