Reason behind the recent rally -
Posts tagged Value Pickr
Sealmatic India Limited (16-07-2024)
Disc: Invested
While Sealmatic’s announcement of a significant business opportunity in the oil and gas sector is promising, there are concerns I worry about. As investors, we need be cautious and not simply rely on management’s statements.
The competition is fierce, with at least three major groups vying for market share. It’s crucial to see tangible commitments rather than just potential opportunities.
Remember the market advice: “buy the rumor, sell the news”. I’m stressed about inflated valuations and market hype. Given the current elevated valuations of many companies, there’s a risk of being blindsided by over-optimism.
Rain Industries – An oversold de-leveraging play (16-07-2024)
(post deleted by author)
Building a Community: Rule-based objective approach to fundamental long-term investing (16-07-2024)
This thread is to discuss rule-based objective approach for long-term fundamental investing.
Rule-based equity investing uses predefined rules for stock selection, entry, exit, and position-sizing. This method eliminates emotional biases and fosters a disciplined investment process. We believe rule-based Investing is the future of investing. By constructing objective rules and backtesting them, we ensure a systematic, unbiased & error-free methodology.
In this thread we will discuss the most effective rules for long-term fundamental ‘‘investing’ (not trading) that have worked in the Indian markets over the last 25-30 years. But, first, let’s understand the evolution of rule based approach (read our full article on this in the CFA blog [ https://bit.ly/3Livaja ]
The evolution of rule-based investing has been remarkable, advancing from trading → Passive investing → semi-passive investing (factor) → mainstream active investing.
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Trading: Originating with quantitative models in the mid-20th century, early systems used technical indicators and moving averages. Later, it was extensively used by HFTs and short-term traders.
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Passive & Factor-Based Investing: Applied to index investing, ETFs etc, it reduces tracking error and increases cost-efficiency. Factor-based strategies use rules based on volatility, value, momentum, or quality, bridging active and passive investing.
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Mainstream Active ‘Investing’: Evolved from stock screens to comprehensive investment rules. While stock screens could only provide a filtered list of stocks, selecting final stocks, and other decisions like entry, exit, position sizing etc is not covered. Moreover, backtesting of stock screens is not possible. Complete investment rules tackle all these problems. Popular rules include: Joel Greenblatt’s Magic-Formula, Coffee-Can-Rule: (developed by our team at Ambit), FidelFolio-Rule (developed by FidelFolio’s ML engines)
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Best Practices with Rule-Based ‘Investing’:
- Align rules with fundamental economic principles
- Ensure data integrity and consistency
- Portfolio turnover to be considered per investment objectives
Our aim is to empower readers to create their own fundamental-ratios-based investment-rules. We hope to help DIY investors, research analysts and fund managers. On request, readers can access FidelFolio’s backtester tool for stock screens to backtest their own fundamental ratio-based rules.
Share your suggestions in the comments on the investment rules you’d like us to backtest. Let’s analyze their returns and fundamental characteristics together!
GOA CARBON – Domestic leading producers and manufacturers of CPC (16-07-2024)
Disclosure of your holding is missing. Till you comply, the thread remains locked.
Sealmatic India Limited (16-07-2024)
Sealmatic has announced huge business opportunity in oil and gas sector. They have all the certifications and Govt. is very keen on energy efficiency.
Sealmatic Update.pdf (444.6 KB)
Hariom Pipes Ltd: A Capex Play! (16-07-2024)
The latest investor PPT from Jun 26th gives a comprehensive overview of current operations and expansion plans. Request all to go through the same, so that basic queries can be avoided on the forum.
https://www.bseindia.com/xml-data/corpfiling/AttachHis/402e10ea-cc88-4564-b0e9-78d3b085dfaa.pdf
Malabar India (of Sumeet Nagar) has been acquiring a significant position over the past few quarters
DIY Momentum QnA and Discussion (16-07-2024)
After a long period of research, I have not found any discernible evidence that technical analysis significantly enhances the performance of momentum strategies. It’s important to be aware that technical analysis is of two types:
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Technical Indicators: These are reasonably systematic and include RSI, moving average, exponential moving average, etc. These are tested thoroughly, and we already use basic ones like moving average, or within some percentage from an all-time high, etc. These work. I haven’t seen anything that enhances performance more, like RSI or donchain channels or similar indicators. The more indicators we add to the momentum strategy, the higher the probability of having a false positive breakout or false positive exits. Churn increases, and returns go down because you constantly enter and exit. In my backtesting, I observed that keeping the core filters like moving average and all-time high, analogous to momentum, is acceptable. Anything else derates the strategy performance
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Technical Chart Patterns—These are discretionary and almost impossible to backtest, so I don’t know how these patterns will enhance or derate the strategy’s performance.
Now, to “whether we should use technical analysis or not?”
The answer is that “it depends” - the traditional momentum factor in academia doesn’t have a moving average filter, nor does it go into cash. But most of us do that to enhance our strategies, and we have found that it has worked historically in our markets. Now, for technical analysis, if you have tested it or are confident that it will increase your performance and help you stick with the strategy, plus make you more comfortable, please go ahead and use it. The only thing to remember is that every technical indicator or chart pattern, or extra filter you add will have a trade-off. If you try to reduce the drawdown to a lower extent, you will lose on cagr. There is no holy grail.
While I follow my systematic strategy according to the rules I have set for myself, I also understand that to make money in markets, having multiple uncorrelated strategies is a must. This diversification ensures that you can stick to the rules and not get bogged down if one strategy is in deep drawdown during the current market regime. It’s a safety net that provides security and preparedness.
Ugro Capital – Opportunity To Invest in a Fintech-like Company Below Book Value (16-07-2024)
What’s negative here is management has not quantified the exact impact of this rundown.