Timing The Market Experiment

[Nomad]

I am fully aware that this post is going to divide opinion.

Nonetheless, I am going to invest in shares using an adaptive allocation model based on their Sharpe ratio.
In simple terms,100% this is timing the market.

However, this is only going to be with a small percentage of my stash, and also,
I will gradually buy into the market not going all-in like a brave/foolish person.
However, given the current CAPE value, this is doubly brave/foolish.

Once a month, I will post my investments with preceding the gains and losses.
The first investment will be on the 1st of September...

[ertyu]

cool cool. good luck. Explain your stock selection proceess in greater detail when you post on the 1st, it would be interestng. Are you selecting and forgetting or would you be "rebalancing" every month?

[Alphaville]

a small % of risk capital in your asset allocation is not wrong and makes for good fun. i look forward to reading.

[Jean]

gl hf

[fiby41]

gl hf

great learning high five?
good lord how fast?

[Nomad]

@ertyu
I will will be buying probably different stocks each month and will either have 1,2 or 3 shares only.

@alphaville
Yep, I do not have the nerve to do this with a large percentage.

[Nomad]

Starting small.

Company Shares Price Total
AMD ADVANCED 8 $92.18 $729.25
AAPL APPLE INC 21 $134.18 $2,816.63
TSLA TESLA INC 3 $475.05 $1,423.95

Total = $4969.83

[Alphaville]

@alphaville
Yep, I do not have the nerve to do this with a large percentage.

nerve... you mean you don’t have the foolishness to abandon good sense and risk it all in one dumb move like a degenerate gambler? then i wholeheartedly support that decision/attitude/lack of stupidity...

(who was that said “gonads are useful for their purpose but they’re no substitute for brains”? )

anyway, cool to see what you’re doing, though it would be nice to hear the rationale for your picks.

“adaptive allocation model based on sharpe ratio”? don’t bury the lede

[Nomad]

@alphaville
PortofolioVisualizer.com has a section on market timing models.
I have basically picked a number of parameters and am going with what it suggests for a list of certain Nasdaq shares.

[Alphaville]

ooooh... i see. thanks so much i had no idea about this.

[Seppia]

And how are you going to sell?
Because I imagine you aren’t planning to hold Tesla at 10 times revenues and a bajillion times “earnings” or Apple at 40x earnings.

[Alphaville]

And how are you going to sell?

won’t the bot tell him? i really have no idea how these robo-advisors work.

https://www.portfoliovisualizer.com/tes ... tsToHold=2

[Nomad]

@seppia
The 'bot' equation tells me what to hold for the next month. It is quite likely I will have entirely different shares next month.
Luckily, because the brokerage operates in US dollars, there is now now foreign exchange fee or even transaction costs.

[jacob]

Ouch!

These are almost the only [significant] issues that are down today. Perhaps the split-boost overshot a bit. Noting that this is enough to drag the "entire" NASDAQ into negative territory currently. Of course, 45% of NASDAQ is now made up of just five (the giant 5) companies.

[Nomad]

@jacob
Indeed, it will be an exciting experiment...

[Nomad]

The first month was a bad month.

The algorithm says sell AMD and AAPL and buy NVidia.
8 x AMD bought = $729.25, sold = $653.99 = $75.26 loss
12 x AAPL bought = $2816.53, sold = $2435.43 = $381.2 loss

Total loss crystalised = $456.46

I have now bought NVidia
6 x NVDA = $3248.85, currently up 0.78%

I still have the TSLA
3 x TSL = $1277.04 currently down -10.32%

[Alphaville]

damn. i read nassim taleb and he’s opened my eyes.

to paraphrase him some, “mathematics is for meditation, not for computation”

but you could get lucky... because randomness abounds.

[Nomad]

@alphaville
This method should work in the medium to long term, but a stock market correction won't help.
It is kind of based on stock momentum picking stocks with the best Sharpe ratio.

Currently, however. $577.82 down.

[Alphaville]

it could be good learning...

i mean, if you fail, it could be good learning

if you succeed, it could delude you into thinking you’re in control

lol i really know nothing right now. i’m in a state of total agnosis and bafflement.

i gotta read black swan + antifragile... fooled by randomness was great but seems only the start

—

i gotta ask though, are you trading with cash or leveraged?

[bedon]

@alphaville
This method should work in the medium to long term, but a stock market correction won't help.
It is kind of based on stock momentum picking stocks with the best Sharpe ratio.

Do you have any stop loss rules?