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My Investment Journey

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Bought SDI, 2850 @ $0.52

I've owned them on several occasions before, both in this portfolio and in my super.

Last time, I've bought them for $0.50 and sold for $0.615.

The price dropped back to my buy level, while sales and profits have since increased, although only by a few percent.

Their recent update says that profit will be down, however, on a pre-tax level, it is up on previous year. Sales are also up, and with more cash coming in, they are ramping up R&D again, which will pay off in the future.
 
Monthly update - portfolio lost $2004.63 (4%) for the last month and finished they year underperforming the benchmark by over 7%.

I would normally do an annual review at this point, but given that I've just changed my investment strategy, I won't this year.

 
Sold WTP, 2800 @ $0.805 for a profit of $431.10 (21.49%).

This was to free up funds for a purchase of ADA (1880 @ $0.80), a small company in a niche market that is predicted to grow strongly over the next few years.

The price has jumped considerably after a recent profit upgrade, but it is still trading well below fair value, in my opinion.
 
Great thread, read it from start to finish.

I would just put "If the business makes more money because of that" onto every reason given to buy a stock.
 
Monthly update - portfolio lost 1.07%, but pleasingly, keeps gaining ground on the indexes this year.

 
Nice and resourceful!
Any commentary on investing in commodities market please.
 
Sold COF, 3873 @ $0.405, for a profit of $308.04 (25.7%).

A takeover received at a premium of 236% to last trading price, a nice surprise for me in the morning.

At this price, I don't think there's much of a chance of a bigger offer and the price is close enough to the offer to sell and not risk the deal not going ahead.

Previously, I sold most of my value stocks, changing strategy to small growth stocks. I am glad I kept this one.
 
Monthly update - portfolio has gained $4,175.01 (8.4%) for the month.

I've realised that I forgot to record my second TCN purchase, which is now corrected. Price hasn't moved much since I bought it, so the effect on prior periods is insignificant.

 
Great thread!

Without wanting to sound too negative I see you making many of the mistakes that I once made

Here are some questions that I would like to ask:
  • Have you tried quantifying value or growth?
  • Could you tell me which one has performed better historically?
  • Are stocks mean reverting or trending?
  • Are there any sector patterns/trends?
  • If a strategy does not work as planned what makes you think that switching will do better?
I fell into similar sorts of traps where I would switch systems/styles too soon. My lack of consistency only went away once I had developed confidence in my methods.

I guess my takeaway is that we all go through similar stages in our investment journey (sounds cheesy i know!).

Why not take a step back and come up a clear definable framework for investing? You have said you want to target small, growth, quality stocks with a reasonable valuation but you have also admitted not to having a mechanism to determine entry's and exits. Whether you want to be discretionary, systematic a stronger set of rules will always come in handy.

p.s hope you stick to small caps as that's where the best opportunities are!
 
ThirtysixD said:
Great thread!

Thanks ThirtySixD!
Click to expand...


ThirtysixD said:
Here are some questions that I would like to ask:
  • Have you tried quantifying value or growth?
  • Could you tell me which one has performed better historically?
Click to expand...


  • There's been a large number of studies done on both with various definitions of each. Most point to value outperforming and growth underperforming.

    In the last decade, combining value and quality factors produced good results.

    My approach if growth and quality plus a little bit of value, a less researched combination. I do very much focus on small caps - my universe is ordered by market cap and I buy the top 25, roughly speaking.

    ThirtysixD said:
    [*]Are stocks mean reverting or trending?
    Click to expand...

    Prices or financials? Financial performance of the company is mean reverting, as a broad average, but it isn't terribly useful on a small subset of stocks.

    ThirtysixD said:
    [*]Are there any sector patterns/trends?
    Click to expand...

    Don't know, I try to diversify over many sectors as a rule, but I don't time specific ones. Obviously, there are cyclical industries.


    Some excellent points, ThirtySixD, thanks for that.

    The switch to the new systematic strategy, I still think was a good one and for the right reasons. It was about a better strategy, not because of a poor result from the old one. Although, no doubt, it is much easier, psychologically, to switch to something different when the performance is poor.

    The one thing I've started doing since the switch, however, is to establish firm boundaries of what an acceptable range of results is for my strategy. I've used a five year backtest result as a base and I track it on a monthly basis. A 5 year backtest had:

    Average monthly outperformance: 2.51%
    Hit rate: 69.49%
    Max consecutive losing months: 3
    Biggest monthly relative loss: -8.28%

    And here are my results for the new strategy, which now comprises most of my portfolio. Without dividends, compared against XAO.



    Doing very nicely so far, up 16.79% on XAO. As luck would have it, the month that I switched was by far the worst and almost at the limit of acceptable boundaries! It sure didn't look like a great decision then.

    I agree, it was important for me to quantify when I should start questioning my strategy.

    Regarding entries/exits, I am not sure where you got the impression that I don't have a mechanism for identifying those. I buy/sell on very specific fundamental measure that my software generates, with very rare manual intervention.

    ThirtysixD said:
    p.s hope you stick to small caps as that's where the best opportunities are!
    Click to expand...

    That's the plan.
 
Whats the entry and exit trigger? I read 20 or so pages in one sitting so may have missed something.

I got the impression that it was still fairly loose.

Prices or financials? Financial performance of the company is mean reverting, as a broad average, but it isn't terribly useful on a small subset of stocks
Click to expand...

Price mainly but fundamentals are relevant too.

Don't know, I try to diversify over many sectors as a rule, but I don't time specific ones. Obviously, there are cyclical industries.
Click to expand...

I say this because I know that all of your tech stocks have done well recently, but most of your past losses were from mining services. You can definitely sneak in some extra alpha by coming up with creative ways to balance your portfolio in terms of sectors
 
Just stumbled onto this thread. Great work KTP. Looks like a quality thread/journal that you have going here. Will continue to follow with interest.
 
ThirtysixD said:
Whats the entry and exit trigger? I read 20 or so pages in one sitting so may have missed something.

I got the impression that it was still fairly loose.
Click to expand...

No, very rigid in fact. I don't disclose exactly what they are, but the vibe of it is - small, quality growth, some value.

ThirtysixD said:
Price mainly but fundamentals are relevant too.
Click to expand...

Price action is not my thing, I don't pay any attention to it. I haven't yet seen anything that convinces me it has strong predictive qualities.


Definitely worth thinking about it, although it will take my strategy a little away from its automated direction. I've had thoughts of running more then one automated strategy, with capital allocation based around economical cycles and past performance. A similar model could be applied across multiple sectors. Is this what you mean?
 
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