Keys to investment success | Moon Run

Keys to investment success

There are a plethora of theories about investing, whether buy and hold is best verses timing, actively managed funds verses index funds and how much research should be done to get best success. I am of the view that timing can be done, but it is difficult and takes lots of effort. Here are a few things to observe while doing your own analysis and research.

1) Use the computer to the max
When I started in earnest in 2000 to determine best results, backtesting using a computer is essential. All my timing models and stock selection simulations result from painstaking research. I probably did overkill in analysis, but it was worth the effort. While in user groups, I would take someone else's "strategy" and improve upon it. Then branching out there were quite a number of "Eureka" moments which were essential for breakthroughs in theory. Now I get my timer results at night and place new trades in the morning. It all adds up to spending 5 hours a week updating results, freeing me up for other efforts to improve models.

2) Diversify portfolios within portfolios
The categories of mutual funds may be growth, value and blend funds. Through designing stock simulations I can reach into many different areas of the market. This way I can diversify the selections into several 10 stock portfolios so as not to overweight one area. Large cap, mid cap, small cap are available for investing.

3) Don't ignore market timing
Yes, the average investor without a thorough analysis of the market can be befuddled as to when to be in or out. Using market timing I can forecast with accuracy when a crash or large correction will occur. Of course it might not be 100% accurate, but the benefits far outweigh the disadvantages. My book, Before the Bear Strikes, concentrates on just that. The arguments that buy and holders suggest contrary to timing doesn't hold up. However, I do not think the majority of market timers have proved themselves. I won a real money international stock market challenge in 2008 and called the crash in September. I am also Timer Digest Bond Timer of the Year in 2019.

4) Get a simulator
I use Portfolio 123 to select stocks and Metastock to invent timers. When I get a new stock to trade in the morning, I make the trade, no questions asked. When the timer tells me to sell all my stocks I am out the next trading day. Computer results are far better than armchair investors who haven't done their homework. Progress is made by analyzing other people's simulations or coming up with new ideas on my own.

5) Get Going!!
There is SO MUCH that can be improved in modeling. Don't hold back in becoming a stock market expert or guru. There is still enough process waiting to be discovered.

Bryan Johnson
Moon Run Report