GiNeBlog

15% solution

2011-01-02T20:49:00.000-08:00

Beginning in Aug 2010, I have discovered , a great way to make money in the stock market. I call it the 15% solution.
I have been trying to test success in the market with AIM (Automatic Investment Management) and my own variation of AIM with modest success.
AIM works to a degree but it can use up all your cash very quickly and that would still be OK in a flat market. But in a market like the one we just came out of in 08-09 it could have been a disaster.

With my 15% solution of which I have back-tested 20 times of which 7 were for 4 years and 13 only 3 years, of the 20 tests the ave gain was 144% !!!!!!!!
When I say 144% this is during the worst market period since the great depression. The last 3 to 4 years.

Free? Yes this is free. Why? Because I want to do something for my fellow man before I hand in my dinner pail. I'm getting old and might croak at any time. No one knows about this 15% solution except me and now anyone who is lucky enough to stumble onto this blog.

I am very reluctant to pass on this great plan because I am afraid it will be abused if widely known so I am doing it quietly. Please, my advice to you is do not spread this around too much because it would be bad if too many do this. And let me warn you that you could even lose money or even all your money using this method especially if you bought a stock and it was a bad stock!
I'll tell you a better than average place to find good stocks.
http://www.magicformulainvesting.com/welcome.html
Sign up for this no fee service and there you will find a listing of good stocks.

here we go:
I am just going to tell how it's done and no details now. All the info will be here and I will elaborate as time goes by but right now its just what to do and that's it. It will be up to you to seek and investigate the mechanics of it.

1. It would help if you had at least $10000 to start but you could do it for less. Maybe even $1000 but I personally don't care if you have the money or not, that part's up to you. It would be well worth your effort to get enough money though. You could build your fund over time.

2. Open an IRA or a Roth IRA and do it in there because taxes are an issue and this way they can be avoided or offset.

3. Example: Let's say you have $10000. Take $7000 of that 10k and of that $7ooo invest 60% of $7000 by buying stock. $4200 of xyz for example.
The remaining 40% of 7k or 2800 would be held as cash in case xyz drops.

4. If xyz goes up by more than 15 % on a daily closing basis, sell all of xyz the next morning at or above the 15 % price. Use a limit order if you know what that is.
If on the other hand xyz goes down by more than 15% then you would buy more xyz with the 40% of your cash set aside ($2800).

5. If xyz goes down and you bought more, you would sell only that portion of xyz that goes up by a min of 15% but you would still hang on to the original investment until it also goes up 15% from where you initially bought it.
In other words any portion you buy is treated separately and each portion has to go up by 15% min.

6. Each level the stock goes down is a progressively larger amount. Level one (or what I call 1-dot) is 15%, the next level is 23% down from 1-dot or what I call 2-dot. Level 3-dot is down 34% from 2-dot and 4-dot is down 51% from that. Whew!! Are you confused yet?
FYI, notice that each level is 1.5 times lower than the previous one. That is: (15 x 1.5 is 23) and (23 x 1.5 is 34) and (1.5 x that is 51.) Easy! BTW I only go down to 51%, I figure if a stock goes lower than that then I don't want to stick anymore money into it. if you follow the sequence of 15-23-34-51% a $10 dollar stock would go to $2.11, a goodish drop! Now if you buy at $2.11 you would still sell (only the shares you bought at $2.11) when it goes up by 15% of $2.11 or $2.43 min. This is very important.
A word about this dot system: I developed this as a way to keep track of which percentage each part is. If I just used a straight 20% say, and bought every time the stock went down another 20%, I wouldn't need to keep track. But because of the progressive nature of the declines it makes life easier.

7. This brings up another point. The first buy is down 15% and you have invested your $2800 and then it goes down to the next level and now you would normally invest 1/2 of $2800 at that level. You only have $3000 left and here is where having only a small amount to invest is not so good! Now if you have $50,000 then you could buy roughly 7 different stocks and work it safely. I have found that of (good) stocks, a very small percentage reach the 2 and 3 dot level and especially the 4-dot region but it can happen. Like I said I tested this with historical prices of hundreds of real issues and each starting with a $10000 port size. Assuming not all stocks went against me to use up all my cash reserve and during 2008 and 2009 rough market times I would have never run out of cash! What I'm saying here is if you have limited cash its not as easy.
So in this case of having only $3000 left you have to decide how much of it you would invest in each level as it goes down. You could invest $15oo in the next two levels and take a chance it would not go down to the 4-dot region. If it did you would just have to wait until it recovers or save up your Nickels and Dimes!

8. lets say you cash in on a 1-dot 15% rise. That brings in $420 big ones, very good! Let's say your xyz initially started at $10 and you bought 1-dot right at $8.50 ($10.00 - 15%) and then sold it at $9.775 (8.50 + 15%) to make your $420 and then the price went down to $8.50 again. You would buy it again. But here is the beauty of this system. You would invest your original amount of $28oo Plus your last profit of $420 or $3220! Now when it goes up by 15% again you would make 15% profit on 322o or $3703-$2800 or $903 and if it does it again then $4258-$2800 for $1458.
So what were doing here is reinvesting the money and compounding our money!
15% compounding once every year is considered very, very good, compounding %15 every few days weeks or months is much better and that's why this system works so well.

9. When you sell a position you have to choose a different stock and start again. So add up all your profit from the $7000 in this case and then break it into a 60% part (new stock) and a 40% part cash (not including the other cash reserve of which you would like to have 30% of your total portfolio). So in the case of a successful straight up to %15 trade for example would be $4200 (original investment) +15% = $4830 of which you still have $2800 cash or $7630 ($630 more) and $7630 x 60% is $4578 and the 40% portion is $3050 cash, this is how you would proceed on the next stock and just keep it going!

10. When a Stock portfolio reaches more than 120% of it's starting value then you would split that total amount in two and then work two stocks with 1/2 the value each. This way you can spread out the investments for diversity's sake. if you start with a bunch of stocks, then treat each separately and split each in two when conditions warrant.

Confused? I will elaborate as time goes by but this would get somebody going if indeed anyone drops by. But of course if you don't too bad for you but then again if you didn't you wouldn't know what your missing.......

Updating soon and please drop me a line at jibes2@yahoo.com if you need more info.

2007-03-12T19:36:00.000-07:00

Early Morning

Early Morning started as a Sketch. Done in Oil Brushes with Painter 4.

2007-03-12T19:33:00.000-07:00

Bird on a Wire

Bird on a Wire reminds me of North Dakota where I used to live but could be anywhere in the Midwest.
Painter 8. Just pixel dust.

2007-03-12T19:28:00.000-07:00

A Street Somewhere

A Street Somewhere is a newer Painting.Done with Painter 4. Manipulating Pixels.

2007-03-12T18:26:00.000-07:00

All That's Left

All That's Left is a small town that has seen better days. Started as a Sketch and Scanned into Painter 4 for enhancement.

2007-03-07T18:10:00.000-08:00

Boats Waiting.

Boats Waiting. I did this one from a ref Photo. .

2007-03-07T17:54:00.000-08:00

Alaska Village.

Alaska Village is probably best viewed in the heat of Summer. Painter 4 Oil

2007-03-07T17:03:00.000-08:00

Canal Master

Canal Master started as a sketch done on a small Memo pad at work while our Computers were down. Then scanned in and finished off in Painter 4-Oil. Totally pixel dust.

2006-10-13T14:12:00.000-07:00

About Galaxies and how they work. If you have looked carefully at a Galaxy and towards the center of it from a view as if you were looking down on it like that of a plate, you will note that there is a bright central area of highly concentrated stars. I have read that in the very center of the galaxy is a "Black Hole!" I do not believe that at all. Lets see... Black Hole... where no light can escape because the Gravity is so great that everything near it is sucked in! Think about it. Does that make sense to you? Think about the process for a bit. Scientists, think about the ramifications of such a phenomenon. If you do can you see the folly? I have also heard that the spiral arms of the Galaxy are being drawn towards the center and that is a nice theory put forth by the false belief of the "Big Bang." No! It's the opposite. The whole galaxy is like a giant pinwheel if you will, expanding. Created!
Now if you get down close to the center of the Galaxy you will note that the center is slowly rotating and at the same time spewing stars. As these stars are being sent out and as the whole system is slowly turning and thus the result is a spiral that generates the shape (generally speaking) we see most often. More later.

2006-10-04T18:11:00.000-07:00

Let's talk about Evolution: I have pretty good proof that Evolution does not exist. Huge claim you say! Well I did not offer the means to put forth my theory of a theory, It was done by the very people who talked about Amber on PBS and who believe in Evolution. Scientists.
Amber as you may or may not know is tree sap of old. Very old! So old in fact that as I watched a story on the substance, it was stated that "Here is a piece of Amber that is 125 Million years old." Wow, 125 Million years is a long time.
Now here is the thing about Amber that was amazing. Insects would get trapped in this ancient Tree Sap when it formed so that they were perfectly preserved. Frozen in time as it were. I the show on PBS stated that these various species of the little blighters were "Exactly the same as the present day species." How can this be? If this insect is 125 Million years old, it can not be the same! Impossible! If evolution were true then it would have to have changed in some way from the present day form. Or to put it the correct way, our present day insects would have changed from those trapped so many of Millions of years ago. All of the examples were the same. All the insects species trapped were the same as our modern insects.
But wait! You say. These Insects are the same because... They were happy as they were and chose not to evolve. Yeah, that's it. They were happy as they were! I have heard this line before. Do you really believe that? I don't. It's ridiculous. Here's how it sometime goes in science: When something does not work, then another theory is postulated to explain the discrepancy.

Many other theories are based on Evolution. Because of this then, those theories are likely wrong.

If you don't agree I would like to hear from you.