Active Value Investing: Making Money in Range-Bound Markets
(Wiley, 2007) is a book written by Vitaliy Katsenelson
, and describes a strategy for sideways stock market. In the first part of the book Katsenelson makes an argument that for next dozen years or so the US market will be range-bound. In the second part he provides a strategy for this market. Investors look at stock market
as a 11% a year compounding machine, and though this is true for the long-run (a full market cycle, 30 years or longer), in the short run stock market returns are often far above or far below the average. As Katsenelson argues in his book - returns are to large degree a function of starting valuation. High valuation leads to below average returns, low valuations lead to above average returns.
Katsenelson's BusinessWeek video interview and a fairly lengthy article he wrote for John Mauldin's newsletter describe concepts of Active Value Investing in great detail.