As a follow-up to the Q3 Review of the the idea generator and it’s Q3 performance, I wanted to do a quick check-in on the win-rate to see how the tool is faring here at the beginning of December.
No matter how I slice the data, the win-rate has remained consistently above 60%. Of course, this is due in no small part to the strength of the market, with the S&P up 8.68% since the inception of the tool (Q4 5.06%, November, 2.93%). Nevertheless, it’s easy enough to do the analysis…
Idea Generator win-rate breakdown:
- Win-rate since inception: 63.60%
- Win-rate Q4 to-date: 64.75%
- Win-rate November: 61.4%
Given the purpose of the idea generator,which is to generate trade ideas using the screens we’re monitoring as an input, I think this is a good starting point, and continue to expect to tweak the tool as market conditions change. That said, since inception we’ve not made any changes to the algorithm, so you’re looking at an apples-to-apples comparison.
Given the above, I’m not sure that comparing the performance of the output against the S&P would be a meaningful comparison, particularly as we don’t have adequate price resolution or stops set in the tool. The only way to get that would be to generate stops here after the fact, which I’m reluctant to do – both because that wasn’t the purpose of the tool, but also in the interest of transparency. For what it’s worth, raw performance since inception, is 3.06%, but this includes both holding winners and losers well outside of my criteria, as well as putting on trades from all 240 signals . For example, how many people would have sat on their hands -60% on VERI as it continued to make lower-highs, and lower-lows? Or for that matter, those of you up 244% on AVAV since we flagged it in early September… how many wouldn’t have, at the very least moved their stops up?
For those of you interested in tracking a model portfolio based on what we’re doing here at earnings-reminder, we’ve been considering some options around either a generated model like I mentioned last week, or sharing one of our watchlists with you. If there’s interest, we’ll certainly consider membership feedback.
