Tuesday, October 24, 2017

Fundamental Scorecard = Mechanical Investing

I had learned about a new term after reading about Lazy Singaporean's Blog Post - Is mechanical investing a form of index investing?

It was the first time I came across this term, "Mechanical Investing".

After I googled, I found that Investopedia state that mechanical investing is a form of "buying and selling stocks according to a screen based on predetermined criteria, usually with the help of technical indicators such as relative strength or momentum. This method allows traders to enter transactions without emotion and backtest their strategies by using historical data from any time period."

It seems that without any prior knowledge of this term, I have been following mechanical investing via my scorecard method.

Although I am not a trader, but I have been practicing "buying and selling stocks according to a screen based on predetermined criteria" via the scorecard method. I have also "backtest these strategies by using historical data from any time period". Thus, I believe I have been following mechanical investing subconsciously.

Other pointers in the Lazy Singaporean's post is also worth mentioning:

1. Mechanical investors do not care about the industry, news and anything outside the factors listed. As long as it meets the criteria, they buy it.

TUB: For me, I have yet attain the enlightenment of deserting all emotions, news and industry and solely following on the Ultimate Scorecard picks in the Fundamental Scorecard website. But if a counter passed the Ultimate Scorecard, it does provide me with a HUGE sense of comfort to just go ahead to buy the counter without the need to do indepth fact finding. 

2. However, we could go one step further by creating our own index, which might or might not beat the broad index over time.

TUB: Fundamental Scorecard website has a surprise coming for its members soon next year. And it is deeply link to the above sentence. 

3. This is where it gets interesting, because such mechanical investing approaches have been actually proven to beat the market over the long run.

TUB: This post discusses about very successful investors, such as Walter Schloss, Joel Greenblatt, James O'Shaughnessy and Joseph Piotroski, following mechanical investing. I have not yet reach their level yet. Based on the latest post of my portfolio, for the 1st 9 months I have achieved 13.6%. It is not amazing, but to me, this is a good start if I could have 13% for each of the next few years.

In short, I really believe the Fundamental Scorecard website is promoting mechanical investing. This will definitely help retail investors in ignoring the "noises" and concentrate on the facts of each counter.

If you are interested to know more about our Fundamental Scorecard website, do click on this LINK to sign up for our 2nd Value/Growth Investing Workshop! We will be discussing about our Fundamental Scorecard website during the seminar!

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