Friday, June 12, 2015

Removing $CMG & Adding $KKD

Markets have rallied, as anticipated. Sideways action since the start of this year has laid the foundation for strong move. Once the market moves out of current range, we can experience acceleration to the upside. However, the extent and longevity of acceleration is anyone's guess. That is exactly why, one needs to follow a system for investing and trading.

Investors with a unique, easy to follow but comprehensive strategy can make constant income in the stock market without taking huge risks. However, the more one risks, the more are the potential gains. Therefore, it again depends on one's risk appetite. At Understand Survive and Thrive, we have developed a short-term and a long-term trading/investing model.

Short-term model involved a lot of volatility with strict risk management. Whereas, long-term model, manages risk effectively and also generates excellent without continuous stock market monitoring. This model generated a sell signal on Chipotle at the beginning of June and generated a buy signal for Krispy Kreme at the same time.

As with any algorithmic system, trade has to be taken when it is generated without any question. As a result, Chipotle stock was sold and the position was closed in the portfolio. At the same time, Krispy Kreme shares were added to the portfolio.

As of today, $CMG has gone further down (shown below).

Whereas, $KKD has rallied sharply on an upbeat earnings report.

Similar situation happened with Amazon in January and other stocks over the past few months. So far, model portfolio has outperformed a sideways to down market since March 2015, with a very impressive margin (by the grace of God):

DJIA (since March 1, 2015) = -0.73%
Model (since March 1, 2015) = +1.88%

The best part is that the portfolio analysis and trading times are minimal. Consequently, minimal stress with impressive risk-management.

In the next post, we will talk about how do fundamentals stack up for Chipotle and why has it gone down.

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