BeatTheMarket is a mini-game that I built in SGXcafe.
The idea is simple: you will be given facts of an anonymous stock on a historical date. Based on the information, you will choose whether to invest or ignore that stock. Once you’ve decided, SGXcafe will immediately tell you on the next screen if that stock beat the index one year later. If you have not tried it, I encourage you to try it now 🙂
While it is not a perfect way for you to test how well your stock picking strategy works, it does provides some objective feedback.
In the spirit of sharing and learning from each other, I wanted to share my BeatTheMarket strategy. After 325 rounds, my all-time score is at 70%, with a 30-round best of 96.7%.
My strategy is as follows:
- Ignore any stocks with a high PE. A PE that is beyond 20 is out. Between 15-20 is borderline and if so, other metrics need to be good for me to choose the “Invest” option.
- Ignore any stocks that have a dividend strength lower than 70%. Even 70-80% is only so-so to me. Good would be >80%.
- Finally, I have a Screener with the following metrics:
- Price Over Earnings (Lower is better)
- Return On Equity (Higher is better)
- Median Yield (Higher is better)
- 5 Year EPS Growth (Higher is better)
- Total Return / PE (Higher is better)
- Dividend Strength (Higher is better)
- NAV / Price (Higher is better)
Ideally, I would want them to be all green (i.e. better than sector median). Of course, they are rarely all green but if they are, I choose the “Invest Big Big” option 🙂
Typically, if 3-4 is green with others not too bad, I choose the “Invest” option.
Tip: Personalized metrics show up in your BeatTheMarket game if you saved it in Screener.
My original stock picking strategy was similar to this but using feedback from BeatTheMarket game, I was able to refine it as it became clearer and more quantifiable. This has now become my general guideline in stock picking in the real stock market.
I hope you also did (or will) learn something from playing BeatTheMarket game.
I believe we all have different strategies and I would love to learn about yours! You can share it with everyone on the forum. I am looking forward to reading your strategy!