TACKLE BIG FALL DAYS

Yesterday was a sharp fall day. Public gets into reasons. Corona 2? Lockdown 2? Let’s look at the long term? Let them improvise. We did what we were supposed to do. Exit if Stops are hit!  

Our absolute returns on accounts is between 50% to 90% with drawdowns, being pre-calculated as per stop-loss levels at 8% to 15% across accounts. This effectively means an IRR of 100%+ after considering drawdowns. As a money manager, these returns give me satisfaction considering a 9 figure capital under management.  

It took a couple of seconds to decide and couple of minutes to execute a 100% cash out since the TSL’s & respective drawdown calculations are updated every day. The discipline to stick to a strategy is tested on such days which occur once or twice a year but can take the juice of 2-3 months hard work out of the account.  

Now, it would be good to start on a clean slate. Out of our basket of current priority stocks based on momentum, the majority of stocks in our list hit the SL in intraday but at closing, they managed to close above the stop-loss levels. The next job is to see if other similar stocks are getting added to our weekly funnel list on the basis of our proprietary momentum-based filters.

We will keep updating this table and see at the end of this week & month, how many TSL’s are protected on a daily closing basis. This will be a good indicator to take future positions.  

We want to be sure we are riding the relatively strongest stocks.  

Stocks, whose TSL is done could probably give a rapid bounce back to prove their strength. We are all open to see what the markets have to say and act accordingly.  

Alternative low probability scenario – markets could keep falling/going sideways. In this case, we will have to alter our approach and make it more defensive.