Momentum

What is it? And is there an Alpha?

Nobody can be a bigger critic to generation of alpha than Eugene Fama, the father of EMH (Efficient market hypothesis). His whole hypothesis is based on the maxim that you cannot beat the markets.

Despite being COMMITTED to his theory, he confessed in following words.

Momentum is that ‘SIN’ with a pre-defined entry criterion and exit strategy.

Revert to the mean happens, there is no doubt about that, however that plays out over a business cycle of 03 years. In the meantime, what goes up, keeps going up and what goes down keeps going down and once in a while, you come across an outliers stock which goes berserk and changes your portfolio forever.

What Do We Do.

Without disclosing the exact mechanics of our system, let us just say our selection universe is done systematically following a code, lets say 52 week high. (it is a little heavy than that, but still very simple)

EXPECTATION SETTING.

To say we will come out unscathed in all situations would be fool hardy. Find below the underwater equity report for your perusal and evaluation.

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Max Drawdown over the years
  1. Actual drawdown, invariably is always bigger than the worst you have seen before.
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Few Points.

Starting capital was 1 million.

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Insights for DIY investors on Risk management, Option strategies, Special Situations & Momentum.

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