What if I told you there was a simple, easy-to-understand way to potentially double your investing returns?

Well, depending on how long you’ve been reading, I’d expect anywhere from…

Sounds good. I’m in. Tell me more.

All the way to…

Prove it. I’m a nice guy and you say it’s simple, so I’ve give you 60 seconds.

Either way, here goes.

How To Double Your Returns Today

All it takes is combining two simple and proven investment strategies.

The first strategy is value investing.

You’re surely familiar with value. It’s one of the first things you probably learned about as an investor.

You know...when you learned about the simple value measures like the ratios: price-to-earnings (P/E), price-to-sales (P/S), and price-to-book value (P/B).

They’re all simple and quick ways to measure the price of a stock relative to the underlying fundamentals. In other words, the value of a stock.

Overall, value investing works.

For example, the quintile of stocks with the lowest P/E ratios have delivered an average of 16% annual returns over each of the last 50 years.

The quintile of stocks with the highest P/E ratios have delivered just 6.7% average annual returns over the last 50 years.

The cheapest stocks beat the most expensive stocks by 9.7% each year.

Simple enough?

Well, if you read these pages, you know value pays off over time.

Too often, however, that’s over too long a time for most investors.

It can take years and years for value to realized. And few investors have the experience, patience, or commitment often required to be a successful value investor.

They want returns and they want them now.

Fair enough.

That’s where another simple investment strategy helps alleviate the waiting around AND significantly increase returns too.

That additional strategy is momentum investing.

Momentum is basically what it’s name implies - a stock with positive momentum is one that’s going up.

Again, simple stuff.

Extremely important though because positive momentum creates a positive feedback loop.

If a stock is up, people will buy it. The more it goes up, the more they will buy.

That is momentum and following it can produce superior returns.

For example, the top 20% of stocks with the best momentum averaged annual returns of 14.5% over the last 50 years.

Meanwhile, those stocks with the worst momentum -- which are falling -- tend to do the worst. The 20% of stocks with the worst momentum have averaged returns of 6.7% over the past 50 years.

That’s a total difference of 7.8% return per year from just sticking to stocks with the best momentum.

Here’s where it gets really good though.

Combine these value and momentum and you have the potential to deliver far superior returns than either factor on it’s own.

The chart below from Patrick O’Shaughnessy at Investor’s Field Guide shows the history of mixing value and momentum in stocks:

Double Your Returns

Annualized returns, 1963-2013

The table shows in great detail the extra returns delivered for groups of stocks with varying degrees of value and momentum.

The lower right corner is the mix of the best value and best momentum stocks. They averaged 18.5% annual returns over the last 50 years.

The upper left corner combines the stocks which are both the worst values and and have the worst momentum. They have averaged an average returns of just 1.2% per year.

The High Price of Great Value

The difference between 18.5% for stocks with the best value and momentum, an assumed average of 10% for all stocks, and a dreadful 1.2% for the stocks with the worst value and momentum are big…

Over time, the difference is downright staggering.

Over a 20 year time horizon combining value and momentum is the difference between…

Turning $100,000 into $127,000…

Turning $100,000 into $672,000...

Or turning $100,000 into $2.9 MILLION.

Which one would you rather have?

If you already invest in value, you should consider adding some momentum to the mix.

There are quite literally millions of dollars on the line if you do.

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