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NOTE : To see real live proof of just how our subscribers are achieving amazing returns with simple and cost effective JSE investment strategies, go and see all our most followed strategies live and in action at the STRATEGIES SCOREBOARD.

Do-it-yourself, or DIY Investing refers to a person using mechanical investment strategies (automated stock-picking methods) and an on-line brokerage account to build one or more portfolios for superior returns over a 3-5 year period.  It is like running your own Unit Trust or Mutual Fund, but without all the high fees.

The advent of DIY investing has come about in the realisation that most Unit Trusts, Fund Managers and Pension Funds struggle to beat the market indices, yet charge enormous management fees. Warren Buffet is a firm believer that the administration and research costs of most of these funds eats into any gain such efforts might produce in beating the indices or similar index trackers.

In addition, the advances in computing, stock market analysis software, published research, 12 years of forward tests on live markets, 30 years of backtests and books of the most successful investors strategies has made it possible to automate or mechanise popular investing stock-picking strategies and execute them cost effectively through discount on-line brokers.

In effect the barriers that previously stood between the ordinary man in the street and the professional fund manager/investor/trader are being torn down at a rapid pace, and actually leading to significant out-performance of the indices and most professionally run funds by private individuals taking more direct ownership of their own investments.

Most funds are also limited to chasing the Top-40 or Top 100 shares on the JSE. They have no option as they trade in so much investment money that the small to mid-cap stocks are too illiquid for their purposes. Yet overseas research, which we have emphatically confirmed for the JSE, shows that portfolios of smaller shares in general significantly outperform those of larger shares. The DIY Investor gains access to this untapped market for superior returns.

Mechanised (or Passive) investment strategies (and that includes Index Tracking funds and ETF's such as the Satrix-40) are successful as they remove the errors and mistakes introduced by the human emotional and psychological element. Even professional fund managers are prone to these errors. A mechanised strategy spits out a selection of shares for consideration based on some fundamental screen or criteria. You then buy equal amounts of said shares at your discount on-line broker and then you forget about the portfolio for a year or even five. Once a year you re-run your screen and rebalance your portfolio and repeat the process. After 5 years you will have beaten the All Share Index (ALSI) by an average factor of 3 times! Yes, that is correct - tests we have conducted over the last 20 years on the JSE with various mechanical stock picking strategies have shown from 2x to 7x annual out-performance of the ALSI, with many portfolios showing 5 year growths of 1,000 percent and more!

Your most basic Mechanised trading strategy is an Index tracker such as the Satrix-40 Exchange Traded Fund (ETF). This selects 40 shares based on liquidity and market capitalisation (size of invested capital on the JSE) and builds a portfolio of shares in proportion to the market-cap of each share. The success of the Satrix is more to to with the discipline of the selection process than the formula used to pick the components. This is essentially a bet on large well known companies - not a very sophisticated strategy is it? Come rain or shine, bull or bear, the same stock picking method is used consistently and unemotionally, and given time in the market outperforms most professionally managed funds.

Mechanised trading strategies are so successful that it is now common knowledge that someone wishing to start out with investing on the JSE, and not wanting to go to that little extra effort to DIY their own portfolio, or hand the keys to overpriced fund managers, that the best place to start is an Index Tracking fund or ETF like the Satrix-40 or Satrix-RAFI. Even Warren Buffet says ETF's are the best place for the novice investor to start.

If you couple our famous SUPERModel Market Timing System with an ETF such as SATRIX40, or even better, a cyclic portfolio or ETF you can achieve phenomenal returns. Such a strategy delivered in excess of 6,700% return versus the ALSH index's 200% over the last 11 years with only 11 trades. And what makes this even more amazing is that you would have been invested in the JSE for only 60% of the time, leading to far lower market risk than a buy-and-hold strategy. Market Timing with ETFs is such a powerful strategy that many DIY investors who subscribe to PowerStocks don't even bother buying individual shares - they just do their 1 to 2 ETF trades per year and watch our entry/exit signals on our JSE Market Pulse page!

Mechanical strategies have consistently returned in excess of 25% compound annual growth for the last 12 years on the US markets. Our research is confirming that these strategies work on the JSE as well. In fact they work much better on our smaller emerging market.

WHERE TO NEXT? 

  1. Go to JSE Bears to learn about previous bear markets on the JSE and why they are rich hunting grounds for the DIY value investor.
  2. Then go to Value Power to learn about the power of value investing strategies. Make sure you understand our methodology before moving on to reviewing the various most successful global strategies we have tested on the JSE.
  3. Then track the JSE performance and share make-up of the strategies at the Strategy Blogs. Compare the strategies side-by-side at the SCOREBOARD.
  4. Read our Tips and Rules to avoid stock market losses. Ten times.
  5. Are you a "lazy investor" that doesn't have the time to research individual shares but wants a serious slice of the JSE action with 1-2 trades per year? Then try our Market Timing Strategies that you can couple with an ETF to deliver PHENOMENAL returns for HALF the risk!
  6. Once you see how we can make you a successful investor, you can apply for a membership account. Alternatively email subs@powerstocks.co.za with "NEWSLETTER" in the subject to receive our monthly newsletter on new research, groundbreaking strategies and strategy performance updates.

At all times, these pages are all available from the main menu items at the top of the page.


NOTE : To see real live proof of just how our subscribers are achieving amazing returns with simple and cost effective JSE investment strategies, go and see all our most followed strategies live and in action at the STRATEGIES SCOREBOARD.
 
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