While sitting idle over the weekend with family, my wife said “bore ho raha hai…kuch kam chahiye dimag ko” and one thought came up in my mind. Why don’t we invest ~ 1/2 hour time to create simple strategy for coming week and decide investment strategy!!
I have already been working on some strategies since 3 months post my retirement that can be used in investing in stock markets. So, I came up with new strategy that can be build over weekend by investing 30 minutes and spend 5 minutes on working days to buy & sell them.
The strategy uses a systematic, non-emotional and simple investing approach using stock strength momentum to help you run your investment portfolio successfully on Indian equity stocks by investing just 30 minutes on weekend.
The thought behind the strategy was the approach should be so simple that a person with no background of equity markets should be able to understand the concept and can identify winning stocks on their own without any hurdle.
I have decided to finalize one of the strategy that I use for my stock selection. So, first I have finalized a list of 100 stocks for screening on every weekend (anytime after Friday 5PM and before Monday Moring 9AM) on which this strategy can be applied.
Next decision was the focus on creating a strategy that should work for those who want to generate regular monthly income or if someone has long time horizon, then also it should help them in creating long term wealth.
The participants have to simply follow the strategy and create a portfolio in their own account. This approach ensures regular income along with wealth creation for you. One needs to devote precisely 30 minutes a week to their portfolio and stock screening every weekend. This portfolio will complement well with your other investments if any in Equity or PMS investments you have and help in monitoring them as well.
Due to the tactical allocation model, the system keeps you safe by shifting money to debt during times of deep distress or you don’t find any buying options with the above strategy (Which is very rare).
So here is the plan:
Two simple steps need to be followed:
- With the strategy, system determines the Entry price and stop loss that you need to monitor over the weekend and this will be your entry price for stock on Monday Morning.
- Every weekend you need to check the price and revise the stop loss and continue to hold the stock till it don’t breaks the stop loss (Book Profit / loss once stop loss is hit).
Here is the example of one of the stock for which we have followed the strategy:
Below is graph of Infosys for which system provided Entry point. Our weekend strategy has given a buy call on Dec 17, 2017 around Rs. 1000/-, on 27th Mar it is trading around 1160/- almost 16% returns in 3 months. Most important point to note is during this period market given minus 3 % returns.
Holding period can be as short as one week or it can go as long as 12 months. Stop loss may not hit for one year. But you can exit as per your strategy / need. If it is for long term, continue to hold till stop loss is not hit otherwise book partial profits to generate regular income.
After developing this simple strategy, we thought we will run this with few participants who don’t even understand what is stock market or equity and they have not heard of equities in the past.
Apart from my wife, during summer vacation (CBSE short summer vacation In March), I have explained this to my niece and sister in law. My Niece who is in her teen age was able to understand and trade couple of stocks in last 3 weeks and earned ~3K with very short capital under her mother’s guidance.
Then we have decided to back test this strategy. We have back tested most of the stocks from the 100 stocks we have identified. We have back tested the stocks for last 8 years and it has given average ~24% annualized returns. At the same time this strategy was profitable and generated positive returns on more than 70% trades, if we have followed system without fail.
Below is back tested entry and exit for Maruti Udyog stock, for last 6 years, it has given 300% returns
Happy Sunday Fun’d’ay
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