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The Equitymaster Research Digest

A Special Report, a Special Offer and a Lot More...
Jul 14, 2017

  • How to get one year of Microcap Millionaires free - a very special offer
  • Richa's new special report- Backdoor Profits - is now live
  • The latest Hidden Treasure recommendation
  • Apurva Sheth's boldest prediction of 2017
  • What to do if you own shares of IDFC or Shriram Transport Finance?

Last week I wrote to you about the systems we use. I said that we humans are just not good at predicting the future. So it makes sense to let a system do the job for us. This saves us the useless effort of making predictions.

How can a system work without making predictions?

Here's a six-point trading/investing system

  1. Pick a buy level depending on your strategy (deep value, momentum, revision to the mean, etc).
  2. Identify a sell level at which point the theme would have played out.
  3. Decide a holding period irrespective of the stock hitting the sell price.
  4. Maintain a part of your funds in cash.
  5. Allocate a limited amount of money per position.
  6. Maintain a stop loss (optional).

You see... no predictions in the points above. There's really no need for the aam investor to forecast earnings or predict stock prices. The system can do all the work for you.

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