Simon Brown, columnist, investment expert and founder of Just One Lap, an investment information website, started the Lazy Trading System, which tracks the upward movements of the four main indices on the JSE.
“We avoid the downtrends by buying exchange-traded funds,” Brown explains. “The Lazy Trading System uses weekly charts to enter a position on an index that has to meet our criteria for moving higher. Then we hold that position until the trend reverses. The Lazy Trading System’s holding period could be as short as a few weeks or as long as three or four years, if the trend remains intact for that long.”
The Lazy Trading System only “goes long”, meaning that it only buys stock with the expectation that the asset will rise in value.
“You will never short a position (sell stock with the expectation that the asset will fall in value). When markets are weak, we move into cash to avoid the downside,” Brown explains. “We also only put a quarter of the portfolio value into each ETF, which means we often have a lot of cash sitting in the portfolio.”
According to Brown, the most popular ETFs have been the offshore x-trackers from Deutsche Bank, the local indices and the NewGold ETF, which tracks the rand against the gold price. “The best investment has likely been the DBXUS, which tracks the US markets and has returned 223% over the last five years,” he says.