Investing

Trading idea- Based on Graham (TSX)

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  • Nov 18th, 2017 11:29 pm
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[OP]
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tribe1689 wrote:
Oct 18th, 2017 6:55 am
Rod,

Few final questions.

1) Is the $28/month the only price we have to pay (other than commission costs, obviously) or do we have to open other paid account(s) like someone mentioned above?
$28 / month is for growth models. Income models are cheaper. That's the subscription cost to receive the signals of what to buy and sell. The actual buy and sell is done by the user, hence the commission costs. Interactive Brokers has the best commissions, and it's a great brokerage, with excellent forex fees and rate for US models.
tribe1689 wrote: 2) Which one model would you recommend for total highest return. Would it be Value, Sentiment and Momentum (Canada)?
I recommend the model that is tailored to your goals and risk tolerance. Don't chase performance. Growth models, like Value, Sentiment and Momentum, are focused on capital appreciation, but they are also more volatile than income models. Also remember that a model cannot always outperform, since the models are only driven by these rules, while the market has other factors and a higher exposure to resources and financials.
tribe1689 wrote: 3) You mentioned you'll add info in the future on how we get notified on when/what to buy. In the mean-time, is it as simple as getting emails and then just making a sale/purchase? Or too complicated to give a quick answer?
Notifications are done via email and the holdings are also available once you login. The FAQ on the Trading strategies has the details on how you can be notified via SMS too. Correct, it's as simple as getting the info of what to buy and sell (like we do with this Graham model), and then you buy or sell accordingly. Some models are equally weighted while others are weighted according to other criteria, so you will also get the weight target, which should be followed accordingly. The weight represents the percentage of the amount that should be invested on that stock. It will also tell you if there is a percentage in cash.
tribe1689 wrote: 4) It sounds like Value, Sentiment and Momentum (Canada) you're doing about 4 total trades per week or so, based on the stats? So not too labour-intensive, I guess.
Correct. None of the models have a high turnover - all models were designed with this objective, since I too have a full time job and don't want to spend time with frequent trades.
tribe1689 wrote: I guess my savings are large enough that I can throw 10% in, and if the returns are what's stated, that 10% will quickly grow to be a lot higher. And quite frankly, I'm not sure what conventional ETFs, etc to invest in right now since everything seems to be peaking and there's not much that isn't at close to all-time highs.
Past returns do not warrant or predict future returns. Simulation (and live sample) shows period of underperformance at times, so give time to work it out in the long term. Hence the focus on the objective of the model, to have that aligned with the rules that the model looks for.


Rod
Everything about my Investing and automated Trading strategies to boost your income: https://boostyourincome.ca
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Oct 20, 2011
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Hi Rod..

What would be the minimum amount to start to make it worthwhile consider the trading fees referring to the growth model?
[OP]
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kimnhacle wrote:
Oct 19th, 2017 9:18 pm
Hi Rod..

What would be the minimum amount to start to make it worthwhile consider the trading fees referring to the growth model?
It depends on the commissions of your brokerage. If you trade with Virtual Brokers (1 cent / share) or IB (1 cent / share, minimum $1), then I'd say to have $1K on each holding. For the models with 7 holdings, start with $7K. For the models with 10 holdings, like this Graham model, start with $10K. These models don't trade that often, so you probably can stretch that by starting with less, like $5K, but I wouldn't go below that.


Rod
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Any ETA for release of the VIX model? Still fine-tuning or just waiting for a few more months of performance comparison?
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boyohboy wrote:
Oct 20th, 2017 9:25 am
Any ETA for release of the VIX model? Still fine-tuning or just waiting for a few more months of performance comparison?
Model is live, I just want more time for out-of-sample. The leveraging produced great abnormal results, so I want to evaluate that out-of-sample is following that. So far it is, but it just got started. I estimated to be available in the beginning of next year.


Rod
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West Fraser Timber with a strong Q3 earnings report. Adjusted EPS of 1.93 significantly higher than analyst's estimates
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SkimGuy wrote:
Oct 24th, 2017 9:34 am
West Fraser Timber with a strong Q3 earnings report. Adjusted EPS of 1.93 significantly higher than analyst's estimates
Hopefully the model will capture a good chunk of the gain this time, instead of repeating SIS. Will see...
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boyohboy wrote:
Oct 24th, 2017 9:40 am
Hopefully the model will capture a good chunk of the gain this time, instead of repeating SIS. Will see...
I think the valuation of WFT will increase in line with the model's overall ranking of the stock. The fundamentals are strong and I'm not sure if the technical indicators will be strong (i.e have a big enough weight) enough to overcome the other factors of the model to drag it below 80 (Currently sitting at 98.77) to trigger a sell. Maybe Rod could provide some insight? :P
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SkimGuy wrote:
Oct 24th, 2017 10:51 am
I think the valuation of WFT will increase in line with the model's overall ranking of the stock. The fundamentals are strong and I'm not sure if the technical indicators will be strong (i.e have a big enough weight) enough to overcome the other factors of the model to drag it below 80 (Currently sitting at 98.77) to trigger a sell. Maybe Rod could provide some insight? :P
Ranking has to drop below 80 to sell. That could be due to slower growth, lack of momentum, overvaluation or deterioration in quality metrics. Statistically speaking, we should have a profit by selling when the rank says so, but remember that this model doesn't have the same optimization and sophistication than Premium models do, so there might be cases (like SIS or BOS) that ended up selling for less than we want.

I will post the latest rank tonight, although no decision is taken place until Saturday.


Rod
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rodbarc wrote:
Oct 24th, 2017 3:18 pm
Ranking has to drop below 80 to sell. That could be due to slower growth, lack of momentum, overvaluation or deterioration in quality metrics. Statistically speaking, we should have a profit by selling when the rank says so, but remember that this model doesn't have the same optimization and sophistication than Premium models do, so there might be cases (like SIS or BOS) that ended up selling for less than we want.

I will post the latest rank tonight, although no decision is taken place until Saturday.


Rod
Agreed, what I was saying is that wft's fundamentals seem strong enough, especially indicated by the most recent earnings, to continue having a high ranking (higher than 80) which would not meet the model's requirement to sell. The other factors would not seem to deteriorate enough to trigger a sell.

It is a bit nerve-wrecking that we have such a gain and may see a repeat of what happened to sis, but as Rod said the model does not have the same sophistication to capture the outsized gains, but it is optimized enough to capture enough a premium to justify the risk.

Models works best when you allow it to run through the calculations and mechanically derive the buy/sell orders via rankings instead of using emotion to judge when to buy/sell, as it was programmed with these goals in mind.

I don't think you need to recalculate the rankings Rod. It wouldn't follow the model's parameters of weekly rebalancing for the sake one one holding's earnings report.
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Thanks, saw the update on the website.
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Oct 7, 2017
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I’m following this model.

Can somebody please shed some light if we should buy more quantity if the stock (e.g. GIL) sees a drop like this and consider it a buying opportunity?

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