Can you beat the Market? Needless to say, this is one of the most perplexing problem in finance/trading/life. I am proposing this quasi-contest for anyone willing to join. Here are the guidelines/rules: 1. On Sunday Night (or before Monday's bell) select FIVE or less stocks from NYSE. This will be your portfolio. 2. The weight of the five or less stocks can range from 100% to -100%. 3. The price of the stock will be the average of the High and Low. This obviously will be determined by the end of Monday. 4. Commissions are not applicable in this case. 5. Returns are based solely on price (no dividend). Stocks are assumed to be liquidated by the end of the week. The price (sale) will be the CLOSING price of that security. Objective: Pick a portfolio that will outperform (ROR) a simulated one. Simulated portfolio: Five Stocks randomly chosen by me (FishSauce) (or to be correct, Excel randomizer). All the guidelines are the same for the simulated portfolio (except of course #1). The weight will be 20% each. Goodluck
your baseline needs to be the market price of risk (compounded annual rate) - (1 year t-bill annual rate) ___________________________________________ volatility.
FishSauce interesting topic..... I am curious if someone can beat the market by picking stocks consistently ..... Beating the markets is indeed a hard task to do WITHOUT anny restrictions. You have a lot in your competition against Excel. I cant use stops, can only trade on monday morning.... have to hold for 5 days regardless whats going on....... For me the only possible way would be to search finance.yahoo.com for stocks that will reporting earnings on wednesday and where the expectation is so low that it would be easy to beat. Because of the fact that I can play this only 12 - 20 weeks a year I don't think it's usefull for you.... So I will stay on the sideline and watch how the pros will do. As you only have 52 weeks a year - how many years do you think that somebody has to play this to deside that he has beaten random? Good trading and happy eastern
That's the real question for all of us. I'm making progress. I have a feeling this quote is going to apply to me: "There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!" - Jesse Livermore When I do figure out what to do, I'm probably not going to have any money left! :eek:
What stock universe are you using? Will you weed out really low cap/low volume stuff that would be hard to trade in reality? g