Theoretically, you can achieve an excess return with small caps - the smaller the better - and this is also empirically verifiable. But where I am completely out is that you should trade the shares. According to all the rules of logic, this no longer makes any sense at all.
Either you buy good stocks or you buy garbage stocks and hope for the best. If they really are good, why should you sell them at all? With such small companies, a 10,000% return would still be realistic in the future. If they really were "titans", what's to stop this from happening with at least some companies? Mathematically speaking, it makes no sense to sell a good company after 1 year.
And what if they are not quality companies? Then you are actually always speculating that a sufficient number of investors are even dumber than you are and all you really want is a quick pump and dump.
I don't want to attack you or make you sound stupid, but I've long felt that you have a certain penchant for gambling.
Either you buy good stocks or you buy garbage stocks and hope for the best. If they really are good, why should you sell them at all? With such small companies, a 10,000% return would still be realistic in the future. If they really were "titans", what's to stop this from happening with at least some companies? Mathematically speaking, it makes no sense to sell a good company after 1 year.
And what if they are not quality companies? Then you are actually always speculating that a sufficient number of investors are even dumber than you are and all you really want is a quick pump and dump.
I don't want to attack you or make you sound stupid, but I've long felt that you have a certain penchant for gambling.
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@Soprano So feel free to complain to James O'Shaughnessy and tell him that "Tiny Turnovers" would have been a better fit. 😅
This is a quantitative investment strategy
https://www.investopedia.com/articles/trading/09/quant-strategies.asp
As for the whole quality or you have to find someone dumber thing, NO!
What, where did you get that from? I don't even know where to begin.
By that logic, every value and momentum strategy is also a "pump and dump" which is obviously not so.
Why do you buy quality stocks? Because you believe that others will be prepared to pay more for them in the future than they do today.
It's no different with a value approach.
You buy cheap companies because you believe that others will be prepared to pay more for them in the future than they do today.
The price of a share only rises if more is bought than sold. Quality is no different.
Of course, if you enjoy analyzing companies and want to take a quality, buy and hold approach, then you will probably be able to find one or two gems among the nano caps. Provided you can find the necessary information on these companies.
This is a quantitative investment strategy
https://www.investopedia.com/articles/trading/09/quant-strategies.asp
As for the whole quality or you have to find someone dumber thing, NO!
What, where did you get that from? I don't even know where to begin.
By that logic, every value and momentum strategy is also a "pump and dump" which is obviously not so.
Why do you buy quality stocks? Because you believe that others will be prepared to pay more for them in the future than they do today.
It's no different with a value approach.
You buy cheap companies because you believe that others will be prepared to pay more for them in the future than they do today.
The price of a share only rises if more is bought than sold. Quality is no different.
Of course, if you enjoy analyzing companies and want to take a quality, buy and hold approach, then you will probably be able to find one or two gems among the nano caps. Provided you can find the necessary information on these companies.
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@Soprano presumably they are simply trying to find inefficiencies and sell them after a year, as they expect the inefficiency to disappear at some point. At the same time, growing companies often reach saturation at some point. I would take the approach that you don't necessarily sell after a year, but rather reassess after a year and adjust the exposure to the individual value.
The trick is that you have to be smarter than other market participants in Nano caps. Or you have to hang on to someone clever. But you would have to trust them.
The trick is that you have to be smarter than other market participants in Nano caps. Or you have to hang on to someone clever. But you would have to trust them.
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•@PowerWordChill Oh sorry, didn't manage to answer or forgot to answer. A mixture of a lot of work and a bad memory ^^
Well, somehow I can't confirm that this is a value approach. Buying shares that are undervalued is all well and good, but you wouldn't sell them again before all the values have been raised.
Apart from that, you pay horrendous taxes every year if you keep selling.
With a quality approach, you make sure that the company is so good operationally that you imagine that it will be at a certain point in 5 or 10 years and, by investing until then, you assume the risk that you are wrong or are compensated for your patience. So it is quite clear where the return comes from or why someone else will pay more.
But with TinyTurnovers, you simply buy shares that seem cheap in relation to turnover and then say the share will be higher in a year's time - why do I care? There is also no success criterion for the shares.
Well, somehow I can't confirm that this is a value approach. Buying shares that are undervalued is all well and good, but you wouldn't sell them again before all the values have been raised.
Apart from that, you pay horrendous taxes every year if you keep selling.
With a quality approach, you make sure that the company is so good operationally that you imagine that it will be at a certain point in 5 or 10 years and, by investing until then, you assume the risk that you are wrong or are compensated for your patience. So it is quite clear where the return comes from or why someone else will pay more.
But with TinyTurnovers, you simply buy shares that seem cheap in relation to turnover and then say the share will be higher in a year's time - why do I care? There is also no success criterion for the shares.
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@SchlaubiSchlumpf Yes, I can understand that, but there is nothing about that in the strategy. The inefficiencies will only be eliminated THEN, if the company has growing sales and thus becomes bigger and more interesting over time, so that the demand for shares increases involuntarily.
According to the criteria, however, I could also simply buy companies whose sales have been falling for years and wonder why nothing works.
According to the criteria, however, I could also simply buy companies whose sales have been falling for years and wonder why nothing works.
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@Soprano A value approach is purely about valuation. A company can have falling profits and still be too expensive.
In the end, the question is how much $1 of future earnings will cost you today.
The best company in the world can be too expensive to be worth buying.
And an underperforming company can be too cheap.
The strategy relies on finding cheap companies before the market prices them "correctly" again.
In backtesting, the strategy (in different variations) has performed extremely well. And even after the strategy was published, it continued to work for 18 years (which is unusual). I therefore assume that it will continue to function well for the next 18 years.
As for the taxes, yes that's a problem, which is why I suggested mapping it with a wikifolio 😉.
In the end, the question is how much $1 of future earnings will cost you today.
The best company in the world can be too expensive to be worth buying.
And an underperforming company can be too cheap.
The strategy relies on finding cheap companies before the market prices them "correctly" again.
In backtesting, the strategy (in different variations) has performed extremely well. And even after the strategy was published, it continued to work for 18 years (which is unusual). I therefore assume that it will continue to function well for the next 18 years.
As for the taxes, yes that's a problem, which is why I suggested mapping it with a wikifolio 😉.
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•@Soprano A value approach is purely about valuation. A company can have falling profits and still be too expensive.
In the end, the question is how much $1 of future earnings will cost you today.
The best company in the world can be too expensive to be worth buying.
And an underperforming company can be too cheap.
The strategy relies on finding cheap companies before the market prices them "correctly" again.
In backtesting, the strategy (in different variations) has performed extremely well. And even after the strategy was published, it continued to work for 18 years (which is unusual). I therefore assume that it will continue to function well for the next 18 years.
As for the taxes, yes that's a problem, which is why I suggested mapping it with a wikifolio 😉.
In the end, the question is how much $1 of future earnings will cost you today.
The best company in the world can be too expensive to be worth buying.
And an underperforming company can be too cheap.
The strategy relies on finding cheap companies before the market prices them "correctly" again.
In backtesting, the strategy (in different variations) has performed extremely well. And even after the strategy was published, it continued to work for 18 years (which is unusual). I therefore assume that it will continue to function well for the next 18 years.
As for the taxes, yes that's a problem, which is why I suggested mapping it with a wikifolio 😉.
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