Investment Strategy

by [anonymous]2 min read22nd Jan 201621 comments

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Personal Blog

Raison d'être


My original reason for risking my money for more, and the reason I tell myself, is that the marginal value of losing just about any amount of my money at the moment is negligible. I am fairly austere in my consumption habits and have no big ticket debt. Though, having lots and lots of money would certainly improve my options in life.

 

History


I am a bad gambler, better and investor. I lost thousands using the Martingale betting strategy which seemed to work on short-time line simulations that I tried, but failed to work in real life. I now understand why it doesn't work fortunately. I lost thousands on poker, which I’m awful at. Now, I’ve lost thousands on speculating in stocks.

 

Insight


I understand why I lost money when I gambled. It’s less clear to me now as a speculator. My consistent failure has resigned me to avoid any active management of my money making by investing for the foreseeable future because maybe I'm just a gambler and rationalizing all my irrationality in finance away. I was hoping someone here could help me understand what’s going on?

Strategy

My current stock portfolio is down 6000 dollars. My prior is that I have just been the liquidity in the market. My basic strategy has been buying mainstream stocks whose price has tanked for one reason or another (in the hope of a turnaround, or capitalising on people’s fear causing them to dump the stock below its actual value. And, to buy a few biotech stocks that seem high potential. This is all on the ASX cause it’s a hassle to open accounts to trade internationally:


Performance: underpriced

* BHP Billiton crashed due to low oil and an environmental disaster in brazil

* Slater and Gordan crashed due to getting class action law-suited by its own investors (ironic, since slater and gordan specialises in just that) through its main competitor

* Woolworths crashed due to price war with competitor and weaker profits

 


Growth: High potential, tractable and neglected

* Bionics limited is putting through some psychiatric medications in trials and I thought it would almost be good philanthropy to sponsor it since it’s quite novel compared to existing treatments

* Integral diagnostics is mainly owned by doctors who own clinics that order the machines so I feel like it’s undervalued by people not connected to it

* Regis healthcare gives me cheap exposure to the aging population market

* Tissue Therapies sounded like it was about a wound healing thing from a superhero comic but turned out to just be some niche diabetic product

* Donfang modern agriculture grows mandarins or oranges in China, and I wanted exposure to China and thought it was interesting that they’re listed on the Australian stock exchange

 


Portfolio optimization

 


Outcomes

I’ve either made a significant loss on each of these, over the course of a month, or basically no change in the price. The exception is tissue therapies that I bought ages ago and lost lots on too. I was going for long term appreciation anyway, so maybe things are okay? Help me become stronger! The first stock I picked I did extensive quantitative research on the fundamentals. However, I couldn't integrate all the information I collated into a single indicator for what decision I should make and I still don't know what that would look like so I just had to go with my gut. I made a loss anyway despite having found evidence that the team involved were actually quite pathetic because I already did all the research and thought it sad if I didn’t participate (plus shorting seemed to complicating!). I know technical analysis is bullshit, and I don’t see how any inefficiencies in machine learning of stock data that I could replicate in a timely manner with my average brain haven’t already been taken advantage of by existing quants.

 

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