*/ for novice/ new investors only */

lot of investors find many experts talking about index investing but very few talk about, New Investors who do not want to do research or those with very little time to do research can use my technique of investing. I have posted the technique in my blog . I have given a lot of thought before sharing because unlike buying shares where divulging a technique or share leads to direct competition to get those shares. This technique does not cause competition to me, hence I have referred this technique. any comments are welcome

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brijwanth.blogspot.com

Nice concept for passive trading. It would be interesting to play around with this.

BTW, how did you arrive on %Allocations ?

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Always Happy to Share, Learn and Help

Parameter 1:
probability of occurrence of an p/e level. example is we all know that investing at p/e of 10 is great but it may not occur in an life time or a one time event. so you can't spend your time making no money so lower allocation(ideas from taleb's black swan)

Parameter 2:
3 year returns as you would expect lower levels gave higher returns after 3 years.

So in the history of nifty 14.5-15.5 acted as an optimum level. because it gave compounded 3 year returns of 150% and Nifty stayed at that level for 10% of total days that indices ran from 1999

you should see the 2nd graph of this thread
Present Market Scenario
or graph here
dow-jones-industrial-average

Past will not be repeated in future but peaks and troughs do revert to mean period and order of those peaks, troughs and mean days is the one i.e. not predictable

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brijwanth.blogspot.com

If you can not beat the market and the market. An index fund can be a mutual fund or an Exchange Traded Fund. An index fund involves all the actions of the index in proportion to the target index. Yields are similar to an index tracking error below.

It is a group of stocks, selected by an independent body of professionals to reflect the mood of a market or a segment thereof. Therefore:

1. An independent body of professionals calculates factors like liquidity, representativeness of a stock of its industry, size (price x number of stocks) of the total number of stocks of that company that are available to the investing public (“free-float market cap”) in determining the suitability of a stock for an index.

2. Then they compare it with similar stocks in the industry on the above parameters and pick the ones at the top of the list on the basis of the weighted average of those parameters

3. They look at industry factors to determine which industries must be represented in the index

4. Then a basket is created that has stocks (and consequently industries) in the ratio in which the independent body feels the market would be best represented.