Author Topic: DIY growth stocks picking  (Read 10226 times)

jeroly

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Re: DIY mini growth fund
« Reply #100 on: January 31, 2020, 08:37:45 AM »
This is a really unfriendly place for non-believers in the index uber alles religion here.
When Copernicus demonstrated evidence that the Earth orbits the sun, the religion of the time rejected information because it was new.  Religion keeps it's faith, and rejects new evidence, where science incorporates evidence.

Historical data from many sources show indexing beats active approaches.  People who reject factual information seem more superstitious to me than the historical record on which passive indexing is based.

The only flaw in index investing is there is no good way to project what it will do. Using the past to assume the future is a fallacy. Investors typically learn the fundamentals of a business and circumstances of its local market to make a projection of the return on investment. No one on Earth can possibly make a reasonable projection of a total market.
History has shown that there's far less basis to project what an individual stock will do.
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Assuming 5-10% average for all time is faith.
No faith need be involved in making a projection. You can rely on mathematical modeling.  From your statement quoted above, it seems that you think that some other expected return would be a better assumption.  What do you think it should be, and why?
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The OP showed no reasonable to way project what the future of the holdings would return. For someone who quoted Charlie Munger and Warren Buffett frequently, it's amazing what the OP ended up concluding would be a successful style.
 
Agreed.

lemonlyman

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Re: DIY mini growth fund
« Reply #101 on: January 31, 2020, 09:28:09 AM »

No faith need be involved in making a projection. You can rely on mathematical modeling.  From your statement quoted above, it seems that you think that some other expected return would be a better assumption.  What do you think it should be, and why?


I don't know what it should be. There's too many variables in a total market to make a projection. You know you'll get average results. I meant it's impossible to reasonably determine what those results will be. Saying the total market will go up 7% on average in the future because it always has in the past is not a projection. Lots of investors in the Nikkei index have learned that over the last 30 years. Modeling an investment return based on a business's upcoming products or entering a new geographic location is projection, for example.

ysette9

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Re: DIY growth stocks picking
« Reply #102 on: January 31, 2020, 10:40:56 AM »
Look, Iíll go on the record here and say that I am sure that none of us can see into the future. No one knows how the stock market indices or individual stocks will do in the future. All we have to go on is historical data. So 100+ years or so of stock market days will not predict the future but it is a reasonable place to start for modeling what could happen in the future. We can look at best and worst and average performance and make some reasonable assumptions going forward.

You canít really do that with individual stocks. Most stocks havenít been around for 100+ years so your date is less meaningful. Most stocks swing wildly over the course of their entire existence, so looking at worst and best and average case performance will give you such spectacular standard deviations as to make the date meaningless. You can look at business fundamentals and market trends and all of that, and people do try to make educated guesses there. However that isnít any better than making educated guesses about where the US economy will go in the future by analyzing various fundamentals and market reports what whatnot.

With a stock you need to guess well and be lucky because you can lose 100% of your money. With a stock market index there not a guarantee of never losing everything (assuming buy and hold), but the events that would require the entire economy and stock market to be wiped out would be so catastrophic you would likely be too dead to care one way or the other.

Davnasty

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Re: DIY mini growth fund
« Reply #103 on: January 31, 2020, 10:55:33 AM »

No faith need be involved in making a projection. You can rely on mathematical modeling.  From your statement quoted above, it seems that you think that some other expected return would be a better assumption.  What do you think it should be, and why?


I don't know what it should be. There's too many variables in a total market to make a projection. You know you'll get average results. I meant it's impossible to reasonably determine what those results will be. Saying the total market will go up 7% on average in the future because it always has in the past is not a projection. Lots of investors in the Nikkei index have learned that over the last 30 years. Modeling an investment return based on a business's upcoming products or entering a new geographic location is projection, for example.

Perhaps this is just semantics, but basing future expectations on past results in still a projection. It's not a certainty and sometimes people talk like it is, but it is a projection based on data.

GreenEggs

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Re: DIY growth stocks picking
« Reply #104 on: January 31, 2020, 11:20:20 AM »
"[size=0px]With a stock you need to guess well and be lucky because you can lose 100% of your money."[/size]


From what I've been reading you're supposed to limit your risk by using a stop loss that closes out your position when the share price goes the wrong direction too far.  You calculate the number of shares to purchase & the distance to place your stop loss according to the size of your portfolio and the percentage that you are willing to risk losing.  The amount that you're willing to risk should be between 0.5 to 2%, depending on your risk tolerance and the size of your portfolio.  The larger your portfolio the less you should risk.


The explanation that I read last night was that you need keep your losses small by getting out of losing positions early by using a stop loss, and let your winners grow by increasing your position in them as they go up.  (It also mentioned using options as a way to limit your risk when increasing your position in winning stocks.  But, I need to reread that to be sure I understand how to do it.)


Here's the link to the main page of what I read.  [size=78%]https://www.chartmill.com/documentation/stock-screener/127-General-Trading-Tips-&-FAQ[/size]  It all seemed to make sense to me, but I'm happy to hear any criticism anyone has about it. 

PaulMaxime

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Re: DIY growth stocks picking
« Reply #105 on: January 31, 2020, 11:41:56 AM »
"[size=0px]With a stock you need to guess well and be lucky because you can lose 100% of your money."[/size]


From what I've been reading you're supposed to limit your risk by using a stop loss that closes out your position when the share price goes the wrong direction too far.  You calculate the number of shares to purchase & the distance to place your stop loss according to the size of your portfolio and the percentage that you are willing to risk losing.  The amount that you're willing to risk should be between 0.5 to 2%, depending on your risk tolerance and the size of your portfolio.  The larger your portfolio the less you should risk.


This is all terrible advice. Stop losses are terrible ideas. it's really easy for a temporary blip to sell you out of a position when you wouldn't want to.

People generally focus too much on losses. I have a few stocks that have gone down substantially. I may eventually sell them but only if I think the business is also not doing well. As a stock goes down in price it becomes less and less important.

The winners on the other hand tend to keep winning. And I don't believe in trimming winners either. I have one stock that's up over 100X the amount I paid. That makes up for a lot of positions going to zero (though I've never had a zero)

The right thing to do is hold on to good businesses for the long term. Recognize that a relatively small percentage of those will provide the bulk of your returns, and the losers become less important over time. Add to your winners and don't sweat the losers.

This is one of the reasons that mutual funds underperform. They can't allow their portfolios to become "unbalanced" where "unbalanced" is how you make your money.

Oh, and as my portfolio continues to grow, I feel the freedom to take more risk, rather than less. So that's not true either, necessarily.

ysette9

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Re: DIY growth stocks picking
« Reply #106 on: January 31, 2020, 11:41:57 AM »
That would prevent you from losing everything. However it is also a great way to ensure you lose out on the upside of market volatility. How do you know after a 35% drop whether the stock is headed to zero or will bounce back like a post-2008 mage rally that is still going on today? You donít, which is why buy and hold index investing is the winning answer for almost all people in almost all cases.

lemonlyman

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Re: DIY growth stocks picking
« Reply #107 on: January 31, 2020, 11:51:08 AM »
Look, Iíll go on the record here and say that I am sure that none of us can see into the future. No one knows how the stock market indices or individual stocks will do in the future. All we have to go on is historical data. So 100+ years or so of stock market days will not predict the future but it is a reasonable place to start for modeling what could happen in the future. We can look at best and worst and average performance and make some reasonable assumptions going forward.

I disagree that making a model for a company is similar to making a model for the US economy. Anecdotally, I know much more about the future of the company I'm CFO for than is possible for one person to know about the entire US economy. I agree stock prices vary for all sorts of reasons, but when you study a company within your circle of competence, valuations make sense based on the activity of the business over time. The more macro your vision, adding in more and more companies and markets, the harder that is. People seem to believe that only the best investors like Warren Buffett can pick stocks. The 2nd chair of the Columbus Symphony makes a living as a cellist even though they aren't Yo-Yo Ma. I'm not a trader. I invest in a few companies and that's worked very well for me.

Perhaps this is just semantics, but basing future expectations on past results in still a projection. It's not a certainty and sometimes people talk like it is, but it is a projection based on data.

Fair!

jeroly

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Re: DIY growth stocks picking
« Reply #108 on: January 31, 2020, 12:10:00 PM »
"[size=0px]With a stock you need to guess well and be lucky because you can lose 100% of your money."[/size]


From what I've been reading you're supposed to limit your risk by using a stop loss that closes out your position when the share price goes the wrong direction too far.  You calculate the number of shares to purchase & the distance to place your stop loss according to the size of your portfolio and the percentage that you are willing to risk losing.  The amount that you're willing to risk should be between 0.5 to 2%, depending on your risk tolerance and the size of your portfolio.  The larger your portfolio the less you should risk.


The explanation that I read last night was that you need keep your losses small by getting out of losing positions early by using a stop loss, and let your winners grow by increasing your position in them as they go up.  (It also mentioned using options as a way to limit your risk when increasing your position in winning stocks.  But, I need to reread that to be sure I understand how to do it.)


Here's the link to the main page of what I read.  [size=78%]https://www.chartmill.com/documentation/stock-screener/127-General-Trading-Tips-&-FAQ[/size]  It all seemed to make sense to me, but I'm happy to hear any criticism anyone has about it.

You have completely missed the point.

Yes, you can use limit orders to reduce your risk on individual stocks.  However, you have no protection via a limit order if a company goes bankrupt between the close of trading and the start.  This is known to have happened.  Even if you can sell your shares for pennies on the dollar, you will lose way beyond your limit price.  In the event of a dramatic news development (e.g. the designer for an eponymous fashion house dies), a stock price can also plummet quickly below your limit price so that your sell order at 100 per share winds up being executed at say 40.

As pointed out above, you also have the problem of where you then invest your money after your limit order is executed, and if you keep it out of the market how you decide when to get back in.

Big picture:  some stocks will do better than the market and some will do worse.
 
You can gamble (even though the market goes up on average, any stock purchase is a gamble (i.e. not a sure thing, i.e. a probability-based chance at gain)) that an individual stock, or a portfolio of individual stocks, goes up faster than the market on average.  You can, alternatively, buy in to the market average via a total market index fund. 

If you choose individual stocks, in order to outperform the market you need to overcome your trading costs (there is a spread between the bid price and the ask price, so you are paying above or selling below the true market price, plus you have SEC charges and broker fees), plus you lose some deferrment of taxation (eg. realizing capital gains on execution of a limit order).  So on average you will do worse than index funds unless you are a better trader than the average trader in the universe of traders that includes traders for hedge funds, mutual funds, and brokerage houses trading their own accounts, with all their expertise and technology (including high-velocity trading stations to allow for exploitation of small price differences across securities). 

As comments from @PaulMaxime make clear, you also run into the problem of what to do with your winners.  There's a strong temptation amongst bettors (oops, sorry, stock traders) to 'let it ride' and not sell any of a winning stock.  When that stock is Apple, well that's great and you get a huge payoff (assuming that you do eventually sell before a collapse in the company)... but taking that approach greatly increases your risk profile through under-diversification.  Suppose that stock had been Enron.  In contrast, with a portfolio of stock and bond index funds and an investment policy statement, you would likely have a regularized process where winners in your asset allocation (e.g. US domestic stocks) would get sold (i.e., 'sell high') and losers (e.g. international stocks) would get new allocations (i.e. 'buy low').


I disagree that making a model for a company is similar to making a model for the US economy. Anecdotally, I know much more about the future of the company I'm CFO for than is possible for one person to know about the entire US economy.
Did somebody say 'insider trading?'
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I invest in a few companies and that's worked very well for me.

Have you outperformed the overall market on a risk-adjusted basis?


lemonlyman

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Re: DIY growth stocks picking
« Reply #109 on: January 31, 2020, 12:19:49 PM »

Did somebody say 'insider trading?'



*Eye roll*

MustacheAndaHalf

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Re: DIY mini growth fund
« Reply #110 on: February 02, 2020, 07:01:23 AM »
This is a really unfriendly place for non-believers in the index uber alles religion here.
When Copernicus demonstrated evidence that the Earth orbits the sun, the religion of the time rejected information because it was new.  Religion keeps it's faith, and rejects new evidence, where science incorporates evidence.

Historical data from many sources show indexing beats active approaches.  People who reject factual information seem more superstitious to me than the historical record on which passive indexing is based.

The only flaw in index investing is there is no good way to project what it will do. Using the past to assume the future is a fallacy. Investors typically learn the fundamentals of a business and circumstances of its local market to make a projection of the return on investment. No one on Earth can possibly make a reasonable projection of a total market. Assuming 5-10% average for all time is faith. The OP showed no reasonable to way project what the future of the holdings would return. For someone who quoted Charlie Munger and Warren Buffett frequently, it's amazing what the OP ended up concluding would be a successful style.
For the past 15 years, the S&P 1500 has beat 88% of active funds.
https://www.ifa.com/articles/spiva_-year_2019_active_passive_scorecard/

You don't need to predict the exact return, you just need to know that passive investing beats active investing over various time periods, in various markets.  Something I've noticed when people call passive indexing a "religion" is that I can present evidence supporting my claims.  But when I ask for the same... the conversation gets a bit quiet.

PaulMaxime

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Re: DIY mini growth fund
« Reply #111 on: February 02, 2020, 01:05:07 PM »
This is a really unfriendly place for non-believers in the index uber alles religion here.
When Copernicus demonstrated evidence that the Earth orbits the sun, the religion of the time rejected information because it was new.  Religion keeps it's faith, and rejects new evidence, where science incorporates evidence.

Historical data from many sources show indexing beats active approaches.  People who reject factual information seem more superstitious to me than the historical record on which passive indexing is based.

The only flaw in index investing is there is no good way to project what it will do. Using the past to assume the future is a fallacy. Investors typically learn the fundamentals of a business and circumstances of its local market to make a projection of the return on investment. No one on Earth can possibly make a reasonable projection of a total market. Assuming 5-10% average for all time is faith. The OP showed no reasonable to way project what the future of the holdings would return. For someone who quoted Charlie Munger and Warren Buffett frequently, it's amazing what the OP ended up concluding would be a successful style.
For the past 15 years, the S&P 1500 has beat 88% of active funds.
https://www.ifa.com/articles/spiva_-year_2019_active_passive_scorecard/

You don't need to predict the exact return, you just need to know that passive investing beats active investing over various time periods, in various markets.  Something I've noticed when people call passive indexing a "religion" is that I can present evidence supporting my claims.  But when I ask for the same... the conversation gets a bit quiet.

Statistically your statement is 100% obvious. The market in aggregate will return to an investor the average return minus the fees paid. It's obvious. It's really not even an interesting question to ask. It's like saying that the average temperature on Earth is 20 degrees C or we average 12 hours of daylight each day. It doesn't really tell us anything interesting.

A more interesting and actionable question is: why do investors underperform and how can we modify those behaviors in ourselves so that we can outperform?

Mutual fund investing and individual stock investing are not the same thing. The professional mutual fund manager has a lot things working to their  disadvantage including a short term focus, not being able to let winners run, being forced to buy and sell based on the behavior of their investors, not wanting to appear too different from their peers, etc.

Here's an interesting article on the topic: https://www.nasdaq.com/articles/i-know-why-mutual-funds-fail-perform-2017-06-19

So individuals actually have a lot of advantages. I don't have investors getting on my case if I underperform for a quarter or a year, I only have to buy my best ideas, etc.

So it's purely anecdotal, but tracking rigorously against the S&P 500 total return index (including reinvested dividends) I've managed to outperform the index by about 7% per year since 2007 (I don't have records before then). There are communities where people that do this sort of thing gather and I'm not the best one by far.

Given cash flows and such (I've added a lot of cash to my investments in recent years) I have 57% more money in my accounts because of this.

Now, sure I'm taking a chance that I'm going to underperform. Sure. But if I do I can always just go and buy me VTI and forget about it. I think the real risk here is not that so much as I'll spend the time and just end up matching the market. But so far evidence is that I am able to outperform. The effort is not that great. I tend to buy and sell something at most once every couple months, maybe not even that often. As I get more cash I tend to add to the holdings I already have and know. So it's not time consuming and stressful at all. In fact it's really fun to learn about different businesses.

I firmly believe that it's possible for many more people to succeed in this. If you are happy with average and not putting in any effort, that's fine with me but it's been worth it in my case.


waltworks

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Re: DIY growth stocks picking
« Reply #112 on: February 02, 2020, 03:49:59 PM »
Your math doesn't make sense - if you're up by 7% per year vs the S&P, you'd be 100% ahead in just 10 years (roughly), not counting some tax and fee drag. You say you've also been adding money to the accounts in that time... which would mean you'd have MUCH more than 57% more money in your account vs a passive S&P500 index over the last 13 years.

Put another way, $10,000 invested in a generic S&P 500 index fund in January 2007 would be worth $30,000 today (a 200% increase, or about 8.8% per year). If you are up 57% over that ($47,100) that's around 12.5% annual, so a bit less than 4% better returns - assuming you didn't contribute any new money in that time.

While I think it's possible you killed the S&P over the last 13 years, I think it's more likely you aren't tracking this properly.

-W
« Last Edit: February 02, 2020, 03:58:39 PM by waltworks »

PaulMaxime

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Re: DIY growth stocks picking
« Reply #113 on: February 02, 2020, 04:08:23 PM »
Your math doesn't make sense - if you're up by 7% per year vs the S&P, you'd be 100% ahead in just 10 years (roughly), not counting some tax and fee drag. You say you've also been adding money to the accounts in that time... which would mean you'd have MUCH more than 57% more money in your account vs a passive S&P500 index over the last 13 years.

-W

So in 2017, say I added 20% of my total to my accounts, that money hasn't been earning for that long. I track as if I added that cash to both my stock investments and to an S&P 500 index fund. I also assume that cash flows out come equally  from both, like when I took $300K to buy our house, it came out of "both" accounts, conceptually

There's a difference between time weighted return which ignores cash flows and actual account growth.

For example, last year my "return" was 34.49% (market 31.49%) but my account balance grew by 43.09% because of a large cash infusion. Adding cash reduces the balance outperformance because that chunk of cash is starting at 0 return. The portfolio was much smaller back in 2007.

This year so far, I'm up (TWR) 10.97% and the market is -0.04% I've taken some money out so my S&P balance is down by -0.92% and my actual balance is up 10.77%

The bit of the spreadsheet I added shows the difference between the TWR and portfolio growth while hiding the actual dollar values.
« Last Edit: February 02, 2020, 04:10:23 PM by PaulMaxime »

waltworks

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Re: DIY growth stocks picking
« Reply #114 on: February 02, 2020, 04:13:32 PM »
Um, ok. Your own numbers (57% more money than the S&P) still make no sense in this context. No need to get too fancy, if you have 57% more money actively trading (setting aside any cash inputs), that's a bit under 4% better annual return than the S&P, not 7%.

-W

PaulMaxime

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Re: DIY growth stocks picking
« Reply #115 on: February 02, 2020, 07:46:30 PM »
Um, ok. Your own numbers (57% more money than the S&P) still make no sense in this context. No need to get too fancy, if you have 57% more money actively trading (setting aside any cash inputs), that's a bit under 4% better annual return than the S&P, not 7%.

-W

Well I hate to say it but you are wrong.

Depends on if you are looking at IRR or TWR. TWR removes cash flows and is what is used to compare performance apples to apples. If I had all the money up front the difference would be much greater. Later cash flows don't get the full benefit of all 12-13 years of growth.

But even if I give you the 4%, 57% more cash is nothing to sneeze at.



waltworks

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Re: DIY growth stocks picking
« Reply #116 on: February 02, 2020, 08:21:16 PM »
LOL. Look at YOUR OWN CHART. Your cumulative gains are 500%! That's quite a bit better than even you are claiming here...

Keep on trucking/convincing yourself that you're winning. I have seen plenty of people mess around with math until they get the result they want...

Seriously, good luck. If you can beat the market, great. We see that claim regularly. If you want to really convince people (Thorstach, is this you?) you can post your current holdings and moves as they happen for a few years so we can follow along. Otherwise, you're just another random anonymous person (just like the OP) who claims to kill it.

-W
« Last Edit: February 02, 2020, 08:37:19 PM by waltworks »

MustacheAndaHalf

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Re: DIY growth stocks picking
« Reply #117 on: February 03, 2020, 02:51:08 AM »
@PaulMaxime - I agree AUM encourages bad behavior - it's probably the big motivation for closet indexing (an active fund with a surprisingly high correlation to the S&P 500).  But I don't see evidence of stock picking beating passive indexing in that article.  There's also another factor: one book I read cited a study where the most concentrated active funds performed better.  Meaning a fund manager with 5-10 holdings tends to beat fund managers with 50+ holdings.

I think it's a good sign you both posted spreadsheet data, and are open to explaining it.

Are you willing to start a new spreadsheet - a new experiment here in the forum?  Whenever you buy a stock, you could then announce what you bought in the forum.  And then never edit that post again (since an edit shows up in the modification time, and suggests past data can't be trusted).  You can setup a new spreadsheet with the new stocks, and track their performance, and how the S&P 500 did over the same time period.

lemonlyman

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Re: DIY growth stocks picking
« Reply #118 on: February 03, 2020, 07:37:10 AM »
Are you willing to start a new spreadsheet - a new experiment here in the forum?  Whenever you buy a stock, you could then announce what you bought in the forum.  And then never edit that post again (since an edit shows up in the modification time, and suggests past data can't be trusted).  You can setup a new spreadsheet with the new stocks, and track their performance, and how the S&P 500 did over the same time period.

If he did that and beat the S&P 500 over a sustained period of time, would that convince you it's possible or that PaulMaxime is just really lucky?

index

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Re: DIY growth stocks picking
« Reply #119 on: February 03, 2020, 07:39:27 AM »
I would venture to guess he is already down as his posting seems to have dried up when the market had a few bad days.

MustacheAndaHalf

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Re: DIY growth stocks picking
« Reply #120 on: February 03, 2020, 10:06:07 AM »
Are you willing to start a new spreadsheet - a new experiment here in the forum?  Whenever you buy a stock, you could then announce what you bought in the forum.  And then never edit that post again (since an edit shows up in the modification time, and suggests past data can't be trusted).  You can setup a new spreadsheet with the new stocks, and track their performance, and how the S&P 500 did over the same time period.

If he did that and beat the S&P 500 over a sustained period of time, would that convince you it's possible or that PaulMaxime is just really lucky?
I hope convincing me isn't his goal.  :)

Another poster was defensive and didn't seem open to learning.  I didn't think they had a good chance of it.  But PaulMaxime posts information quickly and responds to questions openly.  So yes, it's possible.

In my opinion, Warren Buffet is skillful, not lucky.  There's another investor I respect, but don't understand well, but his name has become controversial and political.  I think the person who broke the bank of England decades ago, and ran the Quantum Fund with stellar performance also indicates skill.  You can look them up with that information, if you're curious - I don't want to derail the thread with it.

Most likely, an experiment won't run long enough to prove it's skill.  I gave up inside of 3 years, and that's the longest experiment on the forum that I've seen.

But if someone does it, I hope they do it for their own reasons.  Proving me wrong is fine - I'd be okay being corrected.  But that isn't the kind of motivation that lasts for years (I hope!).  Being curious and wanting to see if it works - all in public - seems like better motivation.  For me, I kinda wanted to know what running an experiment was like... I wondered about running a fund, and I got a sense of it running the 5W experiment.

PaulMaxime

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Re: DIY growth stocks picking
« Reply #121 on: February 03, 2020, 10:45:27 AM »
Are you willing to start a new spreadsheet - a new experiment here in the forum?  Whenever you buy a stock, you could then announce what you bought in the forum.  And then never edit that post again (since an edit shows up in the modification time, and suggests past data can't be trusted).  You can setup a new spreadsheet with the new stocks, and track their performance, and how the S&P 500 did over the same time period.

If he did that and beat the S&P 500 over a sustained period of time, would that convince you it's possible or that PaulMaxime is just really lucky?

No, sorry I'm not going to do that. Why? Well I don't really have anything to prove- I'm just interested in providing another perspective and maybe someone will decide that there's a chance they can do better for themselves and they'll be interested in trying.

I've posted my past 12 years of returns already. These are real actual numbers based on my account balances at the end of each month and full cash flows into all my accounts. I suppose I wouldn't have posted if I had underperformed for that period - fair criticism! But still I'm not interested in managing my money in public going forward. I've hidden my balances for privacy sakes and I would want to continue doing that.

There is a place on the internet where people post their stock picks live for other people and track themselves against the S&P 500 Total return index: caps.fool.com.

It might be a fun thing to try picking a few stocks and see if you can get a positive score.

StashingAway

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Re: DIY growth stocks picking
« Reply #122 on: February 04, 2020, 06:06:22 AM »
I've posted my past 12 years of returns already. These are real actual numbers based on my account balances at the end of each month and full cash flows into all my accounts. I suppose I wouldn't have posted if I had underperformed for that period - fair criticism! But still I'm not interested in managing my money in public going forward. I've hidden my balances for privacy sakes and I would want to continue doing that.

I don't blame you for wanting to limit your exposure. But I want to point out that the "fair criticism" is a much bigger deal than you seem to be weighing it:

From this end of the forum, there is no way to distinguish your success from statistical noise. Of course some people are going to beat the stock market. The problem lies in the follow up. We don't hear nearly as much from the ones who have failed. And we hear a lot from the success. This creates the first bias: survivorship bias. It is easy to get a poor representation of results when we can only mostly view the survivors. From my viewpoint, I am highly skeptical of success stories because of this. It makes it very difficult to compare strategic success vs. failure in the market when we are mostly hearing the success stories.

Humans also have the tendency to underestimate luck in their own success- it is one of our many biases that make it difficult to analyze personal successes. Anyone claiming that they have a winning method in the market could be affected by this bias. This isn't to say that you definitely are, it's just saying that you could be and from the other end of the internet there is no way to discern between the two. It's not personal, it's just why there is so much heavy skepticism.

You're right in that you don't have anything to prove; In fact, I doubt you could prove much anyway because there's no good way to run a quantity of experiments significant enough to get a good statistical representation of the data. In fact, if you were to lose in the market, that wouldn't really prove anything either. You could make excellent judgements; perhaps you have a method that works in 90% of the markets, but just happen to hit the luck spectrum in a way that comes out a a failure (a 10% chance). If we were to judge the quality of your decision solely on the results, we wouldn't be taking into account luck. So unless we could run 100's of world market simulations at one time with your method to get a good idea of your success rate, we don't have a clear idea of if it's luck or if it's ability.

jeroly

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Re: DIY growth stocks picking
« Reply #123 on: February 28, 2020, 10:00:38 AM »
@cloud72, how are those 20%/year returns looking now?

(Your 17-stock portfolio is down 10% since you posted it on 1/13, which if it kept it up at this pace for the year projects to a 57% annual loss)

PaulMaxime

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Re: DIY growth stocks picking
« Reply #124 on: February 28, 2020, 02:03:52 PM »
@cloud72, how are those 20%/year returns looking now?

(Your 17-stock portfolio is down 10% since you posted it on 1/13, which if it kept it up at this pace for the year projects to a 57% annual loss)

Not the OP. But the overall market is down more than 8% this year so we're all taking a hit but this is just normal volatility.

My personal portfolio is down from its highs for sure but I'm still up over 3.5% for the year.

Tyson

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Re: DIY growth stocks picking
« Reply #125 on: February 28, 2020, 05:12:10 PM »
@cloud72, how are those 20%/year returns looking now?

(Your 17-stock portfolio is down 10% since you posted it on 1/13, which if it kept it up at this pace for the year projects to a 57% annual loss)

Not the OP. But the overall market is down more than 8% this year so we're all taking a hit but this is just normal volatility.

My personal portfolio is down from its highs for sure but I'm still up over 3.5% for the year.

We're not all taking a hit.  I'm still in accumulation phase so this affects me zero.  Expect for the fact that I get to buy my stocks cheaper now. 

PaulMaxime

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Re: DIY growth stocks picking
« Reply #126 on: February 28, 2020, 07:09:13 PM »
@cloud72, how are those 20%/year returns looking now?

(Your 17-stock portfolio is down 10% since you posted it on 1/13, which if it kept it up at this pace for the year projects to a 57% annual loss)

Not the OP. But the overall market is down more than 8% this year so we're all taking a hit but this is just normal volatility.

My personal portfolio is down from its highs for sure but I'm still up over 3.5% for the year.

We're not all taking a hit.  I'm still in accumulation phase so this affects me zero.  Expect for the fact that I get to buy my stocks cheaper now.

Depends on how you look at it but yeah. Definitely deployed some cash today.

cloud7272

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Re: DIY growth stocks picking
« Reply #127 on: August 23, 2020, 02:54:53 PM »
I just want to give an update for those who care.

Without job income.
At the end of 2019, my net worth was 355k CAD. now it's at around 415K CAD. It's  up 16.9%. This includes my regular expenses + 100-200 per month amazon purchases here and there. I also tore down and remodeled a basement bathroom. Everything was new included studs except the toilet. So my actual investment return is higher than 16.9% between Dec 31, 2019 to Aug 23, 2020.

On July 06, 2020, I've decided 200 stocks are too many. It's too much paper work and it dilutes the overall ROI. So I raised the bar to a minimum of 30% revenue growth for a company and narrowed the list down to 29 growth stocks. I expect the 29 growth stocks to generate at least 30% per year return for the next few years.  So my current target ROI is even higher than 20% per year. :) all those 10 years, I was just content working at a low paying job and not discovering the full potential. Now I realized there are so many opportunities in the US Market. I really appreciated!


Here's a update on performances:
17 stocks(previously shared):  YTD +14.58%
30 stocks(previously  shared): YTD  +15.83%
200 stocks not shared, who wants to own that many? It's a nightmare!: YTD +23.4%   
Meanwhile S&P500: YTD 5.15%

My current holding of 29 stocks since July 06, 2020: +4.32%
List of 29 stocks attached.


P.S. Since end of March, I also allocated 100k CAD to sell deep out of money puts on high IV stocks I am willing to hold the shares but I try not to own the shares.  I was able to generated 42k CAD since March and made 8k CAD in August alone!  I aim for at least 50% per year ROI on those cash secured puts. So this method can replace the cash flow concern and let the growth stocks to grow without disruption.



 
« Last Edit: August 23, 2020, 03:00:24 PM by cloud7272 »

PaulMaxime

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Re: DIY growth stocks picking
« Reply #128 on: August 23, 2020, 08:09:47 PM »
Congratulations on your returns so far. I think a more concentrated portfolio is generally better than a huge one like you had.

Lots of good companies in there that should keep growing for many years. I have several of them in my portfolio.

Good Luck!

hodedofome

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Re: DIY growth stocks picking
« Reply #129 on: August 28, 2020, 09:20:11 AM »
Congratulations on your returns so far. I think a more concentrated portfolio is generally better than a huge one like you had.

Lots of good companies in there that should keep growing for many years. I have several of them in my portfolio.

Good Luck!

Yes - this is my concentrated portfolio in real time: https://collective2.com/details/129385733

YTD performance of this portfolio is 188%

SAAS stocks for the win...they are killing it this year.

cloud7272

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Re: DIY growth stocks picking
« Reply #130 on: August 31, 2020, 09:26:04 PM »
Congratulations on your returns so far. I think a more concentrated portfolio is generally better than a huge one like you had.

Lots of good companies in there that should keep growing for many years. I have several of them in my portfolio.

Good Luck!

Hi Paul,
I really appreciated your introduction of Saul's board to me couple months ago. I kept reading the board and it helped me to gain the courage to reduce 200 stocks down to 29 stocks. If they can do it safely with6 stocks, I can feel safe with 29 stocks.  30 stocks is the number suggested by Benjamin Graham so I chose a number close to 30.  29 has no meaning to it. I just happened to pick just 29 stocks. No more and no less.

Couple days ago I've decided to make a change to the 29 stocks. I've sold out AYX  x 35 shares. The reason is the slow down in growth and its share is way too volatile in the past 2 years.   And I've added a new stock: NCNO X 50 shares.   NCNO has strong balance sheet,cash is greater than all debt and  50% revenue growth. It makes bank OS based on the Sales force platform. So it's similar to Veeva. I don't own Veeva but it did very well for the past 6 years.

ZM had a great earning report today and is poised to jump 20% tomorrow. What a great way to start a new month!


hodedofome

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Re: DIY growth stocks picking
« Reply #131 on: September 01, 2020, 07:02:28 AM »
Congratulations on your returns so far. I think a more concentrated portfolio is generally better than a huge one like you had.

Lots of good companies in there that should keep growing for many years. I have several of them in my portfolio.

Good Luck!

Hi Paul,
I really appreciated your introduction of Saul's board to me couple months ago. I kept reading the board and it helped me to gain the courage to reduce 200 stocks down to 29 stocks. If they can do it safely with6 stocks, I can feel safe with 29 stocks.  30 stocks is the number suggested by Benjamin Graham so I chose a number close to 30.  29 has no meaning to it. I just happened to pick just 29 stocks. No more and no less.

Couple days ago I've decided to make a change to the 29 stocks. I've sold out AYX  x 35 shares. The reason is the slow down in growth and its share is way too volatile in the past 2 years.   And I've added a new stock: NCNO X 50 shares.   NCNO has strong balance sheet,cash is greater than all debt and  50% revenue growth. It makes bank OS based on the Sales force platform. So it's similar to Veeva. I don't own Veeva but it did very well for the past 6 years.

ZM had a great earning report today and is poised to jump 20% tomorrow. What a great way to start a new month!

Look again this morning, ZM is up 40% lol.

cloud7272

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Re: DIY growth stocks picking
« Reply #132 on: September 01, 2020, 11:40:08 AM »
Yep.  There are two factors: 1. short squeeze and 2.  only small percentage of people trade after hours. So day volume is much higher than after hours and pushed the ZM UP 40%.  It's a ridiculously amazing quarter for ZM.  It jumped to my #1 position overnight. I started the 29 stocks roughly equal weight 2 months ago.

People said how do you get 20% while SP500 only generates 10%? You are not warren Buffett etc... Have no idea what kinds of growth stocks out there. US market is a huge market. There are fast growing companies going IPO every single year.  Next interesting stock worth keep an eye on is: Snowflake. The 20% return was based on my 200 growth stocks. Now I picked the 29 fastest growing stocks from the 200. The annual expected return will be 30% to 50% per year.  This is only possible in US market.

« Last Edit: September 01, 2020, 11:45:31 AM by cloud7272 »

hodedofome

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Re: DIY growth stocks picking
« Reply #133 on: September 01, 2020, 01:16:55 PM »
Yep.  There are two factors: 1. short squeeze and 2.  only small percentage of people trade after hours. So day volume is much higher than after hours and pushed the ZM UP 40%.  It's a ridiculously amazing quarter for ZM.  It jumped to my #1 position overnight. I started the 29 stocks roughly equal weight 2 months ago.

People said how do you get 20% while SP500 only generates 10%? You are not warren Buffett etc... Have no idea what kinds of growth stocks out there. US market is a huge market. There are fast growing companies going IPO every single year.  Next interesting stock worth keep an eye on is: Snowflake. The 20% return was based on my 200 growth stocks. Now I picked the 29 fastest growing stocks from the 200. The annual expected return will be 30% to 50% per year.  This is only possible in US market.

I am definitely watching out for the Snowflake IPO. But I'm also watching the lesser known IPO's as well. I bought BIGC at $70 shortly after their IPO and it ran up to $160 in a few days. Should have bought more than $3k...

And yeah, for most of this year SHOP has been my biggest position as well as most profitable one, but after today ZM has moved into the driver's seat for both.

cloud7272

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Re: DIY growth stocks picking
« Reply #134 on: September 09, 2020, 07:39:50 PM »
Sold out: PAYC, QTWO

And bought: PTON, DOCU

Reason: Payc and QTWO have lowest growth potential and PTON and DOCU have better growth potential.
« Last Edit: September 09, 2020, 07:44:52 PM by cloud7272 »

cloud7272

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Re: DIY mini growth fund
« Reply #135 on: September 09, 2020, 07:50:08 PM »
First stat after portfolio construction.  I'll report once per quarter.  So far the 17 stocks combo is under performing the whole portfolio slightly but both are beating the TSX and SP 500 index.

The key to out performance is 1. Finding quality growth stocks and 2. Mr. Market agrees with you.   If you have 1 but not 2, it's a bad investment.

Date: Jan 13, 2020

Total stock Value: $408,144.56 CAD
Number of stocks: 157
YTD % return excluding dividend: 4.72%. 
YTD $ change: $18,373.04 CAD

TSX YTD excluding dividend: 1.35%
SP500 YTD excluding dividend:1.78%


17 stocks sub portfolio(Performance in USD): YTD:2.83%

Link to the 17 stocks: https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing

To prove cloud7272 is OP. I'll edit the spreadsheet of old 30 stocks  to say so . Note my current 29 stocks are completely different than the old 30 stocks.