2009
Like many MBA Business schools , my alma mater also ran an internal competition to find the best manager of a particular batch, what followed was a series of games and situations at the end of which you have your winner.
One game was to make most money in stock markets in a day – A classic day trading game, all of us were given virtual INR 100,000 and a virtual demat account, the aim was to finish with highest balance possible at the end of the day.
There were many finance wizards at my place and a variety of strategies were employed
- One friend read up all the latest Macro and Micro (company specific news) to make calculated bets on items that will move due to news
- My strategy was to run some technical analysis (which till date I have limited understanding) and find stocks that can move with momentum
- Another friend switched on CNBC 18 at 7:30 am to get hot picks from news Anchor to make his day trading gains
- My neighbour in next room had a wait strategy he wanted to see what others are doing and then copy their trades
Next morning – The results shocked everyone
The winner’s balance was INR 100,000, while all of us were devising way to get our balances up, The Winner simply choose not to trade. No wonder he went to become the best manager of our batch that year
2015
Is the first time I wrote on merits of sitting on ass investing, on a smaller time frame the “Do Nothing” portfolio did better than the free Active portfolio that I was running. its been 5 years and I thought it would b good time to test it now as officially we have seen the covid crash and recovery in 2020.
results – “Do nothing” portfolio is up 270% in 6 years (~ 25% CAGR) more than double of passive Nifty returns
This despite
- 2nd largest starting position is down 80%
- 4 positions in deep red , most of the initial capital lost
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Is this a fluke strategy ?
One should definitely read The Coffee Can portfolio – You can make more money being passively active than actively passive.
The Coffee Can portfolio concept harkens back to the Old West, when people put their valuable possessions in a coffee can and kept it under-the mattress. That coffee can involved no transaction costs, administrative costs, or any other costs. The success of the program depended entirely on the wisdom and foresight used to select the objects to be placed in the coffee can to begin with.
Activity is not alpha creator at least in stock markets and like the coffee can objects there was a lot of hard work in initial selection of these stocks , but my mistake was not holding onto all of my winners. (See I was missing Coffee Can in my tool kit then)
As a investor can you build a “Do nothing” portfolio by choosing a ethical advisor along with ETFs
Need some help in starting ?
this below list is not a bad place to start
