BIG MONEY 20

Big Money 20 January 2021

by MoneyFlows Staff All, Members Only

Markets ripped the last 6 months. Our Big Money 20 portfolio performed very well, outpacing the mark...

Want to access this content? Get MAP.

MoneyFlows Staff
MoneyFlows Staff
The MoneyFlows Staff are the true heroes of our firm.

23 Comments

When should I sell these stocks, is there any guideline on it? How should someone decide this, Thanks a lot.
The backtested strategy went like this: January 1st (next trading day), buy the 20 stocks equally weighted, then sell the basket on June 30th. Buy the next basket on July 1st, then sell on Dec. 31st. Rinse and repeat.
Something that I have always wondered is how come we don't see Tesla stock frequently as an outlier stock in weekly 20. I think I may have only seen it once or maybe twice. The stock has moved up more than 700% in last one year. Does it mean that Tesla stock price was mostly driven by retail investor? What exactly defines big money? Do active funds for e.g. Ark define big money?
Tesla hasn't been a frequent name due to poor fundamentals for many years. I expect that to change in the coming months and years, though. Tesla has both a retail and institutional presence. Big Money is how we measure the activity of a stock. Do the shares appear to have institutional activity trading in the shares? If so, then we get a flag. Big Money can be anything or anyone with the ability to move shares in a big way. We try and uncover what the big players are doing by taking multiple measurements of price and volume. ARK funds could easily be a Big Money player.
Thanks for the response. I was under the impression that we don't care about "Poor fundamentals" as long big money is involved. Is it fair to assume that in our weekly/monthly reports there is a filter of good fundamentals (value investing) on top of big money. A suggestion: You obviously know much better than I do, but since value investing has not been doing well in recent past is it possible to get a report (Risky - 20/50) where big money is involved (regardless of the fundamentals)
Great fundamentals are the key to long-term investing. The Big Money signal is there to alert us to pay attention. We don't want to get away from what has worked over the years. Our model is there to find the highest-quality growth stocks out there. That means, we want to keep our edge no matter which stocks are en vogue. Our filtering process gives us the best chance of success to finding outliers. When value comes back in style, (let's assume it will) we want to rely on our metrics. For every poor fundamental stock that "works", there are thousands that don't. The investing graveyard is littered with hopes and dreams. We don't bet on those. We bet only on quality. Win and win often is how we stay ahead of the game.
I'm curious to know how the Big Money 20 did during the 2008 downturn using the back test. It took the S&P500 about 4 years to recover from it's mid 2008 level. I'm really interested in a comparison between the S&P500 and the Big Money 20 in a long time frame, perhaps from 2008 to present. This would be the same graph that's in the Big Money 20 report, but with a longer time frame instead of 6 months.
I actually found what I'm looking for in the white paper. I read it a couple weeks ago really fast so it I quickly forgot the wealth of information there.
I don't know what's the best forum to ask this questions so I am using "Member's only blog post" for my question. I am very curious to know what is your take on this (www.youtube.com/watch?v=Qb8uQSQi8bc&t=19s ) narrative from Cathie Wood. She is a big name in the investment management industry so it would be unwise to ignore her comments. Her narrative here is that most of the big institution do not have a right structure or talent setup to evaluate the next generation of stocks. She thinks that the analysts from these institutions continue to evaluate high growth stocks like Tesla in a completely wrong way. She used Tesla as an example but her point was for all the disruptive stocks. While I was watching the episode I couldn't help not thinking about our big money index (BMI). The entire foundation of BMI is that big money knows what they're doing however after listening to her I got a little curious. I am a 100% data guy and still believe in your ideology of following the data but just wanted to know your thoughts on this. May be you can address this in your next podcast. Thanks for reading my comment!
Hey Amit - CW has certainly become a giant in the industry. Like stocks, she was loved weeks ago - then once a pullback came, people changed the narrative. Clearly she is high growth oriented. She clearly knows what she is doing based on the multi-year crushing performance. As far as the institutions not knowing how to evaluate high growth stocks, I think that is true to some extent. But remember, our models are catching Cathie's activity too...since she's the big money now. Regardless of what happens today or tomorrow, the big money always has an edge as far as we are concerned. Investors with low conviction tend to study-up more when the market is falling :) This is a great idea for a podcast chat!

Leave a Reply

Your email address will not be published. Required fields marked *.