Archive for March 15th, 2012

Long Investment Ideas - II

On 15 Feb we talked about 4 investment ideas. All of them are positive month to date and barring one all of them are also positive year to date. We will review them at a later date when we integrate all the long investment ideas in a single long only India portfolio. Today we are discussing new long only investment ideas.

Q: Why are we discussing long only ideas?
A: Because there are always assets moving up (in a large group) irrespective of a large bear trend. The idea that 90% markets fall together with the market and vice versa becomes a false statement if instead of a daily performance, we consider a weekly performance.

Q: So is Nifty bearish?
A: No. The Nifty is bullish for us and we don’t think the index and the market is correcting beyond March and below 5,100 levels. We consider the ongoing down move as an accumulation opportunity. This is also the reason we are seeking long investment ideas.

Q: How do we select our stocks?
A: First we pick up a sector (Utilities, Electrical and Gas). Second, we filter out the worst performers. (Because worst performers outperform). Third, we check these stock for Jiseki bottoming cycles and running signals. Fourth, we test the stocks against BSE500 to check the long ideas for relative outperformance.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings from 1 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform. 100 is top relative performance and 1 is worst performance. The idea is that performance is cyclical. A top performer will underperform in future and vice versa. A top relative performer is also the worst value pick and the top relative underperformer is the best value pick. Jiseki is another name for Performance cycles, time triads and time fractals. The signals are illustrated as a running portfolio and as Jiseki Indices. These signals can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades.

Jiseki Interpretation. Signals are interpreted as crossovers between various Jiseki Cycles. All three Jiseki cycles (Jiseki 1,2 and 3) depict different time frames. Example: An asset is ranked above 80 percentile and all the three Jiseki cycles are pointing lower, this suggests a running SHORT SIGNAL. Our Jiseki Indices use different kind of exits based on price and Jiseki Cycles. We have color coded the (Jiseki 1>Jiseki 2) SHORT zones with brown sandy (burlywood) and grey (Jiseki 1>Jiseki2) for LONG SIGNALS.

Avinash Barnwal is Master of Science in Statistics and Informatics from IIT Kharagpur. He has worked on human response time at Department of Psychology, University of Amsterdam.  Avinash is a Quantitative Analyst at Orpheus developing money management solutions and building statistical models to address temporal challenges.