I’ve been successfully unemployed since June of 2018 and living off my stock trades since Dec of that same year. It took me quite a while to weed through my trading ideas/styles and fully refine my current system but now I believe I finally have it solved! I suppose time will tell if this is still just beginners luck or not.
1st Position opened on 18 Dec 2018, so it has been 4.5 years now. After logging all my trade data and using Excel’s XIRR function, I have averaged 30.15% per year since my journey has began (I like using XIRR because it is a money-weighted return formula, so my living expense withdrawals won’t bugger up the result).
PnL chart of all my realized trade gains/losses + dividends received (the very last plotted point is the unrealized gain/loss standing of all my currently open positions, as of yesterdays close):
Current Open Swing Trade Positions (in Yahoo Finance ticker format):
BTE.to, OBE.to, PHX.to, SGY.to, SU.to, VET.to
BTU, CUZ, HAFC, HTBK, IIPR, INDB, NEP, OCFC, PEAK, PPBI, SPWH, SSRM
Small Journal Trades (Norbert’s Gambit) still open:
OBE, SU
A pretty sizable holdover from one of my previous buy and hold style strategies (and slowly liquidating now – it’s also the main reason for that spike upwards on that last plotted chart point above):
YGR.to
The ‘gist of my strategy is fairly simple, really.
1. Build a watchlist of companies that have grown their Tangible NAV per share for at least 2 years in a row AND are “undervalued” to the rest of the market (see explanation below).
2. Buy the one that has suffered the largest percentage drop in market price over a relatively short period of time (when compared to the others on that watchlist).
3. Sell when stock price has recovered somewhat (or if just too much time has elapsed and it is now subjecting you to that dreaded “opportunity cost”, or if its quarterly earnings report was sub par).
My overly simplistic determination of an Undervalued Condition (I keep 2 kinds of watchlists):
1. If it is trading below its TNAV/share (and still growing its NAV, of course), then it is undervalued.
OR
2. If it pays a dividend and this dividend is yielding more than the “average” dividend yield on my dividend stock watchlist (and is still growing its NAV, of course), then it is undervalued.
Adding in some dynamically sized diversification to the mix:
1. Place buy order for the new deepest sold off stock using 1/2 the dollar amount of your currently open largest position’s cost base (any uninvested cash reserve is also considered a position in that regard).
2. If cash reserve is insufficient for the desired new stock position size, then sell some of your largest stock holding to fill that deficit.
I have many more nuances concerning my limit order buy/sell targets and date ranges, but I don’t feel comfortable sharing the rest of my system just yet…
