Update for entry on 4th December.
New entrants for the week RATNAMANI and SJVN are unable to enter as there is no vacancy. The stocks that have to go from my portfolio MRPL and SONATSOFTW are outside the top 20, but within the limit of 25 and hence, retained.
ZENSARTECH is outside the top 25.
Other than capital gain, What impact do you see this could have on tax filing ?
Last time around, I used a CA for the first time to file returns. Once the details of trades are given to them on a spreadsheet, they have some software to update the details line by line.
Most of the gains will be short term. If one has any other losses, they can offset. Otherwise, will have estimate and pay advance tax.
Can anyone suggest where can i download concall pdf copy for small cap companies?
Hey @visuarchie I understand how you measure momentum with average of 3, 6months returns.
Could you explain how you measure volatility?
And is the final selection based on just momentum?
I guess tax considerations don’t have to affect our investment decisions most times. I personally like to make sure no errors have crept into the computation done by my CA so I personally check what is being filed by the CA. More capital gain entries I have, the more work I have to do at the end of the FY.
Complications arise if you have shares acquired before 31 Jan 2018 but then if the gains are all short term then no issues.
I have more capital gain entries in my account than that of family member’s accounts I help manage. Their returns are much simpler to verify and file. That’s all I meant to convey.
Yeah, that will be a pain but hopefully gains are material enough to counter the pains. I think Zerodha has some tie-ups with tax filing agencies to compute your taxable gains.
Sure, I am still researching about it and will definitely start a new thread with my strategy, returns and experiences here.
ok …so i am relatively new at the stock investment…about 2 yr.
I am not sure if the following are coherent points, i would love to hear any comments.
I would like to subscribe to this view based on my understanding and my pf journey so far.
However the weekly change strategy could be beneficial in protecting return erosion when tide is turning.
Question,
as per my understanding tax filling is a non-issue to study/execute investment strategy.
@praveen_potnuru I calculate momentum on 6 months and 1 year returns.
Volatility is measured as the Standard Deviation (SD) of the daily returns.
The process I follow is in 6 steps as given below.
a. Calculate the returns on point to point.
b. Calculate the Standard Deviation (SD) of the daily returns.
c. Calculate a factor called momentum ratio which is returns / SD.
d. After that calculate Z-score which is (Momentum ratio - Mean of Momentum ratio of universe)/Standard deviation of Universe.
Complete these steps for 1 year and 6 months look back period.
e. Do the weighting of the Z-score value. I have used equal weightage of 0.5 and 0.5 for 1 year and 6 months respectively. People could choose to give higher weightage to the 6 months Z-score and lower weightage to the 1 year Z-score.
f. I then rank the stocks based on the resultant number.
Do you get it director from somewhere? Or do you have to calculate by yourself every time?
Could you give me the formula and or a source, If you’re getting it directly from Google sheets?
There is nothing in this strategy that makes it extra ordinary and neither is claimed. What we have to remember is that if the market is going up, this strategy might go up more. If it is going down, this pf will also go down, albeit slightly lower. That is because we are holding the strongest stocks all the time.
From what I understand, best returns are achieved following momentum based on price changes only. Anything else will mute these returns. Even the volatility factor that I have used, will reduce the returns.
@praveen_potnuru I do all the calculation myself on a Google Sheet. Stock prices are pulled in and the sheet is populated. I have a standard template where all the calculations get done automatically. My work during the weekend is to pull the prices over the previous week, change the look back period and collate.
Mean, SD are all functions available in Google sheet.
Hello Vishwanath
It wasnt meant to critic or boast particular strategy, i highly regard your efforts as well as this thread and i plan to follow it…pls pardon my english if it caused confusion.
All i meant was to raise a doubt and see if there is any way to further improve the momentum approach.
All good…yes ?
@LarryWink No issues. All good.
You provided a good opportunity to clarify that this pf is not a fool proof strategy that will keep rising all the time.
I put up this pf as a thread so that people can critique it and help improve. As I mentioned previously, my understanding is that for momentum, best returns are achieved considering price changes only. Anything else will reduce this as it mutes overall changes.
Of course, even with the momentum ratio factor that I have used, we could end up with a high return / high volatility stock or low return / low volatility stock. But these are far and few.
Another area of improvement can be to change the look back period or change the weighting factor for 1 year and 6 months Z score.
I do not have capability to run simulation. Hence, any change can come with experience only, but will take time.
Hi,
I am a new Investor, and my interest has grown in this. Glad to see these numbers!!
I follow a similar strategy and have a similar set of numbers.
I review my Portfolio every Saturday and then do some research like - searching for news/ events in stocks I hold. Especially I look for insider buying/selling.
Rebalancing of the portfolio is when there are triggers or I see a more convincing opportunity.
Currently, I am following this strategy:-
Just trying to build discipline and grow as an investor.
Thanks
Jai
Hi, do you filter 25% CAGR stocks through screener or manually? Also do you check for 1 yr CAGR or 3 yr CAGR? Does PE comes into consideration while selecting 25% CAGR stocks. e.g. stocks like MapMyIndia are doing 30% CAGR but PE is high. So wanted to know your thoughts
Hi,
I do not filter 25% stocks, as I am not sure if past performance will sustain or not.
I buy stocks where 50 dma and 200 dma are rising, any pattern breakout and hold them till
Once a stock is short listed for investment
I do read the recent news/ information on the stock I choose to ride. I look for fund raise/promoter buying etc.
BR//
Jai
@jaimathoda good to see that you have developed a system. One difference that I see, is that I go by rules based investment, nothing left to discretion. If a stock has to go out, it will go out (even a profitable one) because there is a better opportunity.
All the stocks that I have this in pf are from a Nifty Index. As the index gets rejigged on a regular basis, some filtering already gets done by NSE.
Hi### Viswanath B,###
Yes, I too sell my profitable ones, once they get flat or I see a better opportunity.
I do not restrict myself to index stocks, but If I get an opportunity in large-caps, I take it. I screen >500 cr m-cap.
For selling, I can sell as quickly as less than 3 months if the stock falls below 50 DMA. Those holding above 50 DMA are mostly profitable (Even Multiples).
So far I believe there are abundant opportunities once you develop a system. Tuning the system is more important than fine-tuning it.
Our ability to convert information to opportunity also compounds with time!
Warm Regards
JAI
