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Equitymaster's Results from Rule-based Investing
Sep 16, 2017


It's not your run-of-the-mill type of investing.

Heck, it even seems too simple and mechanical to amount to anything really.

Yet, with the right rules, rule-based investing can create a lot of profits and take away much of the pain of stock investing.

Equitymaster's first brush with rule-based investing was February 2014, when we started Microcap Millionaires.

Right at the outset, we laid down three simple rules inspired by Benjamin Graham that formed the bedrock of its investing recommendations.

In a nutshell, they were:

  • A definite rule for buying stocks based on impartial and objective reasoning
  • A definite rule for selling those stocks corresponding to the buying technique
  • A definite rule for exposure to stocks within the total corpus based on market conditions, with the rest going into fixed income instruments

We started Microcap Millionaires armed with these rules three and a half years ago, and have stuck to them through thick-and-thin ever since.

If you had invested by these recommendations, here's how that money would have grown:

In annual percentage terms, here's how this performance looks.

Where the compounded annual growth rate (CAGR) the benchmark BSE Sensex showed was 13.3%, the Microcap Millionaires corpus turned in a CAGR of 31% (both excluding dividends).

If the rules are sound, rules-based investing works. Don't be fooled by its simplicity. It can deliver tremendous rewards over your lifetime.

Editor's Note: If you'd like to know more about rule-based investing, I have some great news for you. We have a free online training seminar coming up where Rahul Shah, editor of Microcap Millionaires, will personally teach you how to follow the immensely profitable 3-step formula. Sign up now!

Data Source: BSE, Equitymaster

This Chart Of The Day was published in The 5 Minute WrapUp - Rule-Based Investing Can Make A Lot of Money

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