Tools being used by your trading competition

[Quant]

Howard with your systems is there a specific group of companies that you concentrate on eg top 50 or 300 to generate your trades or do you also use maybe speculative companies that are included as well...?????

I am actually in the middle of building a daily TF algo to trade the top 50 . The top 50 is ideal as they meet all of Howards requirement ^^above^^ and have well structured Price Action that i believe will be condusive to a positive expectant outcome . Im looking at this to trade a SMSF and i anticipate returns double the average fund with minimal time in the market by comparison . Maybe someone should start a thread on this pursuit ... Great topic by Howard , lucky to have him here ...

 

[Triathlete]

I am actually in the middle of building a daily TF algo to trade the top 50 . The top 50 is ideal as they meet all of Howards requirement ^^above^^ and have well structured Price Action that i believe will be condusive to a positive expectant outcome . Im looking at this to trade a SMSF and i anticipate returns double the average fund with minimal time in the market by comparison . Maybe someone should start a thread on this pursuit ... Great topic by Howard , lucky to have him here ...

That sounds interesting Quant.

I have never really strayed outside the top 150 and as you have said the top 50 for a trader should provide more than enough action and with the added benefit of plenty of liquidity.

If you can keep the forum updated on your outcome it would be great..

Also agree that having Howard's insights on these topics is great.

 

[Newt]

I am actually in the middle of building a daily TF algo to trade the top 50 . The top 50 is ideal as they meet all of Howards requirement ^^above^^ and have well structured Price Action that i believe will be condusive to a positive expectant outcome . Im looking at this to trade a SMSF and i anticipate returns double the average fund with minimal time in the market by comparison . Maybe someone should start a thread on this pursuit ... Great topic by Howard , lucky to have him here ...

Yep, lots of us would be interested in updates, appropriate for what you're ok sharing of course. By daily, do you mean interday, or intra?

 

[Trembling Hand]

No need to worry. We can all just buy an ETF and be a quant now.....

http://www.quantxfunds.com/

 

[Quant]

No need to worry. We can all just buy an ETF and be a quant now.....

http://www.quantxfunds.com/

Dont worry i have considered using ETFs in SMSF , the geared ones have appeal for sure

 

[lftrader]

No need to worry. We can all just buy an ETF and be a quant now.....

http://www.quantxfunds.com/

Everyone will be Dalio soon.

 

[lftrader]

This is intriguing how we have come to this stage. It seems complexity doubles every 5-10 years. What is next?

http://www.priceactionlab.com/Blog/...short-equity-strategy-development-with-dlpal/

 

[ThingyMajiggy]

Hedge funds using vast amounts of data, computing power, and machine-learning techniques to make money are drawing investors’ attention. But their brief track records show they suffer the same shortcomings as their more traditional peers. The Eurekahedge AI Hedge Fund Index, which tracks 12 of these money pools, has outperformed hedge fund peers since 2013 but failed to beat the S&P 500 Index.

Source - https://www.bloomberg.com/news/arti...organic&utm_source=facebook&utm_medium=social

So I guess Buffet's advice of buying an index and sitting on it is still the way to go then.

 

[skc]

So I guess Buffet's advice of buying an index and sitting on it is still the way to go then.

FWIW... I think this advice will become problematic sooner or later.

It's not a bad idea when index investing represents only a small portion of total funds flow.
But when index investing turns mainstream, it takes on a different life form.Index investing is an investor conceding that he/she cannot pick the right stocks to beat the market... and implying that the other market participants can better pick the winners.

How does that work though when index investing goes mainstream? It means everyone is looking for someone else to be smart and sort out the "correct" relative weighting of the index. But who would that be? And those people won't have the size in FUM to counter the passive flows, so even if they are "correct" they can't win. f

Passive investing works up to a size, until it doesn't. I wonder when we'd get there (if not already).

 

[Smurf1976]

Largest market cap stocks go up, thus increasing their % share of investment via index funds, causing their price to go up further and the cycle repeats.

Looking at some of the biggest cap stocks in the US my personal opinion is that index investing is already a bubble. The higher those stocks go, the greater the share of the index they become and the greater the buying from the index funds. At some point, as with all bubbles, it won't end well.

 

[minwa]

But when index investing turns mainstream, it takes on a different life form.Index investing is an investor conceding that he/she cannot pick the right stocks to beat the market... and implying that the other market participants can better pick the winners.

I don't think that is possible with human nature. Most enter the market because they think they are better than the average. The group who enter the market with an already "defeated" attitude/believe and are willing to take index market average return minus fees will always be the minority.

 

[howardbandy]

Greetings --

I agree that Warren Buffett has been very successful with Berkshire-Hathaway. But I believe he should be characterized as the CEO of a diversified coglomerate rather than as an investor. He buys majority interests in companies in industries he understands well, then takes an active role in their management. He has stated that he expects to hold a very long time. In the financial crisis of 2008-2009, Berkshire stock dropped over 50%. Indeed, Wikipedia describes Bershire Hathaway as a conglomerate:
https://en.wikipedia.org/wiki/Berkshire_Hathaway

If I was plaaning to emulate his success in the future, I would:
... Have a long time horizon. Mr. Buffett began buying stock in Berkshire in 1962.
... Be well enough capitalized to be able to buy controlling interests in major companies.
... Have a staff of competent and experienced executives to manage those companies.
... Have the tail winds provided by an expanding economy, favorable monetary environment, and stable political environment.

Unfortunately, I can meet none of the first three or those criteria, and I have very little confidence in continuation of the fourth.

Trading an index, through a future or ETF, based on models developed using the scientific method is rational. Buying and holding an index without a validated model or set of rules is an act of faith.

Best, Howard

 

[ThingyMajiggy]

Trading an index, through a future or ETF, based on models developed using the scientific method is rational. Buying and holding an index without a validated model or set of rules is an act of faith.

Best, Howard

That's all well and good, but the "act of faith" is still out performing the AI/ML going by that chart.

 

[Gringotts Bank]

That's all well and good, but the "act of faith" is still out performing the AI/ML going by that chart.

It sure does. Faith moves mountains. Learn what that means. There's not a single method that will perform without a solid belief in same.

 

[howardbandy]

That's all well and good, but the "act of faith" is still out performing the AI/ML going by that chart.

Has done well in the past. Estimating risk and profit potential in the future requires a testable system and returns metrics that can be used for management.

As an alternative, consider James Simons' hedge fund:
http://fortune.com/2017/05/16/hedge-fund-james-simons-renaissance-technologies/

Best, Howard

 

[howardbandy]

It sure does. Faith moves mountains. Learn what that means. There's not a single method that will perform without a solid belief in same.

I have a solid belief in the scientific method. I hope that counts.

Best, Howard

 

[Gringotts Bank]

I have a solid belief in the scientific method. I hope that counts.

Best, Howard

If I said 'yes it counts', you might misinterpret me.

What I said in the previous post points to a deeper possibility - whether the individual mind interacts with what we commonly refer to as 'consensus reality'. There's piles of evidence to suggest it doesn't just interact, but in fact it creates reality. I don't just mean a soft, dream-like personal reality, but all the way up to the hardest consensus reality.

I am a scientist myself, and I still use it in my work, but I'm reformed to some degree. The scientific method has some very major weaknesses which rarely get mentioned, let alone discussed.

 

[Trembling Hand]

Astrology isn't science GB.

 

[minwa]

As an alternative, consider James Simons' hedge fund:
http://fortune.com/2017/05/16/hedge-fund-james-simons-renaissance-technologies/

Using one extreme outlier isn't really solid evidence. For example, I could pick a fundamentalist from the market wizards book that would blow out Simons's returns.

The stats show there is nothing market beating, on average, of employing AI/ML by those hedge funds.

 

[Value Hunter]

It is my opinion that market efficiency limits the use of fundamental information and that it is of near-zero value to individuals other than those with a seat in the boardroom and their best friends.

Howard there are plenty of forum members like myself, Craft, ROE, Value Collector, and too many others to name that are doing very well out of fundamental information thank you very much and would strongly disagree with your assertion. People like you who believe that fundamental information is of little value allow people like us to keep make out-sized profits.