Still Following My Investment System With No Tensions

Welcome to Tip’d, a social media site for finance, investing, and business topics. Want to participate? » Join Tip’d now! or read our FAQ.

Tip It

Still Following My Investment System With No Tensions

Posted by nbk75dq 1127 days ago, popular 1127 days ago (http://simple-trading-system.blogspot.com)
Category: Business | Tags: books investing stocks system trading

After making a 13% return in 2005, 14% in 2006, and 22% in 2007, my account was down 40% in 2008.
However, unlike the days when I aggressively day traded, I was able to remain calm and tranquil, because I aggressively tested my system over the years, and understand how it works.
I have complete faith in it, and am not surprised that we had a year like this...

4 Comments addto

Save & Share Topple

Spam? Topple this!

Comments Who Tip'd

Comments

thekritz 1127 days ago

I don't understand- what is your tarding system?! It looks like your returns pretty closely mirror the S&P, and it doesnt seem like there's anything unique going on. Save yourself the headache, and just put your money into an S&P index fund.

nbk75dq 1122 days ago

My system is about yearly rebalancing each stock position according to my formula. It is detailed in my book "Stock Trading Riches" (available from Amazon.com).

My system outperformed the S&P 500.

For the last 4 years, my system returned 13%, 14%, 22%, -40%. That comes out to an average annual return of - 1.475 over the 4 years.

According to the Vanguard website, for the last 4 years, the S&P500 returned 4.91%, 15.79%, 5.49%, and -37%. That comes out to an average annual return of -5.2% over the last 4 years.

Heidi 1127 days ago

Hmm... you said nothing of your actual "system" other than picking 2-3 of your lowest stocks at the end of the year and selling them off. That doesn't seem like a good policy to me (why is it down, is the business still good, etc). To just pick the three lowest to sell - I don't see the value in that. Also, if you aren't surprised that we had a year like this then why on earth didn't you sell in 2007?

nbk75dq 1122 days ago

Selling off the 2-3 lowest stocks is not a normal part of my system. It is a "triage" rule to use when you do not have enough cash to rebalance all of your positions. My testing has shown that selling off the weakest stocks to be able to rebalance the stronger positions is better than leaving positions unbalanced.

But, again, these are rules for making the best of a rarely bad year. The normal course of action is to rebalance all of your positions (buying low, selling high).

When I said that I'm not surprised we had a year like this, I meant having a year where everything goes down so much - i.e. where I have to sell off the weakest positions to raise cash. As part of my extensive testing, I tested around the Great Depression, and my system held up.

I did not mean that I knew this year would be down. My system is powerful because it reacts to what is happening now - it does not depend on forecasting the future.

Obviously, if I could predict the future, I would not use my trading system. I would own the world ;-)

Want to leave a comment on this story? Login or join Tip'd to comment.

A community for financial news, ideas, and tips