By actively managing portfolios with due regard for recent market history debacles can be avoided and substantially improved risk-adjusted returns can be achieved.
The Traded Portfolio project uses historical data on securities to determine if any given rule-based plan for active investment management is well-drawn or not, so that existing programs can be improved and new and better ones developed.
That capability is ensconced in the Proprietor's original computer code. The codified methods are conceptually simple. Understanding them does not require advanced prior understanding of statistical science.
Presently the model portfolio charts of this page show outcomes of a form of active asset management that is based on an adaptive momentum strategy, here applied to groups of stocks that simulate funds. The improvements to the strategy and the evidence that the strategy works are presented in detail in the working paper “Momentum in a Funds Context— Critically-Different Choices”, which is downloadable below. It explains the strategy in plain language and also discloses the details of the algorithm.