- Joined
- 3 June 2013
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- 53
Can I suggest that you take a look at Dimensional Fund Advisers. Their style is tilting towards small and value companies (amongst other matters). They too have had a rough time of it in recent years.
The Value style has performed well for as far back as data is available to analyse it. The rationales seem plausible enough. Importantly, for whatever reason, it can go through bad patches. If it didn't, there would likely be no premium to Value.
In order to make an informed choice, perhaps it is worth going through some stuff from Dimensional and RAFI as well to see what they have to say about the recent dry spell on this concept. From that, you can make an assessment as to whether the well has been drained or whether it is just having a rough spell.
You may draw inspiration from Pzena.
It is legitimate to question your strategy in light of outcomes. You know that the stats are unlikely to yield anything material with the sample size, so it is just a call. It is also reasonable to come up with a better idea and run with that. Whatever you decide, it is well accepted that to be a Value investor requires a lot of patience. Perhaps the idea works, but you are simply unable to tolerate the pain that must be accepted.
I am also working backwards - instead of looking for value, then checking quality, my new automated strategy is about finding quality, growth, small companies, then checking for value.
Has anyone done any research or has experience with a strategy that deliberately changes from value to growth and back? Buy when when it underperforms, sell when it is doing well, ditto for growth. Not locking yourself into a strategy, but switch between several over time, as part of a master plan.
This is not at all my current intention, but another fear (again) of mine, is that I am very likely selling at exactly the wrong time for a value strategy. And, possibly switching to growth-like strategy and a high point, to make it worse.
As I said in my post above, the current plan is to keep my holdings, selling them as soon as capital is required in the new strategy. So, for a few months at least I will get the benefits and/or losses from both strategies, while it all unwinds.
KTP, from reading some of your posts you come across as someone looking to develop a quantitative, rules-based and automated/mechanical investing process, that doesn't require too much time and too much in depth analysis of companies, and that has been backtested... would that be right?
If so, why don't you just invest in a smart beta ETF? Eg. RAFI as has already been mentioned here.
The hard work has already been done for you by people much smarter than you or I.
Why reinvent the wheel by spending ages experimenting with different strategies yourself to find the perfect strategy?
Thanks for the ongoing posts KTP.
Have you ever considered changing from penny stocks to mid/large caps that offer both growth and perhaps smaller dividends?
I found risk is reduced greatly and you can still make big gains. When things get expensive, sell, and find another stock.
At least that is what I do now. I am always tempted to buy small caps to get that almighty 10 bagger, but I realise, I dont have the talent to pick the dogs from the pearls.
My new strategy of investing in good companies with market caps of minimum 500MIL with a few exceptions (small caps).
Basically, the ASX200.
I read a fellow beat the market consistently just sticking with the ASX20.
All imo.
Good luck and thanks again.
Hi Ari,
I do not think I can do better than average in ASX 200
Regarding risk, I do not think small caps are significantly riskier than large caps, if at all.
Sold LYL, 500 @ $1.36 for a loss of $1,394.90 (-63%). It no longer fits my investment strategy and I need to free up funds for my next purchase.
Bought AKG, 1890 @ $0.79.
A smaller version of VET, but with good quality teaching, 100 year old reputation and little debt.
Up until recently, they also owned a fasteners business that they have recently sold. With cash, they've bought more colleges, a business that has generated very good returns in previous years.
The recent shake up of the industry and reputation damage to the sector caused by VET hurt AKG this year, with profit halved. But, they are still profitable and revenue is growing nicely.
They have a good mix of courses for both international students and local vocational/trade.
Long term, I think Westen style education will continue to be in demand, and Australia's standard of living, climate and location will make it appealing to many international students. Having established colleges that have been around for many decades and have good reviews is a good competitive advantage.
Share price has dropped about as much as their profit for the year. Directors have been busy buying on market and own a large chunk of the company.
KTP,
Thought you might be interested in the comments from www.lincolnindicators.com.au
AKG exhibits unacceptable levels of financial risk due to a below benchmark Financial Health score. Investors need to be aware such companies pose risks and warrant a speculative investment only. Any prospective investment should be managed with tight stop losses implemented.
Sold TTN @ 0.077 for a loss of $1091.72 (-82.91%).
Sold FUN @ 0.02 for a loss of $834.62 (-64.68%)
Hi AJ,
No strategy followed in the last few exits. I switching my portfolio over to a different long term strategy then one I originally started with. I am selling all stocks that don't meet the new strategy.
You'll have to read the many pages of my thread to get an idea of what I'm doing, but to describe it simply, I look for small, growth, quality, reasonable valuation. I will hold for long term, unless they no longer meet this criteria.
I do not look at charts and I will sometimes buy very illiquid stocks.
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