What works on wall street for the individual investor

Well this year has been a awesome with great return on investment. Closed this year with 272% and here is how.

Over the past years & since 2001 , have been ups & down in trading and the only probable reason that I thought whatever happened was by following too many strategies. Over the past several years significant profit happened only once and just what happens to the new kid on the block and all that has been said & repeated in several investment psychology books, happened and took my portfolio down south. Phew ! no worries .. lesson learned was very important. Somethings worked well, others always backfired even when all the signals were correct.

Since market was down in doldrums in 09, i spent the first quarter of this year analyzing what worked. As Malcom Gladwell says in his Outliers: The Story of Success that the minimum amount of time required to achieve perfection is 10000 hours. Well the first flaw emerged, i had only 4-5000 hours under my belt. Which meant rigorous training was to achieve perfection. I have added at least 1500 hours of effort this year and hope to reach the 10000 hour mark by end of 2010. Primed to perfection that 10K provides.

I analyzed several of my trades since 2001 and realized that the only time i made money was when i didn't intend to make quick bucks. Medium & long term investments seem to work the best, shorter investments were very risky & had a very low hit to miss ratio.

A pattern emerged & the best trades were outlined and simple rules emerged. I decided to mirror some of my best trades and the results are in the graph. I combined these rules with ideas in trend following methods of the turtle traders. Also great teacher Mr. Dave Landry & his charting techniques were a eye opener in the world of technical analysis of chart patterns. Last but no the least , focused following of daily news blogged by thekirkreport.com. The Kirk report & Charles Kirk has been a great inspiration.

Trend following works great and rules outlined in The Turtle Trader are really simple. But unless you do a dry run for yourself , you won't realise the power there is to. Of course some one did make 2 Million $ from just 2000$ using those very turtle techniques, & its very repeatable

Here is how my monthly round up looks like for 09. Although for whatever reason, I wasn't able to participate in the market in the Q109, but performance since april has been fabulous


In a nut shell:

Once you have done it, significant confidence develops in a specific strategy and it can be repeated over & over again with minimum effort. I hope to continue this for many more & someday into a full fledged profession.

So What Is Your Strategy?

I hope to better my performance next year, lets say improve by 25-40% but again simple strategy ; no deviations from what works.

Is CASH really KING

For a very long time leaders have stressed on the belief that CASH is king & has been said by not one but several visionaries.

Is cash really king is the question. In time of downturn where cash can certainly help to weather a storm what really can make or break a big or small company is how much the customers believe in the company's deliverance's and the value it is providing.

Where cash strapped customers are looking on ways to squeeze the last drop of value from their already over extended resources always tend to look for outfits that are able to provide the same

Companies that think not about the customers but about how many more line items we can add to the invoice will suffer in this economy and the effects of this impact will be long lasting.

On the otherside of the world lies the paradigm that Customer is King. Asian companies have traditionally been good at delivering value. Although the influence of west is changing this there still exists a lingering impact of previous consumer sentiment where products sold only by word of mouth and lasted lifetime.

Also as noted currently companies are seen to engineer products bound to fail much earlier than their expected life time to ensure that they are able to sell a replacement product which often the customer does not need given his requirements. Often time those are bundled with slew of unwanted features that most customers don't need but allows the justification for increase in product price.

US centric corporations need to a large extent absorb the value driven proposition of Asian companies and incorporate into their culture. That will lead them towards the road to survival not gouging on the customer for every minute and unperceived value they think they deliver.