Share strategies

Has anyone managed to develop a share investing strategy that consistently performs well over an extended period of time (at least six months) apart from the Navra method (which I personally think is extremely well developed and successful).

Do fellow InvestEd'ers (is that a real term?) use technical or fundamental analysis (or a combination)?

 

I've been paper trading Alan Hull's methodologies, or I least I was until I relocated country. While it looks good, and using the shorting methodoligies helps, I still haven't felt that I understand it well enough to start outlaying cash.

What I did learn though is that I am an emotional trader and I try to hard to fine tune a system that I don't understand yet. Even through paper trading I bent the rules to my detriment. That's been a good lesson in itself.

 

Of all the stand alone methods promoted commercially, Alan Hull's would be the one I'd be looking at. He describes his system in detail in his last book ( can't remember the name) and he has a subscription service providing recommendations.

It's a trend following system which also choses good fundamental sound companies.

There are several very dubious companies around and anything with sky or blue in the name be wary of.

If you want to look at something more individualistic, have a look at Tech Trader on Reefcap. John ( from adelaide ) , aka Tech /A , the guy who designed this system is well know to anyone who has frequented the good share forums in Australia over the last 7-8 years and is a die hard Technical analysis buff. He's spent many years trying to make money with short term systems, but turned to tech trader about two years ago , which is a fairly simple long term trend following system using the shares on the BT margin list ( his form of fundamental analysis ).

They've been trading this system on line for two years now with good results and there are quite a few people who are trading the system now.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=8;t=000409;p=1#000015

I've developed a system which is a combination of tech trader and the ideas of " Stevo " , another Reefcap poster which I started trading at the begining of last Dec ( not a good time to start a trend following system . ) On back testing it has periods of 6-12 months where it will go sideways or slightly backwards, but once it gets up to about 18-24 months it has been returning over 40 %.

If you do a Search on " Stevo" as the poster you will find Steves ideas and examples of his trades, though he has never disclosed the code to his system.

All of these systems are trend following systems of some variation and as such can be subject to quite high draw downs at time , certainly in the nature of 30 % in open equity with a big reversal so they're not for every one .

See Change

 

Thanks for your comments.

See Change: How much of your time does implementing your system take? A couple of hours a day, week or month?

Sounds as though the system could be very profitable. I hope it goes well for you. Please keep us informed of your ups and downs with the system.

 

My system is a weekly system and takes about 30 mins a week at max to organise on the weekend and a few mins on monday monring to watch orders . I deliberately went for a weekly system because I didn't want to have to look at the system every day.

It took much of my spare time over several months to design and back test the system , but alot of that time went in working out how to use the program I bought and that has a step learning curve. ( Amibroker - http://www.amibroker.com/ )

It could be very profitable... but it isn't so far .

There is a logical reason for this.

Around about 50 % of the trades are profitable , and the size of the profitable trades is larger than the size of the average loosing trade , however the Profitable trades tend to be longer term trades while the loosers tend to be shorter term.

As a result when starting there is a certain amount of churning as you get in and out of loosing trades, and the profitable trades take awhile to get established and move in to profit.

See Change

 

Yes!! Warren Buffet (the most successful investor in the world) developed a share investing strategy that consistently performs well over an extended period of time, though that extended period of time is usually around 5 years or more.

The strategy is called "buy and hold", and it works especially well when you buy companies that are selling for less than their intrinsic value.

For a good summary about what has worked well in investing over the long term, check out
http://www.tweedybrown.com/library_docs/papers/what_has_worked_all.pdf

 

Thankyou MichL. I am actually a big fan of Buffet's investment style. The pdf you mentioned is terrific - some great info there!

 

From my understanding of the Oracle of Omaha method, six months is a little short in the time scale component of things. There is also the $ scale factor to consider.

I've been "Portfolio-ing", not trading as such, for 4 years (since Aug 01), and generally use a half-assed version of the Navra method which stood me in good stead (22%pa or so) until I became ebullient (as opposed to irrationally exhuberent),neglected filters 1,3 & 4 (see http://www.navrainvest.com.au/index.asp?content=share_selection) and had a couple of holdings "die".

I'm also infatuated with small and mid caps, which have their wildly exaggerated ups and downs, and break the first tenet (i.e. Blue Chips).