Trading systems
Macro and allocation systems: decide what you own before you trade it
These nine do not pick instruments so much as decide how much risk to carry and where. Three of them — buy-and-hold, dollar-cost averaging and 60/40 — refuse the timing question entirely, which is exactly what makes them the systems most investors actually run. The rest disagree about when to step aside: a fixed mix built for any regime, a moving average per asset, a single line under the index, or the slope of the yield curve. What they all share is that the exposure decision comes before the entry decision, not after.
The claim it rests on
The largest share of a portfolio's outcome comes from what asset classes it holds and how much, not from which security inside them.
Systems in this style
9 systems
- Macro & allocationBeginnerMechanical
Buy and Hold the Index
John C. Bogle
Own a broad, low-cost index fund covering the whole market, keep buying on a schedule, and never sell because of anything the market does.
- Holding period
- Decades
- Time needed
- Almost none
- Macro & allocationBeginnerMechanical
Dollar-Cost Averaging
Benjamin Graham popularised it; standard practice in retirement plans
Invest the same amount into a broad index fund on the same date every month, whatever the price is doing.
- Holding period
- Decades
- Time needed
- Five minutes to set up, none after
- Macro & allocationBeginnerMechanical
60/40 Balanced Portfolio
Standard institutional and retail default allocation
Hold 60% broad equities and 40% investment-grade bonds, and put the weights back to target once a year.
- Holding period
- Decades, rebalanced yearly
- Time needed
- An hour a year
- Macro & allocationBeginnerMechanical
200-day MA Macro Trend
Multiple; formalised by Meb Faber
Hold the index while it closes above its 200-day average, and sit in cash or short-term bonds while it closes below.
- Holding period
- Months
- Time needed
- 10 minutes a month
- Macro & allocationBeginnerMechanical
Faber 10-Month Timing Model
Meb Faber
Hold each of five asset classes while its monthly close sits above its own 10-month average, and park that sleeve in cash while it does not.
- Holding period
- Months to years
- Time needed
- 20 minutes at each month end
- Macro & allocationBeginnerMechanical
All Weather Portfolio
Ray Dalio / Bridgewater, with the retail version via Tony Robbins
Hold a fixed mix of shares, long and intermediate bonds, gold and commodities chosen so that something in it works in every economic environment.
- Holding period
- Years
- Time needed
- An hour a quarter
- Macro & allocationBeginnerMechanical
Permanent Portfolio
Harry Browne
Split your money into equal quarters of stocks, long-term bonds, gold and cash, so that whichever state the economy enters, you already own the asset that does well in it.
- Holding period
- Indefinite
- Time needed
- An hour a year
- Macro & allocationIntermediateMechanical
Yield-Curve Regime Filter
Campbell Harvey; New York Fed recession model
Stay in risk assets while the treasury curve slopes upward and the index trades above its 200-day average; move to cash when the curve inverts.
- Holding period
- Months to years
- Time needed
- Half an hour a month
- Macro & allocationAdvancedDiscretionary
Macro Top-Down (Druckenmiller-style)
Stanley Druckenmiller
Work out what liquidity and the economic cycle are doing, express that view in whichever market shows it most cleanly, and be large only when the market agrees with you.
- Holding period
- Months to years
- Time needed
- Several hours a week of macro research
What they have in common
- Decisions are infrequent — monthly, quarterly, annually, or when a single condition flips
- The hard part is inaction: most of the work is not trading while the rule says hold
- They defend against the drawdown that ends careers, at the cost of trailing in a strong bull run
- Nearly all of them are runnable in ten minutes a month; only the top-down approach is a full research job
The failure the style cannot design away
A rule that switches on a single condition will whipsaw at exactly the wrong moment — a brief break below the line, then straight back above. And a fixed allocation built for a world of falling interest rates behaves differently in a world of rising ones, which is a slow failure nobody notices for years.
These are documented methods described for study. Nothing here is investment advice, a recommendation, or a claim about future returns — every system on this page has losing periods, and the pages say where.
Reading about a system is not having one.
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