Low-Risk investment strategy ?

aliciathyme

Jegersmart wrote: »

Hi Alicia
I can see several issues with this system because for me the selection process is a manual process (and on closing prices instead of the "sometime in the afternoon" time that you use) and if I am not able to run it manually for whatever reason then I will miss the buy signal (even if it was actually the right signal due to said variances).
J

Hi J,

Looking at my 5-year-to-date model, on a total of 76 buys the net profit would have been 364.6%.
Buy delaying ALL transactions by one day, the net profit would have been 365.4%. Hardly an issue.

When there is a general drop in the market (yesterday 21 Feb for example when the FTSE 100 index fell 1.6% close-to-close) if you have accumulated enough cash you would buy at a better price. Of course, if you have to sell something it could be better or worse depending on the relative changes.

So overall I would not expect precise timing to be critical.

My reasoning behind the mid-afternoon prices update and buy is so that I can keep my real dealing in step with the model for subsequent analysis and refinement.

Of interest - yesterday my anomaly process gave me KAZ @ 671.5.

But thanks for your continued interest.

Alicia

Jegersmart

Thanks Alicia

I rather think that missing a buy signal at times when a manual process cannot be completed is probably more of an issue perhaps? (And impossible to model of course).

There are other differences which could be related to the above. I haven't seen a buy signal for HL until today when based on closing prices the 1 month increase is 21.34% based on a 842.5p close. I would then usually set a limit buy today at 831.2p (if I had 3 positions, only if one of them was above 5% in profit of course) and if it hits I buy, if not then I disregard. The problem with this is of course that I do not immediately sell to buy, I buy first depending on whether the order triggers......which requires a "cash buffer" to do....which is a not a problem but still....I guess that is why you run the system in the afternoon to allow for that?

So an awful lot of issues to consider, as I said I haven't reached 3 positions yet so am not selling anything. Also, following a system like this without any analysis or regard for price action does make me nervous even though this experiment utilises a small percentage of one pot of funds:)

I don't have an anomaly process so good luck with that!;)

J

Jegersmart

aliciathyme wrote: »

Jegersmart

Did you catch ENRC again today? - It came up as a rising trend buy at 404p.
I bought it from cash in one portfolio, and in another it was already my top holding so I just sold 18% of the shares to take the profit.

fwiw my original "5-year" portfolio is now at 428.9%
My 2010 ISA @ 154.7%
My 2011 ISA @ 2.6% (loss)
My 2012 ISA @ 15.9%

Alicia

Interesting the point regarding the repeated ENRC signal, but a clarification would be good. If you only had one portfolio and you received another buy signal for the same stock you already hold which is more than 5% up, what would you do then? Would you still only sell the profit?

Just trying to clear up some of these actions that you are doing in certain circumstances - or so it seems to me...:)

J

clairbear_3

Just skipped thru some threads on here and think you more than likely just ''lucky'' that your endeavours co-incided with a 4 year bull run and that in a falling market you would lose just as much.

Jegersmart

clairbear wrote: »

Just skipped thru some threads on here and think you more than likely just ''lucky'' that your endeavours co-incided with a 4 year bull run and that in a falling market you would lose just as much.

I think you better "skip through" again then......

(Assuming the results given are honest and correct)


J

aliciathyme

Jegersmart wrote: »

Interesting the point regarding the repeated ENRC signal, but a clarification would be good. If you only had one portfolio and you received another buy signal for the same stock you already hold which is more than 5% up, what would you do then? Would you still only sell the profit?
J

Short answer - Yes, sell the profit.
Why?
Because you need to release the profit for supporting the next buy.
I appreciate that 5% is marginal, but it does cover costs by 4 times if your lot size is £3,500.

Alicia

Jegersmart

Thanks, costs are not an issue - but as I say I think the devil is in the detail with these things.

In the particular scenario where you have 2 stocks and still waiting for the third, you would still sell the profit in an existing stock holding if you get a repeated buy signal regardless of whether you have the 3 "fundamental" positions?

Thanks
J

aliciathyme

Jegersmart wrote: »

Thanks, costs are not an issue - but as I say I think the devil is in the detail with these things.

In the particular scenario where you have 2 stocks and still waiting for the third, you would still sell the profit in an existing stock holding if you get a repeated buy signal regardless of whether you have the 3 "fundamental" positions?
J

According to the rules you will first have decided an investment sum. Your lotsize per share deal will then be 1/3 of the investment sum. So your 3rd share will be from the last tranche of cash. Only when you do not have enough cash accumulated should you resort to selling your best holding.

So, assuming you have followed the rules, the answer is No - buy 3rd holding from cash. After that you will have to sell your best to buy the next (or take profit if best is same company you want to buy). And of course ALL buys will be for the same lotsize value.

Alicia

Jegersmart

Hi All

Just a quick update on this one. I was stopped out of ENRC at 40% loss in the last couple of days - but it has since bounced so no buying opportunity at 50%+ down from entry so far.

My Evraz holding is down about 35.7% so far so quite close to also being stopped out potentially.

All in all, the "system" would seem to be not looking that promising so far - and over the next few months may well wind down the whole project due to some concerns around the "finer detail" that I have expressed before. Obviously a few months is not enough time to validate/invalidate a system like this - but as it does feel somewhat counter-intuitive to me in certain ways I may not have the inclination to spend too much time on it. The sell to buy aspect I have noted and will consider further as part of ongoing trading activities potentially.

Anyway, just some open feedback on what has happened so far (for those interested)!

J

Jegersmart

Hi All

Just to confirm that the Evraz position has also been stopped out today at a 40% loss.

If my understanding is correct, I would only buy these stocks again once they have dropped to 50% of mhy original price or they have risen by 20% in a month. This means that I would buy at 172p for ENRC and 152.2p for Evraz. ENRC has of course bounced quite nicely after stopping me out by 7 at around 201p, they are now 251p.

In any case, just an update for those interested.

J