Traders' Roundtable

G'day,

I'm not sure how relevant this is to anything and whether it is of value but I thought I would pass it on for consumption by the community.

I belong to another forum, Hotcopper ( www.hotcopper.com.au ) which is a stock chat forum based in Australia. At the end of October last year a poster asked other posters to each nominate the stock that each poster thought would have the best gains over the next 12 months. The consequent list of 59 (mainly speccie) stocks has then been monitored with a nominal investment of $1000 in each stock.

The result to the end of July 2003 (9 months) shows a gain of 30% (compared to the AllOrds index of 5.4%).



Impressive result. I'm not sure how it can be used but there you are.


Fforrest

Hi Forrest-

IMHO, the prediction thing is not a viable way of going about things. Now, if you said the poll was done by a guy/gal that has a portfolio selection method which is dynamic and he/she has consistently beaten the index by 600% during every 9months, then that would be something.

I think the “bestâ€

Forrest, I was doing a test of my own focussing on some criteria (usually only found in small caps) at the same time as your test period. Now the interesting thing was that the broad index didn't rise anywhere near as much as the small caps. My results ended up around +60%, but THEY WERE NOT TERRIBLY USEFUL OVER A DIFFERENT SAMPLE PERIOD. I had live data imported ito my excel spreadsheet monitoring the portfolio of around 25 - 30 stocks. The set - up technique I was testing may still be useful, but it requires a mechanical exit strategy and some more filters before an entry signal are given. I'll bet if you randomly chose 30 small cap stocks and tested over your period the portfolio's would almost all produce returns in excess of the benchmark of >20%. It is something I noticed myself.