The
foundations of our research efforts began in 2006. I began trading in 2004 after a friend of
mine turned $5,000 into over $30,000 in a few short months, on a penny
stock. In hindsight, he was very lucky
to have realized that outcome. Over the
next few years I traded, in what I would now admit was mostly ignorance. I would pick a company and put money into the
market with little more than a 50/50 shot of making anything.
It
was also in 2004 that I started my Finance degree, after more than ten years of
working in the factory. As my education
advanced, I began to develop insights into how vastly public information could
be used to make more informed decisions on which companies held a greater
chance of growing my investment dollar. The
financial discipline was not the only knowledge that would help me to
invest. I realized that Statistics could
also play a large role (and arguably a more important one) with respect to my
investment decisions.
In
December of 2006, I began developing a statistical model for evaluating large
numbers of companies at once. The
results of the model are then filtered through an additional algorithm (is a step-by-step procedure for
calculations) to produce a group of potential investments which have a
lower level of risk as compared to other choices. The initial trials went very well in 2007 and
the beginning of 2008. The model stopped
producing results when the markets began to destabilize in mid-2008, which it
was intended to do.
Unfortunately
because of the market crash, the program would simply yield no results. That fact halted any further research and the
project was archived. After completing
my Master’s Degree, I began revisiting the idea of continued research. Last fall (2012), I began running multiple
models again and sharing the stocks that the model produced, and then following
the resulting gains/losses and benchmarking those results against the S&P
500. The most impressive model produced
a gain of 10.52% over a 9 week period, and the least impressive model resulted
in a gain of only 2.51% in the same time period.
Several
weeks ago, my colleagues and I discussed making this research more public. As this has become a hobby of mine, I chose
to create this blog to discuss my research, document the portfolios of each
model and the future results of the trials.
Additionally, I will be happy to discuss and teach various topics within
the discipline of Finance with my readers.
We
will be running the first set of models (for this blog) on Sunday, March 3rd,
and posting the resulting theoretical portfolios.
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