Dual Momentum

Rotating between America, the world and bonds sounds sophisticated. Owning America beat it.

The rule. On the first trading day of each month, measure the trailing 12-month total return of SPY (US stocks), EFA (developed international stocks) and BND (US bonds). Hold whichever of SPY or EFA has the higher 12-month return, but only if that return also beats BND's; otherwise hold BND for the month. Benchmark is SPY buy and hold.

What actually happened.

• $10,000 became $20,905. The same $10,000 in S&P 500 (SPY) became $84,528. This strategy trailed the benchmark by $63,623.
• Compounded at 5.0% a year vs 15.3% for the benchmark.
• Best year: 2021 (+23%). Worst year: 2022 (-23%). This is not a smooth ride.

The catch. At its worst, this strategy fell -34% from a prior peak — shallower than the benchmark's -34%. Would you have held through that? Most people don't. That's the whole game.

The takeaway. The lesson isn't "this idea is stupid." It's that the simple, boring benchmark is harder to beat than the pitch decks admit. Before you try to be clever, respect the index.

Holding right now (2026-09-01): EFA.