THE PROPOSITION:
Stockradar employs a simple, common sense, “buy only” stock market trading strategy that consistently outperforms the ASX / 200 Accumulation index. Consistency of actions breeds consistency of success on the stock market.

FOCUS:
The focus is on trading a “market edge” offered by the long term up trend of the stock market and I offer, as well as the full coverage of 175 stocks, 5 different trading portfolios to capitalise on this. This method and strict trade plan process consistently outperforms the ASX/200 index. Our success benchmark is simply to attain a consistent 10-20% better return (alpha) than the ASX/200 Accumulation index which Stockradar has more than achieved.

STRATEGY:
I do not employ complicated strategies or generate unnecessarily high levels of trading activity I use a simple, common sense, weekly based, buy only approach. The underlying philosophy is to take advantage of the natural long term up trend of the stock market. The key plank of our risk management strategy is protecting gains and limiting losses and as a result we never hold  large loss making positions preferring the safety of cash.

WHY STOCKRADAR?
I offer an alternative! A common sense failsafe strategy for trading a manageable portfolio of 20 stocks by employing four simple buying triggers based on price analysis, and two simple exit strategies based purely on money management. Our trading strategy ensures we invest heavily in equities when defined up trends exist and contract to cash when they don’t. Funds cannot exit the market on masse they can trim their weightings at best and this reveals a serious flaw in their strategy which is effectively restricted to buy and hold with a mandate to hold 90% in equities. Thus bear markets will always have a seriously adverse effect on returns built up during bull markets and that is an inherent failure of all major funds, they don’t, or can’t sell. Stockradars alternative approach is responsive, focused, disciplined, methodical, thorough, profitable, and realistically generates consistent above market average returns.

PORTFOLIO RETURNS TABLES:
Below is a trading returns table for all stocks covered (175 approx) and each of our 5, 20 stock portfolios back to 2003 ex any interest payments which during 2007-2008 were quite high due to the amount of cash we held in the portfolio’s and the small equity exposure. (See Stock Pick count below) As expected it is the Random portfolios that offer the greatest consistency and best returns.

                Stockradar Stock Pick count vs. the ASX/200 Accumulation Index

 

This chart above shows that the number of Stockradar “Stock Pick” recommendations (Stock Pick Count) reached a peak in January/February 2007 and declined to almost zero by the end of 2007 and thus Stockradar recommended clients move quickly to a cash / equity ratio of 90% to 10% then just as the index was moving to its peak. The Stock Pick Count is the number of stocks qualified by our process as having sustainable up trends from within a defined pool of stocks. The Stock Pick Count thus provides a market breadth indicator based on the number of defined trends from our pool of 175 stocks. After a divergent spike with the ASX/200 high in late 2007 our cash balance remained at 90%+ for 2 years with our trading activity accounting for only 10% of the total return and the rest in cash. The benefit of the Stock Pick Count is that it clearly tells us where our cash/equity ratio should be on any portfolio with respect to the prevailing market conditions of risk. The rapid descent of the Stock Pick Count shot a clear arrow of heightened risk through the heart of the rampaging bull market during 2007 prior to the market making its ultimate high at 6851 on the 2^nd of November 2007. In November 2007 we sold all four major banks.

HOW AND WHY DOES IT WORK?
The strategy involves rigid protection of entries with stop losses of no more than 10%. If a stop loss is hit three events can unfold; the stock either goes down, or sideways, neither of which is of interest to us as buy only traders, or thirdly the stock resumes its uptrend and in that instance we do have an interest and a simple and effective common sense re-entry technique. As the stock market spends the majority of its time rising this strategy must make money despite the occasional bear market in which we primarily do not participate in due to our strict stop loss and risk management focus. By following this systematic process methodically we must profit from every up trend from within a defined portfolio of stocks comfortable in the knowledge we are also always protected from market declines of 10% or more and they are the real capital destroyers as we have just been reminded of. Provided our profits are greater, and they are at an average of 27% as our results show, then we must make money.

BACKGROUND:
Richard Lie is managing director of Stockradar and having being certified with an AFS license in 1997 to advise on securities I developed a simple outperforming trading strategy for my existing clients and with its success the Stockradar education and trading service evolved. My background began as a futures trader for Australian Billion Co in the late 70’s, then to stockbroking with AC Goode during the eighties, and then a long association with Dow Jones both here and in the UK managing the development and sales of financial value added products with the primary focus on price analysis. Since returning to Australia I have developed my own business with a passion for advising and educating clients on how price analysis can successfully be used as an integral part of a simple and profitable stock trading strategy.

SUMMARY:
Stockradar provides a realistic stock investment alternative that has a proven trading record by understanding the absolute necessity of managing stock exposure strictly on a money management basis to exact the optimum return. Although we enter a stock based on price analysis once in the trade it then becomes strictly a function of money management. Just as you do with the budget for your business where income (read trading profits) must be more than expenses (read trading losses) for you to remain a viable entity. And that is exactly how we have designed our trading portfolios. Consistency of actions breeds consistency of success in the stock market and you can see that consistency flow through our results.