Think you’ve got what it takes to top the Strawman Leaderboards?
Here are some things to consider:
High Risk, High Return
The surest way to top the shorter-term leaderboards is to concentrate your portfolio into a handful of speculative small-cap stocks. It’s not uncommon for these types of investments to deliver 100%-plus returns in a relatively short space of time, and you’ll likely put more conservative investors to shame when measured over a 3 month period.
However, there’s a couple of major problems with this approach.
First, it’s also not uncommon for these kind of stocks to drop 50% (or more!) relatively quickly. With speculative stocks, your early returns are largely a function of luck. Sure, you might hit the jackpot, but you could just as likely be in the poor house.
And it’s hard to crawl out of a deep hole. A 50% drop, for example, needs a 100% gain just to get back to even.
The other problem is that if you do happen to get it right, you’ve got to pull the same rabbit out of the hat again to sustain your ranking. With the high-risk approach, it only takes one or two mistakes to send you from hero to zero.
Trading Is Hazardous To Your Health
All of humanity’s problems, according to Pascal, stem from man’s inability to sit quietly in a room alone. In other words, sometimes the best course of action is to do nothing.
This is definitely true if you want to dominate the longer-term leaderboards.
The top ranked members aren’t usually those that have skillfully traded in and out of the market. Rather, they’re those that simply bought well and let time do the work. Sure, it’s sensible to make adjustments along the way, but when you catch a monster such as a2 Milk (ASX:A2M) or PushPay (ASX:PPH) you really want to just get out of the way and let the magic of compounding do its thing.
Play Favourites
Stocks are not children — you don’t have to love them all equally.
The proportional breakdown of your portfolio should be a reflection of the conviction and return potential of each holding. And be ruthless too; if a stock no longer makes the grade (or you find a better alternative), don’t feel bad about booting it out onto the street.
Those that lead the rankings do so not because they avoided any mistakes, but because any that were suffered were well contained.
Be Disciplined
Every investor that ever lived has made mistakes. All have suffered through rough patches. But those that ultimately succeed do so because they focus on the process, not the scoreboard.
Before you add anything to your Strawman portfolio, take the time to outline the investment case in a Straw and set a valuation. Not only does it give you something useful to anchor on when volatility is playing havoc with your emotions, but the very act of writing it out will help clarify your thinking.
Practice Makes Perfect
We may only be dealing with play money on Strawman, but the tactics that will help you climb the rankings here are just as applicable to the real world.
As with any skill, investing is something that only improves with practice. And with Strawman, you can do that risk-free, while at the same time learning from the success (and failures) of others.
Good luck!
Strawman is Australia’s premier online investment club.
Members share research & recommendations on ASX-listed stocks by managing Virtual Portfolios and building Company Reports. By ranking content according to performance and community endorsement, Strawman provides accountable and peer-reviewed investment insights.
Disclaimer– Strawman is not a broker and you cannot purchase shares through the platform. All trades on Strawman use play money and are intended only as a tool to gain experience and have fun. No content on Strawman should be considered an inducement to to buy or sell real world financial securities, and you should seek professional advice before making any investment decisions.
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