Position Size Calculation – Part 1
This Journal posting and the next couple will be devoted to answering these specific questions posed by Simon to my 27th March journal post with the key questions repeated below: http://blog.sharewealthsystems.com/?p=2380&cpage=1#comment-15666 “It appears that the definition of the level of risk, both trade risk and portfolio risk, is central to adopting a robust and reliable […]
Active Investor e-Newsletter
Gary’s Comments Most equity markets around the world have suffered a half-decent retracement over the last 3 weeks, except the DJIA, S&P500 and NASDAQ which have only really tracked sideways. Despite this retracement most equity indices around the world are still enjoying long term Up trends, as shown in the table below. The retracement was overdue and hence welcomed. […]
The 6% Rule
This week’s journal posting is a response to a comment by ‘fastbucks’ last week when the following question was posed: “Another related rule is the 6% rule, i.e. you cannot have a total risk in your positions at any one time greater than 6%. I don’t suppose you have any comments on that?” The 6% […]
Busting the Myth of the 2% rule
The art of trading is not about winning as much as it is about not losing. Like a business needs to control its costs, a trader needs to be able to minimise and withstand losses so that they are ready and able to take advantage of profitable opportunities. This comes down to managing risk at […]
When will the Small Resources join the party?
The chart below is a Base Reference Comparison between 3 indices: The main weekly chart is the ASX Small Resources Index ($XSR). The green line is the ASX20 Index ($XTL). The blue line is the All Ordinaries Index ($XAO). The base reference start date is the 3rd January, 2000 meaning that all three indices start […]
Luck, randomness and skill…….
One of our long standing customers forwarded this article to me last year. It touches on a number of important topics that I believe are strongly related to active investing and are well worth being aware of to help put your trading endeavours into perspective. http://www.smh.com.au/executive-style/culture/luck-of-the-draw-20120829-250hc.html I’m sure that as you read this article all […]
History Making Event on the Horizon
We may be approaching a history making event in the next few weeks so now is a good time to put this event into perspective. Whatever the outcome of the event I’m talking of, it will be analysed and investigated millions of times over in years to come. Over the past few months, readers of […]
Performance during rising and sideways markets
This week’s blog looks at our momentum ‘equities and cash’ strategy’s performance during rising and sideways markets. I have put this week’s posting together in response to a question by a reader of last week’s blog. His question is repeated here: “Gary, is it possible to compare these strategies from a more recent common start […]
Improving the worst case portfolio scenario
This blog continues on from last week where I posed the question: “How can I, in advance, eliminate the fairly good chance of selecting a poorly performing long term portfolio, even if I re-invest dividends?” There are two approaches of ensuring that one does NOT experience portfolio performance similar to the poorly performing 10-stock portfolio […]
Systematic risk management for buy & hold portfolios
Last week we looked at the potential upper and lower limits for ASX dividend re-investing buy and hold portfolios. I posed the question of how systematic risk can be mitigated and how the worst case stock selection can be avoided. Before getting into these answers we should quickly explore the difference that re-investing dividends makes […]