Relative Strength Methodology
Relative strength methodology is an integral part of our investment strategies here at Madison Park Capital Advisors. Let's take a closer look at what this means. To put it simply, relative strength is a ranking system used to measure a security’s price momentum relative to its peers. This methodology relies on unbiased, unemotional, and objective data, and reflects our belief that we cannot tell the markets what to do, but instead harvest opportunities based on what the markets are doing.
Relative strength is known as a “momentum” investing technique, and is also known for its disciplined nature thanks to having both an entry and exit strategy. The methodology compares the performance of asset classes and individual securities to that of the overall market. It calculates which investments are the strongest performers, compared to the overall market, and recommends those investments for purchase, while also identifying weaker assets and recommending those for sale. In the end, we believe that this methodology allows us to achieve superior returns while also limiting downside risk – a nice combination in the world of investing.