Deep Value on Pace for a 148% Return*

Deep Value on Pace for a 148% Return

Apr. 1, 2024

Subscribe to my YouTube Channel HERE.

 

Beware of the word “annualized”.

Because what it means is: it hasn’t happened yet.

Making returns annualized is just way to estimate what a new system might do if it keeps up its current pace for a whole year.

Not a calendar year. A whole year. That’s why it’s valuable.

For example, let’s say you discover a system you like in October, and it makes 5% in that month.

If you look at it until the end of that year, that’s only a couple of months away–which isn’t helpful if we’re planning on yearly budgeting.

So we’d take that 5% and multiply by 12 and get an “annualized” 60% return by next October.

Of course, there are all sorts of dangers with this type of thinking.

For one, it almost certainly won’t do 5% every month for the next twelve months. And every month that it’s less than our benchmark for annualization, our projections go down.

For example, if our first month is 5% and our next month is 0% and our third month is 2.5%, then our annualized return went from 60% when we were so enthusiastic down to 30% after the real results came in.

It’s possible for the returns to improve as we go, too, but that usually doesn’t happen.

In short, annualized returns are used as marketing tricks, at worst, and honest guesses that are probably too high, at best.

That said, back in late January, I posted a portfolio of Deep Value stocks that were below their 800 period Bollinger Bands™ and had some recent momentum.

This is how I like to look at (and trade) Deep Value. Is it an effective way to trade value stocks? Here’s the update:

Let’s quickly go through it.

How did I find those? I used the scan I created in Tradestation.

Were those the only ones that came up on that scan? Yes.

How have they done so far? They’re up over 39%.

How much is the market up during that time? Only 8.5%.

Deep Value is beating the market so far by over 4x? Yes.

What’s that annualized? If it keeps up this exact pace, it would return 148% at the end of a year.

Are they still undervalued? Yes, you can see the technical “fair value” projections in the table above.

A lot of people say Value Investing is dead.

I’m not sure that’s true.

We’ll look at some automated systems the rest of the week.

 

Join the free Newsletter list here .

 

Get Robot information HERE.
Visit my Performance Page HERE.
Buy my new book HERE.
The Inevitability of Becoming Rich
is HERE.
My latest YouTube video is HERE.

 

Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.