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Investing/Strategies / Mechanical Investing
|Subject: Jordrok's MI portfolio, episode 1||Date: 3/24/2013 10:08 PM|
|Author: Jordrok||Number: 242442 of 256317|
For those who missed the pilot, it is here : http://boards.fool.com/im-going-to-try-this-mechanical-thing...
Although mungofitch suggested using the YldEarnYear screen, I went with... YldEarnYear2! Why? Well, I thought that if someone took the time to do a version 2.0, it must be an improvement, no? Ok, not always. So I checked results on backtest.org and it's almost a tie.
Problem #1 I faced with mechanical investing : all those screens on backtest.org and the infinite possibility of tweaking. What if I try this instead? Or that?
Then, I saw a post in which someone mentioned combining a YEY screen with PIH_CSO_simple. Again, back to backtest.org and that guy was onto something : putting those screens together gives surprising results.
I must confess I don't understand the PIH screen as well. But the backtests show strong and consistent results over more than 30 years. Not many monkeys could do that, right? Of course, I know that this doesn't guarantee that it will continue to do well...
Anyway, again moving just a little bit away from what was suggested, I chose to go with PIH_CSO_safe. So month 2 started with YldEarnYear2 combined with PIH_CSO_safe and hopefully, much of the tweaking is over.
The first month was positive... which means nothing. Except mentally: starting with a win just feels good. But backtesting shows that those screens pick winning stocks 63% of the time, so I'm ready for a negative month any time soon.
One element I have to consider more carefully now is commissions. When you invest with a long term outlook, a buy and a sell at $5 each allow you to make a $1,000 purchase and in the end, it costs only 1%. And 1% after, say, 3 years is almost nothing but a 1% price every month will just eat profits away. So I had to put a bigger portion of my portfolio in those picks earlier than originally planned.
So far, what I'm enjoying from this experience is that instead of having to look under many rocks to find good stocks for my extra cash, I just use the picks from the screens and I can do something else with my free time.
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