Does many of you follow a protifolio of stocks rather than buying a fund? I have read this magazine for 15years now, (Dine Penger in Norway) and they have this portifolio with 8 stocks, changing just every month. For 28 years they have done 23% average from stocks only from the norvegian index, beating the index by a mile or two.
I trade within a taxaccount so the taxes are postponed to when you take money out. I looked into the two porblems of fees for trading and different stock price the day after the adviced stock portifolio is given. I studied two years of trading, and in average you can expect to subtract 4,5% of the 23% (or the annual performance of that year) There was less than 5% chance for missing out on 9% of the profit yearly, and the same 5% chance of missing out on approx 1% of the profit. This is because of the variation of the severity the stocks were more expensive than rated in the mail from the magazine the day after the advise came out. The advice comes out an evening based on the price that day, and you buy it the next day.
I also read a book of Stig Mikalsen called Stocks and Stocktrading (in norwegian) Where he has an chapter telling that following such an portifolio is the easiest way to beat the index. Actually all the portifolios he mentioned beat the Norwegian index Oslo Børs for 85-90% of the years counting. Even better, they also beat the index in bad years.
I tried to follow for 6months this spring and was up around 12-13% while the index did around 7%.
I am definately gonna do this for parts of my portifolio. I believe that with small sums you are able to move effectively in the market, rather than if you have a big fund, you cannot just sell all your holdings in one stock at once, because it will drive the price downwards.
As i say, this has been going on monthly for 28years in this magazine, and i have been reading and following for 15, but it is only lately that the postponed tax accounts together with the falling prices for buying and selling and my amount of savings is doing this practically possible for me without to big losses to tax and to payment for trading.
By the way these guys that gives the advices also sell funds, which does much worse, basicly i think because they are big, moves slow in the marked and has a lot of rules regarding how much to invest in certain sectors and so taking away the freedom of investment.
Would be good to hear what your opinion on such investment strategy would be.