@visuarchie I was trying to build a back testing framework to see historical returns for a momentum portfolio giving different input weightage/near far momentum etc. If I take the current index constituents, it may not be correct when we go back in time. Do you know where to find the index constituents history?
As a newcomer, I am not sure how to enter into this momentum portfolio. The previously selected stocks are doing well, but are they still good for new entries? Is the momentum of these stocks still going to keep up? Are there new stocks that would be better options? I would really appreciate any advice that the more experienced users could give me.
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@Aman_Ahuja Two caveats before I reply.
- I am not an investment advisor. You have to do your due diligence before you taking any investment decision.
- The details shared here are for educational purposes.
Every week, I put a list of 20 or 25 of the strongest stocks in the index. This is for fresh entry every Monday. These stocks are the ones that still exhibit momentum.
We look at this as a pf exercise and not as an individual stock investment.
Sir, how you bring about change in the price of a stock after a dividend or stock split; Is there any website where can we get information about them on weekly basis. Thanks.
@visuarchie : Sir, if we want to use similar strategy in nifty 200, which will have large and mid caps. What modifications could be done as we are suppressing volatility in this strategy.
Update for entry on 8th July 2024
50EMA (16298) > 200EMA (14448); hence, we can continue without any change.
Based on ranking:
- COCHINSHIP
- JAIBALAJI
- GRSE
- ANANDRATHI
- HUDCO
- POWERINDIA
- AEGISLOG
- SCHNEIDER
- NBCC
- BLUESTARCO
- JWL
- ARE&M
- TITAGARH
- VGUARD
- GODFRYPHLP
- EXIDEIND
- RAYMOND
- SIGNATURE
- APARINDS
- SOBHA
Based on A → Z for easy tracking:
- AEGISLOG
- ANANDRATHI
- APARINDS*
- ARE&M*
- BLUESTARCO
- COCHINSHIP
- EXIDEIND
- GODFRYPHLP
- GRSE
- HUDCO
- JAIBALAJI
- JWL
- NBCC
- POWERINDIA
- RAYMOND*
- SCHNEIDER
- SIGNATURE
- SOBHA
- TITAGARH*
- VGUARD*
Exits:
CENTURYTEX, EIHOTEL and SWSOLAR make an exit.
KPIL and MOTILALOFS remain within the top 25 and hence stay.
Entries:
ARE&M, TITAGARH and VGUARD make an entry.
APARINDS and RAYMOND cannot enter as there is no vacancy.
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@Amandeep_Singh2 Sorry, I missed this message when you had posted this previously.
Do you want to suppress volatility? Nifty 200 includes 50% of midcaps and therefore, might be worth retaining the aspect of volatility (I use this even for Nifty 50 and Nifty Next 50).
However, if you want to ignore the volatility part, then you can focus on Rate of Change only.
There are multiple ways of going about this.
- Look at 12months return only and rank them.
- Look at 6months return only and rank them.
- Take an average of 12months and 6 months and then rank them.
You can ignore the factor called momentum ratio in our worksheet.
@Subha_M I am not aware of any site providing this info automatically.
I visit the screener.in page on a regular basis and check for announcements on stock splits or bonus. If any of our stocks are listed there, I make a note in our worksheet. Before I do the rebalance every weekend, I check if any of the above corporate announcements have been effected.
Sir, for bonus, how you adjust the price. Do you deduct it from the current market price. Please can you explain this.
“Look at 6months return only and rank them” How to bring about “ranking based on return”
in this worksheet
@Subha_M I multiple the quantity by the total number of resultant shares and divide the original cost price by total number of shares. Please remember that the final sum must remain the same.
Example:
Recently, INOXWIND came with 3:1 bonus, ie. for every one share you get 3 shares.
If you had 10 shares and each was purchased at Rs. 48, then your resultant will be:
10 x 4 (1 share held and 3 shares allotted - 4) = 40 and price will be Rs. 48 / 4 = Rs. 12.
Before bonus: 10 x 48 = Rs. 480.
After bonus. 40 x 12 = Rs. 480.
There is a row called “6 months price change”. Do ranking based on this row only.
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Thanks a lot sir for taking so much effort to teach.
Sir @visuarchie, I recently joined this forum. I have 2 questions.
- is there any guideline what will be stop loss for fresh position.
- Can you suggest me any fresh position i can enter. As most of stock in your list has already given move
@Aayushjha8 Momentum strategy works differently. We look for stocks that are showing momentum and invest. If they run out of steam, we exit.
Therefore, to answer your questions.
-
There is no concept like stop loss. We exit when the stock has lost momentum (relatively compared at other stocks in the investing universe).
-
Again, momentum investing works differently. We aim to buy high and sell higher. More importantly, we don’t go on stock basis, but review our portfolio every week (or fortnight or month). Exit stocks that have lost momentum and enter ones that are showing.
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So Vishwanath Bro ! 
(Still a rookie here, but let’s just say this is an address to your boundless energy!)
I’ve got a different kind of question, all about the smallcap space as a whole.
Would I be right in observing that over the past 2 years, value investors have been lagging behind momentum seekers in terms of returns? (I might be shooting my mouth off here, so please correct me if I’m overstating it !)
Based on what I read from analysts, a truckload of money is pouring into SIPs from savings. So, fund houses are basically sitting on a mountain of cash, where else they can pump this money if not into the market ?. 
From my observation over the past few days, the small/micro cap space seems to just shrug off every valuation comment or negative news and then surge ahead with a vengeance.
Do you think we’re still far from the fag end of this bull run? What are your observations in the small/micro cap space?
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@LarryWink If you are calling yourself a rookie, not sure what I should call myself. But still, as you have asked me, I will share some of my thoughts on this.
A wise man in the market once said, “there are only two people who catch the market highs and lows. One is God and the other is a liar”. Therefore, we just follow the market.
There is a Gujarati saying in the market, “Bhav Bhagwan Che”. This translates as ‘Price is God’ which means you should go with the flow and not question why the market is giving a certain price to a stock. It signifies that the price of a share is a correct reflection or representation of the company. If we are humble then we have to accept that the market is much wiser and not question the valuation or the prices.
Whatever I have said is applicable to all segments of the market, not just the small or microcap space. When there is a rally in market, it will start from the large caps and move down. But the largest amount of money is to be made in the small cap / microcap space. When the market falls, smallcaps are going to be hit first and the most. So, what is it that we can do to protect ourselves? Watch the market movements, stay nimble and follow the system.
Have a look at the current composition of the pf. All the themes that are the flavours of the season are present. PSUs, Defence, Railways, EV/Power etc.
The stocks have been changing in our pf over the last one or two years. We have moved with the themes.
There is this stock, JAIBALAJI, that has been in our ranking at the top ever since it was added to the index. It is clear that the this scrip gained most, before it entered the index. After getting into our pf, I don’t think it has moved much. However, our system has said that it should be part of our pf and therefore, it is. We don’t look at stock wise, we look at the pf on the whole. If we believe our system is robust, we should be manage the market movements easily.
To summarise, we don’t know if this end or the continuation or the beginning of a bull run. We do not know which stocks will gain and which will lose. We do not know what themes will be favoured by the market in future.
Therefore, we just follow our system. Be agile and move in and out as indicated by the system.
I do not know if I have answered your question or concerns fully, but this is my belief. I will remain invested as long as my system tells me.
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