Magic Number Investing Approach?
by nickperrone | May 15, 2016 11:38 am
Steve Sjuggard of True Wealth[1] (Porter Stansberry[2]) is claiming a Magic Number method of investing which gives good timing info. Any comments on this approach. Don’t think Steve’s approach has been that accurate to date but I may be wrong. Any thoughts on the validity of this methodology?
Endnotes:
- True Wealth: https://www.stockgumshoe.com/tag/true-wealth/
- Porter Stansberry: https://www.stockgumshoe.com/tag/porter-stansberry/
Source URL: https://www.stockgumshoe.com/2016/05/microblog-magic-number-investing-approach/
Could it be the gold/silver ratio? I know it’s insanely high and of course know the 15:1 elemental occurrence ratio, but I was wondering the same thing as well.
No, I know it is some figures that his algorithm checked to determine in his entry and exit points. For e.g. when gold is higher than a year ago, then buy gold next month, meaning if gold is lower than a year ago, sell gold. His system uses a number of sensible algorithm to time entry and exit points…
do you know what the algorithm is? I am dying to know, I can only find a few articles on this, probably because it is kept “hush hush,” are what are the best books that explain this concept?
i am definately interested but they tease it works for stocks as well so would a 15.1 pe or 15 dma or 15.1 sessions be able to tie in lmk
john
jpesente1116@gmail.com
Could it be the Fibonacci ‘mandated’ rebound of 0.6… times a recent drop that broke through a significant (high-volume) support level? I’m eyeballing it here.
Did anybody listen to the entire message? I left it play and walked away.
Found out at end they wanted big bucks. I’ll pass. Suggerud’s record with me is positive but not worth this kind of money.
“Did anybody listen to the entire message? I left it play and walked away.”
When you get a Stansberry video with no timeline, try to leave the page. You’ll get a message that says either you can leave the page or stay on the page (continue). Press stay on the page, and the video will be replaced by a transcript of the video. You can scroll down to skip all the testimonials and other fluff to the price (“Subscribe Now”), so you don’t have to sit through (or walk away from) the video.
There really are some facts about the product (which is almost always another newsletter) buried within the transcript, but the facts never gives you what the “headlines” promise. Check it out.
Other than the well-produced sales pitches, Stansberry has some pretty good information – but you’ll pay for it.
I did a web search on one of the names, “David Harding” in Steve Sjuggerud’s presentation, which I’m in the middle of listening to. Here is an interesting article:
http://www.afr.com/business/banking-and-finance/hedge-funds/meet-david-harding-the-man-behind-the-models-that-beat-the-market-20151121-gl4kna
A quote from the article “Harding is a hedge fund hall-of-famer and one of the founding fathers of systematic investing – where computers are programmed to buy and sell securities based on models designed to beat the market. They do this largely by identifying and following trends in what’s known as momentum trading.”
The entire article is worth reading.
Steve also quotes Cliff Asness who uses a variation of the method. An interesting article about Asness’s successes (and a drawdown):
http://fortune.com/2011/12/19/cliff-asness-a-hedge-fund-genius-goes-retail/
Also it’s from “True Wealth Systems”, not “True Wealth”. I am a sub to TW and they won’t give it to me.
The Asness Fortune article references the “Golden Formula” mentioned that is actually the “2% management fee/20% hedge-fund profit share that Asness’s AQR funds allow investors to shun, and describes how his momentum strategy works. Steve mentioned 2 AQR mutual funds that outperformed the market by multiples last year. Yahoo finance lists about 100 AQR fund-family tickers. Of those, only 2 did very well in 2015 (the “last year” referenced?): QLEIX AQR Long-Short Equity Fund, and QMNIX AQR Market-Neutral Fund. Also, the 212 years of data used in supporting the methods can be found referenced in: http://www.valuewalk.com/wp-content/uploads/2014/05/SSRN-id2435323.pdf or simply search for SSRN-id2435323, the SSRN publication number that Valuewalk dutifully included in his website page address where the publication is re-posted.
Momemtum investing is a great strategy until it is not. Even combining momentum and value, as Asness suggests doing 50%/50% to beat the market long-term, can be troubling at times as he mentions long periods of under-performance that some have problems staying with the strategy/funds.
The video also mentioned Ed Seykota, a “father” of momentum investing. Check out https://en.wikipedia.org/wiki/Ed_Seykota
Seykota was a Turtle guy. Great discussion and links above. If you look at all the examples and time frames discussed (Apple, etc.) you might find that any extreme oversold indicator might have signaled the reported uptick. Of course they NEVER talk about the false positives. But Seykota does. Money Management 101 is all over his interviews (fail small, succeed enough to generate edge over losses). All quants just nest if/then conditions to weed out false signals. They have just reduced it to one number here. Like it’s anything new? I don’t expect anything earth shattering here. There are MANY indicators that signal “trending” vs. “consolidation”, but all are not foolproof (choppiness index, ADX/DMI, squeeze indicator based upon 2 sigma Bollinger Band being inside 1.5 ATR Keltner Channel, etc.).I prefer Market Profile and fib levels, but there are many other ways to look at price action that signals a trend.
All of the people he mentions are famous trend followers, including the “Turtle Traders” like Seykota. Momentum investing is similar, and sometimes people use the terms interchangeably. If you look online, you can find the Turtle trading rules for free. They look for a commodity/stock to break out of a certain range.
I’m guess Sjuggard has his own twist on this. It may be quite different from the Turtles, but I’m almost sure it’s based on trends/breakouts.
I’m guessing it’s basically a a 10 month moving average and price system. And then they refine the exact MA for each security. If so, that’s a perfect system for a newsletter where you want subscribers to hold for 6-18 months.