About this site
|March 14, 2016||Posted by Oddmund Grøtte under About|
My name is Oddmund Grøtte (Grotte), a native Norwegian based in the former USSR since 2010. I have successfully invested in the US stock market since 2001 (net positive 170 out of 175 months) using quantitative analysis for short term trading. I have also published two books in Norwegian about trading. (My mother tongue is not English so please accept my apologies for any spelling mistakes.) You can contact me at “oddmund at daytrading dot no”.
However, this website is all about picking stocks for long-term appreciation. I’m investing my own money. By publishing which stocks I purchase I hope to force myself to do better research.
Here is how I do it:
- Once per month or if the markets drop I scan 15 000 stocks listed in USA, Canada, UK, Germany, France, Belgium, Holland, Italy, Spain, Switzerland, Norway, Sweden, Denmark, Singapore, Hong Kong, Japan and Australia. I rank them based on different parameters. I’m looking for good and cheap companies. It might seem contradictory, but they are not as rare as you might think. In short, this is more or less like the Magic formula of Joel Greenblatt. However, I use averages of several years.
- Preferably I want a simple and predictable business with consistent profitability/cashflow, compounding ability and is shareholder friendly. In general I try to pick the least cyclical stocks. Logically, the better the competitive advantage, the more cash it can generate compared to competitors.
- I have manually picked a database/investment universe of about 450 stocks among those 15 000 (as of now, this will gradually increase). These companies have historically shown stability in both earnings and free cashflow, and have a good return on invested capital/tangible assets.
- Using a discount factor of x% and a margin of safety between 10 to 30%, I calculate a buy price on these 450 stocks based on historical returns on equity and invested capital.
- Simply wait until buy price is hit. Once in a while Mr. Market’s mood swings can serve us well. Patience is a virtue.
- Any time hold between 20 to 30 companies. I’m not a market timer so I will be fully invested most of the time.
This is a very simple strategy forcing me not to overpay for earnings, which can be very detrimental to any portfolio. I think common sense is undervalued in investment, and I’m a firm believer in keeping things simple and easy. The business world is dependent on so many factors and I don’t want to spend a lot of time analyzing tens of factors why a stock should go up or down. What next year’s GDP will be or where the currency will go I usually have no idea. All I know is that stocks go up in the long run and I want to jump in when stocks sell on the cheap side. I’m more quantitatively inclined than qualitatively.
I will not give specific investment advice. I strictly use the work I publish for my own investments.
I write about short-term stock trading on my website called www.quantifiedstrategies.com.