Why You Should Try SCOREFASTTM Right Now

Asad Dossani

How do you find a trading strategy that works? I've been thinking about this a lot lately. For all the strategies that worked and didn't work...what did the successful strategies have in common? What did the failures have in common? Is there any pattern?

First, successful strategies are not overly complex. They don't rely on too many parameters or indicators. They don't overfit the data. Many strategies fail for precisely this reason. They are too complicated. They may seem fancy on the outside. But underneath it all, there is nothing.

Second, successful strategies have solid intuition behind them. We understand not just how they work, but why they work. This is critical. If we don't know why a strategy works, we have no reason to believe it will work in the future. For every indicator or pattern used, successful strategies do it for a reason. Bad strategies just lump together a bunch of indicators without any coherence. Without underlying logic or big picture.

Third, successful strategies have risk management built in. This goes without saying, but an exit strategy is critical. We need to quickly get out of trades gone bad. And we need to let our profits run as much as possible. This is easy in theory, but tough in practice. It goes against basic human psychology. Relying on a system for our exit signals helps overcome these biases.

Fourth, successful strategies flow. Sometimes when I'm working on a strategy, I'll keep hitting a brick wall. It's a bad sign. If I must force it, there's probably nothing there. But at other times, it's the exact opposite. It is as if the strategy is already there, and I'm just uncovering it.

Now, as you may know, my colleague Apurva Sheth has just released his SCOREFASTTM trading strategy. We spent a lot of time discussing and analysing it. From the big ideas to the nuts and bolts. And thinking about whether it met these criteria for success. And I'm happy to report that its done that and more.

SCOREFASTTM has the potential to deliver outstanding returns while minimising risk. It is truly one of the best trading strategies I've seen for a long time. I strongly encourage you to try it out right now. This opportunity won't last long.

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Market Notes

IPOs Don't Deserve the Hype They Get

Investor are always interested in new initial public Offerings (IPOs). They subscribe to them hoping to make a big buck. But unfortunately, barring a few rare exceptions, IPOs are a dud investment. Most of the huge IPOs don't do well. Although they might give you a listing gain, a year down the line they are a nightmare for investors.

The problem is most IPOs are priced insanely high. Many of them are marketed in such a way to lure investors to apply. And the timing of the offering is strategic. Most big IPOs come out only when stock markets are rising. When investors don't seem to care about fundamentals. Even if the business is terrible...even if the price is insane...investors still flock to these IPOs hoping to make a quick buck.

Last time, we showed you how huge IPOs near market tops do not bode well for the bulls. Now let's dig a bit deeper. Let's have a look how the huge IPOs perform after they're listed.

The chart below shows IPOs with an issue size of Rs 500 crore and above from January 2010 to January 2016 and their one year return after listing on the exchange.

IPO Returns After One Year

The success rate is only 32%. Of the 31 companies to come out with an IPO, just ten of them generated positive returns one year after listing. This is extremely poor. If you'd invested in each these IPOs on the date of listing and exited in a year's time, your average return would have been -16%.

Among the IPOs that generated positive returns, three of them gained only 1%. If we exclude them, the success ratio drops to an abysmal 22%.

Looking at this above, the hype around IPOs is clearly baseless. In fact, the real damage is even worse when you consider inflation. Factoring in the opportunity cost reveals the true picture: Investors would have been better off keeping their money in the bank.

In short, overhyped IPOs, marketed and packaged at insane prices during bull markets, are generally not a smart buy.

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