Investing

Trading idea- Based on Graham (TSX)

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  • Aug 19th, 2017 10:36 pm
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Sold ET for ~$70 gain... profit is profit, can't complain however small it is :)
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SIS earning tomorrow... hopefully will turn the ship around.
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March 13, 2017 signal:

SELL: GIL, WPK

The model will be 80% invested and 20% in cash after today's rebalance.


Rod
Last edited by rodbarc on Mar 13th, 2017 7:12 am, edited 1 time in total.
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rodbarc wrote:
Mar 13th, 2017 7:12 am
March 20, 2017 signal:

SELL: GIL, WPK

The model will be 80% invested and 20% in cash after today's rebalance.


Rod
Do you mean March 13th, or are you clairvoyant? Smiling Face With Open Mouth And Smiling Eyes
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SkimGuy wrote:
Mar 13th, 2017 11:09 am
Do you mean March 13th, or are you clairvoyant? Smiling Face With Open Mouth And Smiling Eyes
Yes, March 13. Next rebalance is on the 20.


Rod
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SkimGuy wrote:
Mar 13th, 2017 11:09 am
Do you mean March 13th, or are you clairvoyant? Smiling Face With Open Mouth And Smiling Eyes
I think he meant March 11nd.
:confused:
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iEyeCaptain wrote:
Mar 17th, 2017 3:27 pm
I think he meant March 11nd.
No, March 13 because the model uses the latest fundamentals which are loaded daily - from Monday when it rebalances. Hence, next one is on March 20.


Rod
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Performance stats updated on first post.

Rod
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XIC/XIU returned ~2.60% from Feb 27th, 2015 - March 13th, 2017 but your model claims that the benchmark return is ~1.9% vs 7.4% for your portfolio. There are two questions that come to mind:

1) Why the discrepency between the returns? XIC returns are after fees and it is still higher than your "benchmark".
2) Why are you not including dividends in benchmark returns? XIC pays ~2.5% dividends per year but you are ignoring that in your calculations?

Image

Quite frankly, the 7.xx% annualised return you have received after going through all this trouble is the same as couch potato portfolio has achieved with half the amount of risk and 15 minutes worth of work in a year.
Illegitimi non carborundum
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ksgill wrote:
Mar 19th, 2017 10:13 am
XIC/XIU returned ~2.60% from Feb 27th, 2015 - March 13th, 2017 but your model claims that the benchmark return is ~1.9% vs 7.4% for your portfolio. There are two questions that come to mind:

1) Why the discrepency between the returns? XIC returns are after fees and it is still higher than your "benchmark".
2) Why are you not including dividends in benchmark returns? XIC pays ~2.5% dividends per year but you are ignoring that in your calculations?

Image

Quite frankly, the 7.xx% annualised return you have received after going through all this trouble is the same as couch potato portfolio has achieved with half the amount of risk and 15 minutes worth of work in a year.
Some misconceptions here, so let's clarify them.

First, as per the graph on my models, the benchmark is S&P/TSX Composite Index, which is not the same as XIC or XIU because the index doesn't pay dividends. I can't build a benchmark with ETFs, otherwise I would have. it's not my benchmark, it's what portfolio123 provides. It's to give an idea when compared to an index, not an ETF replicating an index. Nevertheless, performance is close.

Second, the model`s annualized return, which is almost triple than XIC / XIU, takes very little effort, as it rebalances infrequently and one just needs to check what buy / sell once a week. This model is not optimized (that`s my worst performing model, and yet it has beat the index since inception), this is more of a screener of active investing following rules from Graham. The other trading models that I have did much better, with annualized returns between 10% to 30% during the same period (which will be published soon and available to be followed).

There`s nothing wrong with Couch Potato. Many are fine with that, and if it fits their goals and risk tolerance, that`s perfectly fine. But anyone can do better than that with very little work by simply reading what to buy or sell, based on someone that did the hard work once and now have a platform to keep running it for us. That`s what this model is about and what the upcoming models are about too. Anyone can learn how to do that as well. For those that don`t want the time, they can simply follow the signals, knowing that isn`t based on luck or instinct.

Indexing has 3 issues that explains the lower performance:

1. No control on quality of holdings - you need to buy the whole market, which includes companies losing money. Not every company carries the same risk or meets the same goals, and yet, when you index, you buy them all.

2. No control on valuation. You must pay market price for all holdings, including paying more than you should for the ones that are overvalued, dragging returns eventually.

3. MER on ETFs drag returns further.

“If you want to have a better performance than the crowd, you must do things differently from the crowd.” – John Templeton. And with quant investing, once a model is implemented, that`s very little work. Quant investing not only mitigates these issues above, but also takes emotion out of the equation, since rules are always executed in a consistent way.


Rod
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rodbarc wrote:
Mar 19th, 2017 1:25 pm
Some misconceptions here, so let's clarify them.
...
3. MER on ETFs drag returns further.
This is what I'm personally struggling with. Say we're adding ~20K to our non-reg account per year in a few tranches. I can buy 3-4 stocks and pay $5 in commissions for each - or buy HXT for free (we're with Questrade) and pay $6 per 20K, or $14 after the rebate is over:

0.07% REBATED BY 0.04% TO AN EFFECTIVE MANAGEMENT FEE OF 0.03%, UNTIL AT LEAST SEPTEMBER 30, 2017 (PLUS APPLICABLE SALES TAX)

Or, with a bit more work to track RoC, buy XIC or ZCN with 0.06% MER...

Sorry, wrong thread, as I'm talking about building a longer-term buy and hold portfolio, not trading following the model (where trading fees vs MERs would be even higher though..)

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