Mechanical investing (MI) is a type of investment strategy in which the investor relies on predetermined rules and algorithms to make investment decisions. This approach aims to remove emotion and subjectivity from the investment process, and to increase the consistency and efficiency of the portfolio management.

This board continues the history that started at TMF in the late 1990s with their 'Foolish Four', and then an extremely active Mechanical Investing board whilst the NASDAQ was skyrocketing and momentum based MI strategies were doing exceedingly well. Over time, MI has had given mixed results, but the concept is sound. After all, when you purchase the S&P500 index, in a sense you are investing mechanically - in this case by selecting large cap weighted stocks systematically over many years. You could switch strategy to an equal weighted S&P500 index, which through the whole 20th C outperformed the standard S&P500 by 1% or 2% a year after costs.

Mechanical investors may use a variety of tools, such as stock selection by filtering over a large population of stocks each month, or each year, backtesting, and tracking progress of post-discovery data. The MI approach can be useful in theory for investors who lack the time or expertise to manage their investments actively, however in practice it tends to involve time and attention for most investors engaged in it.

The goal is usually to have a higher long-term average return than the S&P500, but some investors aim for a similar return but with reduced losses during market downturns.

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