Basic Strategy
-
Only hold stocks that part of the NASDAQ 100
index
This is the index of the 100
stocks on the NASDAQ that have the largest capitalization (i.e. number of
shares outstanding times the share price). In December of each year the NASDAQ
announces mutations in the index, i.e. which
stocks are added/deleted. This can also
happen throughout the year if a stock ticker
disappears (e.g. due to a merger such as in
the case of Oracle and PeopleSoft).
-
Only hold stocks that have buy signals for
less then 250 trading days
A stock has a buy signal if
its short-term and long-term trends are positive (i.e. have an upward trend).
This implies that
if I'm holding a stock and either
the short-term or long-term trend
turns negative then I will replace this
stock. Also, I do not hold a stock
if more than 250 trading days have passed
since the buy signal first occurred. Nothing
can go on forever and my simulations have
shown that in most cases you're better off
replacing a stock that meets this criterion
with another one.
-
Hold a maximum of 5 stocks and put 20% of
your capital in each stock
If fewer than 5 stocks have a
buy signal (i.e. they satisfy condition 1
and 2) then I keep the remaining portion of
my capital in cash (i.e. if only 2 stocks
out of the 100 have a buy signal then I
will have 60% of my capital in cash). If
more than 5 stocks have a buy signal then
I pick the 5 stocks that have the highest
“lossability” indicator (a proprietary one
that I have developed for ranking stocks).
-
Rebalance once a year
If the allocation among stocks is uneven then
I bring the allocation back in line with my target. In this case it
means that I sell shares of some stocks to buy shares of
others so that I have the same amount invested in each stock.
I only do this once a year. In my simulations I do this on
the first trading day of each calendar year.
Current Portfolio
Latest Simulated Results for this Strategy
Additional Strategies
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