eleph4nt

Start Here

<script type="text/javascript" async src="https://tenor.com/embed.js"></script>

If you are new to this and want to use it, there are a few rules.

The rules are to help you to reduce risk. Stocks over the long term give good returns. But you must manage the risk properly. The main rule is to diversify - don't put all your eggs into one basket.

First, you must try to invest in as many different countries as possible. You should not just put all your money into just one country.

Aim for 5 or more. The more the better.

Second, try to have at least 30 stocks in your portfolio. For example, if one stock blow up ie. goes to zero. You only lost 3.3% of your portfolio, and that can be recovered from the dividends for that year. It is better to have 50 if you can, depending on the amount of money you have and the costs of buying and selling and the time required to manage your portfolio.

For example, if you have $50,000. And your broker allows you to trade 5 countries. This means $10,000 each in each country. So, then you buy 5 stocks for $2000 each for each country. So, total stocks = 5X5 = 25 and number of countries = 5.

When to buy? Buy when a fresh list is generated. Check the date to make sure it is recent.

When to sell? At the end of every 3 months, sell everything that you bought 3 months ago and buy the fresh list. For example, if you bought the stocks on the list on the 1 Jan 2022, then you sell all of it on 1 Apr 2022. And if you bought a second batch on 1 Feb 2022, then sell everything on 1 May 2022. So just keep it for only 3 months.

Which stock to buy? Buy from the top of the list for each country. And if you have more money, buy the 2nd on the list and so on. If you are a savvy investor, you can choose from the list if you wish. If you are not, just buy the top of the list of each country.

Try to make sure each stock you buy is more or less equal in money amounts.

Cautionary words:

AI is not God. It can't pick stocks with 100% certainty. Think in terms of probabilities. Each stock picked by the AI has a 60% chance of doing better than average. So, if the average stock market return for that year is -10%, and the stock that is picked by the AI returns -9%, then it is a success, as it returned better than average results. If the average stock market returned +20% for that year, and the AI stock pick returned +15%, then it has failed in that pick. Remember, that the odds the AI will win is 60%. This means that if you buy the 20 stocks that the AI has picked, then most likely 12 stocks will be better than average (60% * 20) and 8 stocks will be below average (40% * 20). If you have an intuitive feel of numbers, then it is better to have more stocks than less stocks so that the AI's 60% chances of winning is more certain. If you don't understand all this, just make sure you buy at least 20 stocks, and if the market is down, very likely the overall AI picks will be down too, but a bit less. And if the market is up, the overall AI picks will be up too, but a bit more. Do not think in terms of a single stock, or measure the performance of a single stock. It does not make sense to ask "Why did this stock went down -10%?". Evaluate the overall portfolio together and measure the average returns of all the stocks. If the average return from all the stocks has beaten the average stock market returns, then the AI is working well. If the AI picks can always return slightly above the average stock market return, it can do quite well longer term. Just be patient.

Thoughts? Leave a comment