Should we stick to a strategy?

[garilou]

bryanmcn wrote in another Topic:
(http://www.superstockpicker.com/forum/index.php?topic=596
Re: ONR « Reply #19 on: Today at 10:38:07 »

I have been following SSP for quite a while now and I have profited greatly from their system. When times are good, they are REALLY good!

But when things turn down in the market, the SSP system requires that they stay invested 100%, so when things are bad, they can be VERY bad. The recent 40% drawdown has most probably shaken out a lot of SSP followers. I mean  ... come on! ... Anyone that lost 40% of their portfolio in the past 2 months has GOT to be hurting.   

I keep reading everywhere "in order to be successful, you first need to be discipline: adopt a strategy and stick to it" no matter how difficult it can be sometimes". (in my words).

If SSP is a strategy, should we really stick to it?
I am still too new to it, I am not sure.

In the same post bryanmcn wrote:

the SSP system requires that they stay invested 100%

Although it happened a few times that a portfolio was empty, it seems to be quite the rule: when a sell order arrives, you "reallocate" and buy more of the stocks that are still in the portfolio, unless all the stocks are under a "sell" signal.

And that, even when that or those stock(s) are going down.

I think that bryanmcn is starting to influence me, in my intention to adopt one of SSP's portfolios and stick to it 100%.

I think no automated system can be 100% right, and sometimes, I might not reallocate if the performance of a remaining stock is too negative. I'll look for other short term indicators to make my decisions.

Louise

[DCA]

The difficult part is figuring out the time frame to base this on.  You do not want to stop following SSP because the portfolio went down yesterday.

I work on a different strategey.  When times are tough for one strategey (SSP) I shift more money to another.  I leave some money in SSP.

So in this way I only lost 25% over the last two months.  The true test is can I make it to October and remain up on the trailing 12 months?

[garilou]

Hi DCA,

You do not want to stop following SSP because the portfolio went down yesterday.

I think neither bryanmcn nor me thought about such a short time frame!

When times are tough for one strategy (SSP) I shift more money to another.

This means you are not totally "true"  to SSP.
I would really like to know better how you do it:
1. Do you "follow" specifically one or more of SSP portfolios?
2. When you say :

I leave some money in SSP.

do you do the exercise of re-allocating the money that you keep in your SSP portfolio(s) according to SSP rules?

Í ask those questions because I would like to know from as many members as possible, how they really use SSP in order to make the spreadsheet that I am working on as flexible as possible and not absolute 100% SSP strategy, although it does allow one to do so .

So in this way I only lost 25% over the last two months.

Only?
Ouch!
I do not know what your other(s) strategy(ies) are, but I find 25% a lot!
I also made losses, but not that much!
Maybe I was saved by selling long positions, and shorting a lot though the summer.

Thanks for you input!

Louise   

[dhamel]

My sugestion is stick to it no matter what.  Otherwise how can you judge that it is good or bad.   However you must know before hand what you can endure.    If the strategy have had a maximum drawdown in the past of 40% than you must be prepare to endure that and even a bit more.

Reading a book call "Inside the house of Money" and one of the guy that had work with Soros, is exactly saying that.  Dont expect 100% return if you cannot sustain 20% drawdown..

However.  You dont have to allocate all your money to a single strategy.

Ex: You have 30,000$ to invest.

You pick 3 strategy. and allocate 10,000 in each, then you follow each of them perfectly.

Nobody ever said that you have to have all your money in one strategy.   Also, being in more than one strategy does not mean have 10K in SSP1, 10K in SSP2 and 10K in SSP3.   that is all the of the same

Denis.

[garilou]

Thanks for your feedback Denis,

You wrote:

My suggestion is stick to it no matter what.  Otherwise how can you judge that it is good or bad. 

But what is the real point? Do we want to judge if SSP is good or bad? Or do we want to make gains or minimize are losses?

However.  You don't have to allocate all your money to a single strategy.
Ex: You have 30,000$ to invest.
You pick 3 strategy. and allocate 10,000 in each, then you follow each of them perfectly. 

How many other strategies do you know that you could "follow perfectly"? I know lots of sites that will rate this or that stock (Some are very expensive), but they go stock by stock and do not tell you as SSP does how to allocate your (to take your example) $10 000.00 between them.

Question:
Do you think that you could treat another portfolio based on other recommendations (or stocks that you have found on your own), and apply SSP's calculation system on those?

Louise   

[dhamel]

It is effectively difficult do find other strategy.    BUt some are out there, especialy if you want to follow US stocks.

I had discover some similar strategy as the one use by SSP in the US, actually you can get their stock scanner and play with it and do some backtesting.    It is call Zacks.com  You can download their stock backtester and play with it.

I had been able to generete over 100% return with their tools, but I did not trade it as I was looking for something Canadian, that Is how I hade found SSP.

That was 2 year ago, I would have to retest it.

=======

Second question:   I do follow 3 others strategy, but those are currently private, they will eventually be available.   They are less volatile than SSP, but still give really good return (35-50%) year coumpounded in back test.   I have started following them a few month ago.


======
Third question, No, if the other system have their own allocation methodology, however what SSP is doing is to give more weitgh to the stock that provide the best return..     

To give you an example of not following this.  My own portfolio is now at 97,573$ started with 50K in January 2007.   However the first year I was not applying the right formula, I was allocating th emoney equally between the stock every time we had a new order.   I have made the calculation that If I had allocated it correctly the same portfolio would be at 182,202$   This is almost double, with the exact same trade, just wrong allocation of money.

==============

And again believe me I want to make money, not just test the system.   But so far, I have not seen many system that give you that sort of return, and the methodology is well know (momentum).

I suggest that you read the Nichalos Darvas story, This is a good story about momentum stock picking.   Not that technical, but between the line you see that what he was doing manually was really similar to what SSP is doing in a mechanical way.

Plus he talk alot about how looking too closely at the market can bring you to your lost because you start to second guess your system.

Denis

[garilou]

Thanks again Denis, for your time in replying to me:

I had discover some similar strategy as the one use by SSP in the US, actually you can get their stock scanner and play with it and do some backtesting.    It is call Zacks.com  You can download their stock backtester and play with it.

I go often to Zacks.com, but the back tester is not available for free, not anymore at least.
I receive their newsletter, follow a fictive portfolio of their recommendations, As for what is free on their site, I could not call it a strategy, but I am not ready to pay to get everything they offer.

I trade a lot US stocks, there are so many paying sites, and so expensive, it is hard to make a choice.
But I do like their "Bear of the day"    

Second question:   I do follow 3 others strategy, but those are currently private, they will eventually be available.

I guess you'll let us know, but will they be expensive?   

Third question: <snip====> I have made the calculation that If I had allocated it correctly the same portfolio would be at 182,202$   This is almost double, with the exact same trade, just wrong allocation of money.   

This is the intend of the spreadsheet that I am working on: to help people do the reallocations, which are way not easy to understand, but what you say confirms that it is important do follow SSP strategy properly.

I suggest that you read the Nichalos Darvas story

I just ordered the book. Thanks for the hint! ( You meant "Nicholas Darvas"  )
I hate to download it "for free" and have to print it my-self and give personal info to sites I don't know.

Thanks again,

Louise   

[stockmarket4beginners]

If SSP is a strategy, should we really stick to it?
I am still too new to it, I am not sure.

Well my advice to you is this. Do not take any one else's word for it. Why don't you find out for yourself? Do a little internet research, of course see what the others have to say BUT decide for yourself whether you should stick to it or not because with the current financial ongoings I feel we should be very vigilant where the market is headed.

[InSidesAndOut]

You people confuse me. The system dosn't work. Its down 50%, that is insane. How about research and analysis of your own companies. A Fool could have told you UTS was going down. Even some of your other stocks had book values 500% lower then the actual cost of the stock. Some At the time being held made no money during the entire period. Others sold simply for stupidy, when they should have been purchased again with a lower cost now in place.  Anyways... Whatever, can someone tell me of a better stock forum ??  obviously I am on the wrong website.

I will spend another hour or so looking into the website to see if im wrong when I get back from the store, but this is probably the last you will see of me. 

GOOD LUCK !

[bryanmcn]

SSP rolls in waves like the TSX. At times like these is appears that the "system" has failed and does not work. You are justified in thinking this when you look at the present track record. The question is what will its performance be in 6 months or one year?

Unless you find a site that promotes shorting or trades in positions that do well during bear runs, you are unlikely to find anything doing very well right now. If you do I would love to hear back from you.

Here is a paying site that says they are up 60% this year.
http://www.todayhotstocks.com/index.php?page=home

[garilou]

Hi InsideAndOut,

Your nickname says it all!
Unless you short a lot, you're probably out!
You write:

The system dosn't work. Its down 50%, that is insane.

Have you followed the markets in the past months?

It is true the SSP's system has had big problems during this bear market. If you look, (just to name an active topic) at the thread "SSP during a drawdown", you'll see lots of comments on that.
SSP has received other criticisms, like not paying enough attention to too small volumes of very cheap stocks.


They are trying to adapt. They are now working on a "volume filter".
Don't know how long it will take, but they are thinking about creating shorts portfolios.

They apply a strategy that you might like or not, paying mostly attention to the momentum, together with an allocation and re-allocation system that few people here follow, but that makes the gains remarkably higher then simply buying one of their stocks once in a while.
The full strategy is not easy to understand (Read the posts in "How it works").
It does not mean the you have to stick to each and every buy order.
Each investors must be responsible alone for its trades, that is MY philosophy, and I'll never make someone else responsible for a loss I made.

And if you spend enough time on the forum, you'll see lots of people saying "thank you!".

SSP does not promise 1,000% return, if you pay 500$ to $1000 a year with a supposedly 15 or 30 days free trial (but try to get out, that's way not as easy as getting in).

Here, the recommendations are free, and you are free to apply the strategy or not.

And compared to others, SSP administrators are terribly honest, posting on their front page their losses as well as their gains.

I can tell you that by experience, because over a year ago I subscribed (for two years) to a paying site.
First bad surprise: by subscribing for 2 years, I lost my 30 days free trial right...
My first trade with them was a huge quick win, that in 2 days paid my 2 years subscription! I was so amazed!
But we were still in a very bullish market, when you could almost buy blindly almost anything!
I made another few gains, then I started to short most of their "Buy "recommendations"!
I won't name them, but they are extremely present everywhere on the financial Web.
They would send us messages, "cherry picking" comparing a stock that had gone down so much and to one that had done exceptionally well, and "demonstrating" us that had we bought both, we would still had the profit of the winning one.
Except that they give lots of recommendations, and there is no way you can buy them all, unless you a have a huge capital, because they seem to literally fall in love with their stocks, and can't get away from them.
So if you were not amongst those who had bought that extra winning stock, you were loosing a lot, because if they give buy recommendations, they almost never give sell signals on the stocks they "own".
To the contrary, while everything was falling apart, they kept sending us messages "Stocks you should never sell!", stocks that I had already shorted with good profits a few times.
And each of their newsletter is mostly aimed at having you subscribe to another of their subscriptions, each more expensive then the other one, and still ""better" then the one you already subscribed to.

I'll say like Bryan, if you make good profits with another site in times like now, unless you are good in shorting or day trading, let us know!

Good luck to you too!

Louise