Guide · Trend following
Does Stage Analysis work?
Across 375 stocks, Stage Analysis cut the worst fall on 89%, beat buying and holding on risk-adjusted return on 28% and on raw return on 20%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
The 30-week moving average splits a stock's life into four stages. Own it only in Stage 2, when price is above a rising average.
- In when a weekly close is above a rising 30-week average.
- Out when a weekly close is below the 30-week average.
Trend following plays bet that prices that have been rising tend to keep rising for a while, and falls tend to keep falling. The family guide
How to use it
- Expect to be wrong more often than right: only 23% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Real estate (68% beat holding on risk-adjusted return) and worst on Industrials & rentals (11%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Stage Analysis did best against holding in the 2008 crash (+33% median gap) and worst in the 2020–21 rally (−22%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Stage Analysis | +33% | −8% | +15% | −22% | +10% | −10% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Real estate | 68% | +0.02 |
| Micro caps | 50% | -0.12 |
| Media & telecom | 40% | -0.07 |
| Financials | 38% | -0.07 |
| Software & devices | 35% | -0.06 |
| Energy & power | 32% | -0.11 |
| Indexes & ETFs | 29% | -0.02 |
| Industrials & materials | 25% | -0.11 |
| Sectors | 25% | -0.12 |
| Consumer & retail | 24% | -0.16 |
| Semiconductors | 22% | -0.13 |
| Big tech | 17% | -0.12 |
| Healthcare | 17% | -0.13 |
| Metals & mining | 14% | -0.17 |
| Industrials & rentals | 11% | -0.28 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Stage Analysis holds 173 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.