CPPI vs. Buy-and-Hold in Oscillating Markets

Guys - any idea which one of these two rebalancing strategies does better in an oscillating market? And what is the rationale behind that? Thanks.

buy and hold is always 2nd in the rankings per Schweser

trending up or down =

1 - cppi

2 - b&h

3 - cm

volatile/oscillating =

    • cm

2 - b& h

3 - cppi

Buy and Hold - nothing gets done - you just have your initial holdings (adjusted for market up/down).

CPPI = when market goes up - you buy more equity, when market goes down - you sell equity. So you BUY HIGH, SELL LOW. Lots of impact on your portfolio because of that.

So B&H > CPPI in an oscillating market.

In constant mix you sell on the high and buy on the low because you are always rebalancing to target the target m in stocks

Hence contant mix profits in oscillating markets.

CPK , I think we passed the exams in the same years L1 in June 2008 and L2 in June 2010

Let us pray this is our year , we seem to like even numbers. LOL

you draw a graph, with all 3 over lapping. resulting graph should look like a fish skewer or squid skewer.

thats how you determine which outperforms which. The graph will show the ranking as well.