I discovered a very conservative, but effective way to make money on the stock market that beats passive index investing by several notches. It took almost a year to refine the algorithms, along with a lot of false starts, bugs, and mistakes, but I feel really confident now that the methodology is somewhat sound and stable.
This sounds too good to be true right? Sounds like SPAM, right? One of those auto-bots on stock discussion boards, that almost sound like a real person. Perhaps. Well, I’m not SPAM, and I’m not an auto-bot (nor a Decepticon), and I can’t determine if this methodology will work if we fast-forward into the future. However, it’s based on some old fundamentals, uses historical data, and there are a few safety checks built in to help avoid the real risky equities (OTCs, etc). In fact, I actually think it can still work in a very bear market, or one that is grossly overvalued. All those sentiments are baked into the decision making of the software, and should allow one to stay clear of real dangerous / volatile securities.
The only time I have lost money on the market this year (which is too many) is only when I departed from using this algorithm. I start to let me emotions carry me and I used my gut. I sold when I should of held; or bought something on my own. Well, my gut seems to be as good as flipping a coin. I’m a software developer, and I know how to write code, calculate probabilities, and program a computer. I’m not an equities analyst, nor do I have any real business background. But, I found that as long as I slavishly follow the logic I developed and not let me emotions sway me, everything seems to work very well. In fact, YTD (9 months so far) if I followed this strategy, I would have seen a 120% gain in my portfolio. Of course, I didn’t follow it religiously, so I can’t boast that I had that type of gain this year. But, if I followed it to the letter, I would have — and I kick myself for it constantly.
They say that 84% of stock trading is done by computers. This is probably why this algorithm works — it thinks like a computer, because it is. It crunches historical data, measuring probabilities, finding trends, consumes analyst sentiment, and weighs target prices. If you follow the advice of my software slavishly, like an emotionless machine, you should see steady gains. Of course, investing any money in the market involves risks, so do so with common sense and discretion, and never follow the exclusive advise of one dope on the internet — use your own judgment.
This has been a really good year for the market in general. Some call it the Trump effect; that seems to be as good a reason as any for the huge gains over the broad market: especially since the double digit rise in the S&P aligns almost perfectly with the recent US election. Maybe this algorithm won’t work next year as the Trump effect seems to have cooled. That is yet to be determined.
I’m going to make the computer’s stock picks available on a daily basis to others as soon as I work through ways to do so without incurring too much load on my servers. Stay tuned!