What is Model Portfolio? How do I take advantage of it?
Model Portfolio contains a list of stocks which qualify CAN SLIM criteria, and are added to the list on a proper breakout from their pivots (resistance levels). While there may be many stocks which qualify for the above, we ensure the best and the most ideal of the lot are recommended. Stocks are removed from the model portfolio when they breach our sell-rules, or when they weaken technically. Investors can consider purchasing such stocks, when they are added to the list. The additions are notified via the app as well as e-mail alerts. It is recommended that stocks are added, when they are within 5-7% price range from their pivot levels. Similarly, investors can remove stocks when they receive the remove alert, which are sent through the app or e-mail
A stock was added to the Model Portfolio last month. Can I buy it?
Buying right solves half of your selling problems. The ideal buy range for a stock is when it is purchased within 5-7% price range from its pivot. Our research shows that buying within the 5-7% range, enables you to sit through most of the normal price corrections in a stock. So please ensure that you buy stocks only when they are recommended and are not extended more than 7% from their pivot. You should also look at the current market condition even if the stock is available in the buy range. There is a possibility that the market direction could have changed since our recommendation and hence it is important to keep an eye on the market trend before making any new purchase. If you like a stock in the model portfolio, but have missed buying it, either because the stock was not available within the ideal buy range or the market direction was unfavourable, don't worry, the stock market provides ample opportunities in terms of other stocks or new entry points into your favourite stock.
How many stocks should I own? (Ideal number of stocks in a portfolio)
Individual investors with a large portfolio, say of Rs. 10 lakhs, need not own more than six or seven well-selected stocks. Smaller capital investments should consider holding only 3 or 4 stocks. Once you own the required number of stocks and if a tempting opportunity comes along that you think is really great, you must buy more only by selling off your least attractive investments. The more stocks you own, the harder it is to maintain proper track of them. Additional capital could be used to average-up existing positions, when such stocks break out of proper bases. The objective is to have one or two big winners rather than dozens of small profits.
When do stocks get added/removed to/from portfolio? How frequent would be the changes?
Stocks are added to the MarketSmith India model portfolio based on fundamental and technical strength, using the CAN SLIM methodology. While many stocks may qualify our CAN SLIM criteria, they are added to the Model Portfolio, when they breakout from their bases (price consolidation patterns) and when they close strongly near their pivots (previous resistance levels). Stocks are removed from the model portfolio when they breach our sell rules including stop-loss hits (we follow a 8-10% stop-loss rule), and 50-day and 200-day moving average breaks on huge volume. Stocks could also be removed on account of profit booking (20-25% or higher). Stocks showing technical weakness, without strictly breaching the above sell rules are also considered for removals. Stocks are added and removed based on the volatility of the market. Our research has shown that 3 out of 4 stocks trend along with the general market. If the market is in a Confirmed Uptrend, the green signal remains 'on' for new stock purchases. Similarly, when the market is in a Downtrend, we generally avoid adding any stocks to the model portfolio.
What should be the minimum portfolio size to take advantage of MarketSmith India model portfolio (1 lakh, 10 lakh?)
Stocks provide an advantage of investing even with the smallest of token sizes. While we do not provide any emphasis on the size of the portfolio, per se, we recommend investors to not hold too many stocks in their portfolio. Smaller capital investments should consider holding no more than 3 or 4 stocks. Individual investors with a large portfolio, say of Rs. 10 lakhs or more, need not own more than six or seven well-selected stocks.
How many stocks will you have in the MarketSmith India model portfolio? Should I hold all of them?
The number of stocks in the model portfolio could range anywhere from 1 to 40. The model portfolio represents 'Model' stocks and how to enter them at their 'Ideal' buy points. While it is not advised to add every single model portfolio stock to your portfolio, investors are advised to select the best of the stock ideas which appeal to them. Holding a few good ideas can generate the required returns, when purchased at proper buy points, and when strict sell-rules are followed. While the model portfolio could have a higher number of stocks, going up to 40 , it is only an indicative list on screening for CAN SLIM stocks and entering them at their ideal buy points. Please note, the model portfolio performance has beaten the benchmark, inspite of the number of stocks in the portfolio, indicating the effectiveness of the CAN SLIM growth strategy.
What is the benchmark index of the model portfolio?
The Nifty 50 has been the benchmark selected to evaluate the performance of the MarketSmith India model portfolio. The model portfolio could consist of any of the micro, small, mid, or large cap stocks, which qualify our liquidity criteria, resulting in the general market to be our universe. The performance of the model portfolio has well-beaten the benchmark since inception, even after adjustments for regular trading fees, implying the effectiveness of the CAN SLIM growth strategy. Important Note: The model portfolio is run with an objective to provide effective stock ideas to the investor, and not strictly with an objective to beat the benchmark. While we are happy to assume responsibility to track the performance of our recommendations, we believe running a model portfolio, with an objective to purely generate alpha using the CAN SLIM methodolgy, could generate far superior returns.
Will there be common stocks in India 47 and Model Portfolio?
The Growth 50 list is algorithmically generated list of the top growth stocks in India, with strong fundamental and technical characteristics. The list gets updated on a weekly basis and can have stocks that may or may not be available at their ideal buy points. There is a likely possibility that there could be common stocks in Growth 50 and the model portfolio.
When will I be notified about a stock addition or removal?
Subscribed users are notified of any additions or removals to the model portfolio through a notification from the MarketSmith India app, as well as an e-mail alert to the registered e-mail of the user. The app and the e-mail alerts contain information including the add/remove prices for the stock, market cap, volume, industry details, stock research, etc.
William O Neil India Investment Adviser division, is one of the divisions of William O Neil India Private Limited, which is a company incorporated under the Companies Act 1956. William O Neil India Investment Adviser division is a registered investment advisor with the Securities and Exchange Board of India and through its online product, MarketSmith India intends to provide quality equity research material and information to its customers. The investments discussed or recommended through MarketSmith India may not be suitable for all investors and hence, you must rely on your own examination and judgement of the stock and company before making investment decisions. Data provided through MarketSmith India is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. Information and discussions made available through MarketSmith India contain forward looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. William O'Neil India Investment Adviser division or its employees / directors or any of its affiliates are not responsible for any losses that may arise to any person who has made investments based on the contents of this document. Past performance never guarantees future results. Investment in equities are subject to market risks and despite the best efforts to provide market leading research, William O’Neil India would like to exhort its users to acknowledge and fully understand the risks involved which might include but not limited to loss of both principal and income. Data and content provided through MarketSmith India is to be consumed only by the intended recipient and must not be redistributed any further. Performance results do not represent actual trading and may not reflect the impact that material, economic, and market factors might have had on the investment-making process if actually managing client money. There is substantial speculative risk in most stocks. Performance computations reflect a time-weighted rate of return and includes a brokerage of 0.5%. All holdings are rebalanced to equal rupee amounts daily. Dividends are not considered in computations. Percent gains and losses are calculated for all issues that remain on the “Current Holdings” at the end of the day. For stocks that were added to “Current Holdings”, the basis used to calculate the percent change is the price noted when the issue appeared as a “Current Holdings” in MarketSmith India. For stocks that were removed, the selling price used to calculate the percent is the price noted when the issue appeared as “Removed” in the MarketSmith India. For more information, see our Legal disclosures here.
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