Why Momentum Investing is Peaceful Investing?
Confidence that their is a framework that will protect me come what may then you will be able to sleep well at night and sleep better in lot of investments you have started with 5 lacs or 10 lacs you have become very rich, you have got 1,2,5 crores but you say that we should not take so much risk in equity but when you are scaling with a framework then there is no issue about it I welcome you to another offline face2face welcome to another wonderful face2face and and again this is going to blow your mind you have to watch this till the end because you have so much to learn with so much experience sharing and wisdom that it will be so much fun friends my name is Vivek Bajaj and I run this channel if you are here for the first time then subscribe to my channel I have recorded around 160 videos and all of them have some hidden gem inside be it the knowledge or the expert, it is a diamond and surely you people have benefitted in our journey when we are moving ahead in our career we meet various people at various stage of our career even if we talk about our life we meet various people but if you meet some people you will feel that you have met them before it's a feel, and sometimes you feel that something is pending from your previous life you have so much similarities when you meet them, it has so much connect it is about the wavelength and emotional attachment that you have in the first meeting so you must be getting reminded of this incident there are some market participants I have interacted with in the first video only I understood that I have some connection with him and I have to talk more with him today for the first time I am repeating face2face face2face part 2 with the same expert I have I have recorded part 1 with today I got another chance to record face2face with him, part 2 and the guest for this face2face is Alok Jain Hello, how are you? Thank you so much for having me here thank you, I am having so much fun with you here and it is always better when it is offline you don't have energy transfer when it is online anyone who is sitting with you will get the energy transfer you are so full of energy and doing wonderful things It is so amazing, so sweet of you In Face2Face 1, we have talked a lot it was conceptual and technical and their is a want for more So I thought I should call you to Kolkata and do another interaction you agreed to do this interaction, your time is very resourceful and expensive I got the chance to know more from you All my pleasure, so Alok sir, we know a lot about you guys if you haven't watched it then I am giving the link here you have to watch it because his history is great, he is so educated he is so humble, we know about you more or less we know you well particularly I want to get into conceptual discussion with you momentum trading, which I also worship I also believe that I will don't look at the history of the company, I only check the prices so let's discuss momentum trading once again so according to you what is momentum trading or what is momentum investing basically everyone is doing momentum trading they call it momentum investing or not, maybe some other name but they still do it you see the momentum in price or earning it is the same thing you see it in the margin or market share, everywhere there is a momentum of statistics going up something that you are trying to catch we are of course doing momentum in price action but this is also part of the same thing like everyone else is doing where you know there is some objectiveness to catch the enlarging growth of statistics momentum term is simple in investment terms the phenomena of something trending will not after a point so if a stock is going up it will keep going if a stock is going down it will keep going if it will not stop so there is a continuation of trend for sometime the time span of the trend is not defined but it is a trend formation our work is not to predict the trend or how far it will go our purpose if to understand where the trend is according to the momentum indicators we use is to have the faith that stock will trend with that faith, you will do multiple transactions you call it investing or trading the idea is that if you have 100 transactions, and if 50 is on a loss, then the other 50 should make such profit that your loss won't make any difference the probability and maths should come together to give you a better outcome so it means you have to trade a lot not necessarily, there are a lot of portfolios that are only 10 stock portfolios once a month if you are rebalancing, some stocks will go in some will go out, so it depends how you design the momentum strategy momentum just like any form of investing can be done everyone has a different style of doing it momentum is a broad sort of categorization, even in value you can do 10 types someone can do growth momentum in 10 different styles similarly, momentum style also differs according to how you want to do for example you want to do it fast or it is relaxed you can design it so you are an IITian, you know science. Momentum is a concept in physics when the momentum starts and ends, the distance that is being covered we call it velocity right? that is never in linear velocity sometimes it will be fast, sometimes it will be slow, it has a pattern also so when we are participating in some momentum so this volatility in velocity so you manage this or not? I don't manage it like that, it is about how tightly are we defining the momentum when we keep a momentum strategy according to the ranking over the year what has been the rate of change of price and let's say if you are doing a monthly review of that then you are allowing that entire month of noise to go out so you are saying anything can happen this month if it is a Jackson hole decision or anything that happens I will take the decision on the first of next month and I have a historical proven time record that I was practicing this I could have done that, basically this is a noise cancellation that we have to keep my mind on the side and one stock that he has, he has not done anything to it for months that is not the focus, the name of the stock is Reliance or ABC that is not the focus they think that this is not making money so why have I kept it on hold, I think every investor has the same issue so once you do that and you have a design of a strategy then you want to follow the strategy to the T Just for academic purpose, we are trying to know how they build the ranking system and what is the significance research and add more elements to it, I am just giving it as a starter for your development you took out today's pricing and then you took out one year, and calculate the change percentage suppose this is the 1st of the month or 5th, any day you are rolling this monthly thing it will fall, you let the winners run we have to cut losers, when it will start falling we will cut, right now it is running you have 25,000 allocation of these 20 stocks, now we will see after a month what we have to do it went down around 21 and 22, we will remove them from the portfolio, and in replacement the stocks we have we will put that in 200 stocks are rotating up and down and then you are checking the strength, and you are allowing that strength to propagate this is why the name of the firm is weekend investing, when I started this work it was for me, these strategies were designed for myself I know your philosophy of life, which is so inspiring, let's do some stock specific discussion most of the people had a circumspect view of the group or the stocks or about the valuation of the stocks it has just started growing and now it is doubled, so the person who is waiting for 10 years will leave because they were waiting for so long when will the momentum come, so when the momentum will come we will take it then basic checks, a basic filter that we have to keep a check on and all stocks are almost filtered if you walk 5-6 kms your health will get better but it is not easy, how many people do it, even I am not able to do it professional fund managers who make so much wealth in their remuneration, if I can beat this simple strategy by 80-90% by myself second, if you are doing momentum then exit is very important, even you agree that exit is more important than entry I think the answer to the first question is that it is not true, US studies and research, over last 20 years data is available and momentum is more successful in our market because it is the most porous, you will notice that before any result is out the good stock is up coming to the maturity level that their will be no high beta markets, so that question is gone so regarding the exit part, so it again comes to the same spot that you need to disassociate yourself thinking whether this stock is good, if it will be good you will get it again. So if it will come again we can take it? yes after 17 it had hickups, we will open the chart because it gets better with a chart 50 rupees to about 350 rupees and something like that, so it was a good momentum , then it was a hickup here one is lower drawdown means better return in the future, I will explain to you with an example such as you are walking down a road and you fell on a pit you have to keep it shallow by design because everyone falls on a pit but you have to come out of the pit instantly having a lower drawdown has a very big advantage when they are gaining nifty itself will give you a 14% return every year, and my capital will double on that day sometimes something bad can happen to any company, there is a study which says that the average snp 500 company, it's average in the 60s used to be 40-50 years suppose something bad happens to a company I am not particularly saying this one, anything can happen to any company and we have seen that in the last 5-6 years I have seen that momentum has done very well, or maybe I have observed it more in the coming years there are a lot of people who wanted to get support from you for this, without momentum nobody can make money in some way or the other it is momentum investing, it was given the name of momentum investing with price action you have made some small cases, I wan to talk little bit about that I have seen that you have made 9-10 in that platform there are few where we are doing multi-cap kind of activity and there are several that we have created and which are already available does it require any new strategy, or the same strategy with all the category, you can say that the genetics is same of the strategy we can also call it quasi algo right, algo trading is when the transaction is also happening on its own but the regulation in India is like that so you can't do it they have the habit of buy or sell high, here we buy high and sell higher, so it is counterintuitive and it is very difficult for an individual to have one leg in the conventional world and one in this world then you will realize what were you doing, and why have I not taken momentum before, end of the day we should not miss out on our focus that we have come here to compound our wealth then you will be able to sleep well at night then you will be able to scale better like you gave an example, in Occidental Warren Buffet is buying and it has already run up so much actually momentum makes you realize the value of the company sometimes, what a lovely phase you know the framework of earning or with peers, when it is extraordinary it is aversion to mean I think this is the part of human emotions, we are always mean reverting, so this game is all about psychology very soon this will also happen, we will add his small cases in our StockEdge, so thank you for helping us people who have stayed till the last, I am sure they want to know, right now you are at an age where you have a set income I am like a football, I will go were I am getting kicked, it is like flowing like water I came back, I take whatever opportunity I get, and then what I want to do you can say that a lot of people have started their learning from here, be it emotional trading so I really don't know what will I do after few years, I really can't say all the best to your viewers, and success to your StockEdge. So thank you friends! hope you all like it I will only put if it has a momentum, I always say that so that even you get more followers, but I am sure my learners will subscribe to your channel