Low-Risk investment strategy ?

Thrugelmir

aliciathyme wrote: »

Well of course - the well known hindsight environment.

Alicia

No different to investors believing they've found the holy grail of success, and over rating there stock picking skills.

Learning from hindsight (history) is a useful tool to have in the box.

aliciathyme

Thrugelmir wrote: »

No different to investors believing they've found the holy grail of success, and over rating there stock picking skills.

This quarter is an opportunity for me to share my STB model which examines all the target buys over the last 10 years and is an in-depth analysis of all the portfolios. These are 5-year portfolios, 105 in all, each started with the next Target Buy detected after the start of the previous portfolio. Many variations on processing options are explored to arrive at the optimum configuration. The lowest net profit of any potfolio was 122%, and a longerterm 10-year portfolio is presented which achieves a net profit of £70,145 on an investment of £7000, just over 1000%.

I would be interested in any comments you have.

You will find my STB Investment paper here.

Alicia

aliciathyme

As nobody has come up with an STB assessment on their own stock picking records I have trawled the internet for alternatives.

Last week I came across an independent stock pick system from stockpickssystem.com who conveniently list past recommendations for both buying and selling high profile US stocks in an attempt to temp punters into subscribing for recommendations.

Their historical record gives 64 buying and selling transactions over the period 24 Feb 2012 to 16 July 2014. I have reproduced their list here

Rearranging their data in order of stock buying dates gave a suitable list of transactions to experiment with.

Suppose a US investor had signed up to stockpickssystem prior to their first recommendation on 24 Feb 2012. There appear to be three ways to take advantage of all the recommendations:

- To buy and sell as recommended
- To buy and hold all stocks
- To use my Sell-to-Buy scheme (ignoring their recommended sells)

I have run all three options using historical stock prices downloaded from Yahoo Finance and have assumed a broker fee of $8.95 (as Charles Schwab on-line trading)

a) To buy and sell as recommended:

Assuming a lotsize of $1000, the final value would be $23,146 of which $19,804 would be cash.
Representing a net profit of 33.1% and a win ratio of 92.2%
The total investment would have been $17,384
For graphic and schedule details see here

b) To buy and hold all stocks

Using the same lot $1000 lotsize would require an investment of $64,000 which would not give a comparable result, so, normalising to the same investment value of $17,384 spread across all 64 stocks gives a lot size of $271.
The final value would be $22,288 (no cash since fully invested)
This achieve a net profit of 28.2% and a win ratio of 92.2%
For graphic and schedule details see here

c) Using STB

Again using the same investment value of $17,384 gives a lot size of $5,795 based on the 3:1 STB rule.
The final value would be $25,596 including $5389 cash.
Representing a net profit of 47.2% and a win ratio of 100%
Only 13 buys of the possible 64 are actioned due to insufficient value of holdings current.
The remainder are annotated "No Buy"
For graphic and schedule details see here

This investigation has shown that STB performance advantage is not implicitly linked to my stock picking system, and provides a significantly better return than the other options presented for this alternative stock pick source.


Alicia