MONEY IN THE BANK.
The series began on November 01, 2019.
With some hope and confidence I gave it the name — Money In The Bank.
Two years later, after closing the October 2021 series trades yesterday ( October 22, 2021), we find that the simple strategy has lived up to its name.
Each and every day of trades has been recorded on this blog and many readers have now learnt about it and quite a few benefited from it.
The First Post:
This was posted on November 01, 2019:
First 12 months:
Simple thing work in the market. Only, we traders do not believe it. Result of that are well known to us. Most of the traders lose money.
They get into more complicated setups which at times they do not even understand and again end up with another loss or some small gain which is not worth the effort put in.
We had a good beginning with profits in first 4 months. Then came the crash of March 2020. Surprisingly that month did not cause much harm though we lost some money. Next month i.e. April 2020 was most profitable of the 12 month period.
At the end of one year, we were on to a good thing.
This is what I wrote at that time:
Written on October 22, 2020:
Second 12 Months:
If first 12 months had 2 losing months, we got one more in the second year. We made a profit in 9 months out of 12.
Some readers have written to me that the strategy worked because the market was on the up move.
That is only partly true.
We did not have March 2020 like situation in the last 12 months, still had a very big loss in August 2021.
The strategy makes money because of outperformance by the heavy weight stocks. Sometimes it makes money even while stocks move lower.
More about how and why of the performance will come later.
Let us have a look at the numbers for 24 months:
The profit in the past 12 months is Rs. 191787 which is not as good as in the 12 month period before that.
We can not have outrageously good profit all the time. We accept what the market choses to give us.
The capital requirement at the beginning was around Rs. 4.5 lakhs. Presently it is Rs. 5.50 lakhs. We consider the capital as Rs. 5.00 lakhs for the purpose of comparison.
The profit over 2 years works out to 92.91%.
Comparison with Index and Top Banking Stocks:
Profit of 92.91% in 24 months is good.
We need to compare.
BANKNIFTY was at 30330.55 on November 01, 2019.
It closed at 40323.65 on October 22, 2021.
BANKNIFTY gained 32.94% in two years.
With a profit of 92.91% in the same period, this strategy surely outperformed BANKNIFTY.
The benchmark index NIFTY closed at 18114.90 yesterday ( Oct 22, 2021 ).
On November 01, 2019, NIFTY had closed at 11890.60.
NIFTY gained 52.34% in two years.
This strategy outperformed NIFTY also.
We can see from the performance of NIFTY and BANKNIFTY that banking sector has not done very well in last two years. It is still lagging the benchmark NIFTY in a big way.
And all of us have heard this so many times:
Most fund managers are not able to do better than the index. It is best to invest in index ETF.
Probably, this is true.
Why do we need fund managers if this strategy delivers profit far better than the ETFs?
I know some of the readers will still have doubts.
Doubts are normal but it is acting on your belief with a method which finally makes money.
Now we compare with the top banking stocks.
The top 3:
HDFCBANK has moved up from Rs. 1240.05 on November 01, 2019 to 1680.75 on October 22, 2021.
ICICIBANK from Rs. 462.25 to Rs. 759.30 and KOTAKBANK from 1579.90 to 2171.40 in the same period.
If someone bought 550, 1375 and 400 shares respectively of these 3 stocks, the cost of investment on November 01, 2019 would be — Rs. 1949581.25.
All the stocks have gained over this period and the investment will have a value of Rs. 2879028.75.
A very good gain of Rs. 929447.50 in two years.
Such investors have every reason to be happy as they went through the turmoil of March 2020 and are now looking at a very decent profit.
But how decent?
This profit is 47.67%.
What did the strategy earn?
A cool 92.91%.
I have taken KOTAKBANK for comparing as we had this as the third stock for most of the months. We had SBIN only for 2 month and AXISBANK a few times.
AXISBANK is a serious underperformer as it has moved from Rs. 748.30 to just Rs. 816.70 in the same period.
The strategy has given better results than NIFTY, BANKNIFTY and every one of the top 5 stocks of the banking sector.
The strategy has given profit in 19 out of 24 months. That makes it reasonably consistent.
And it is absolutely simple.
Set up and forget type of simple.
Let us cast our doubts aside and make way for simplicity in trading.
The proof is staring at us. We must not look away.
Embrace the facts, accept the reality and surrender to the supremacy of market. Profitable trading shall follow.
Once again, I thank all the readers for their questions, comments and inputs which went into improving the strategy over this 24 month period.
Please share this post with as many traders as you know.
There is joy in sharing and caring.
Enjoy the holidays.
For some questions and answers about the strategy, please go through these posts: