Let’s talk about the stock that delivered most money in 2021
my stock of the year: SMID, got me ~150%
I found that the stock was present in many successful portfolios, such as :7sisters Rising Stars, 1st! 3# QuantStrike 25 Stocks Revised: no market timing! .
It was also present in my two systems at the top positions.
At that time - I found it as a perfect stock - sensible business model, low valuation, high growth, high quality - it was too perfect to be true.
And it turned out that it was a good bet. But I remember that there was a big drawdown at some point.
Man, I wish I’d held onto SMID. I gave up on it last summer. I only made about 7% on it.
For me it was Aviat Networks (AVNW), which I opened on 11/9/20 and closed on 3/3/21 for a return of 172%, and CPI Card Group (PMTS), which I opened on 2/1/21 and closed on 5/13/21 for a profit of 170%. Both stocks are now at about the same price as I sold them, but I missed a huge run-up in PMTS this summer. That stock’s 52-week high is 9 times its low.
It’s recovered since though, and then some. I’ve held it a few times across 3 of my strategies, with varying returns. My first strategy bought in May, then sold in July, likely due to the sudden drop in price (momentum factors etc).
Another strategy picked it up near the bottom (October), it’s up 115% to date. Let’s see where it goes.
My biggest winner by a wide margin was in one of my Canadian strategies (Crisis/Recovery). POU (Paramount Resources), I bought in June of 2020, is up ~850% to date. Return in 2021 was about 350%.
Of course, take with a grain of salt! Lots of losers too! In the US equivalent of the strategy, had 2 companies that went to 0 in 2020!! The strategy still worked out with the winners, but first time owning these types of stocks.
POU definitely helped my Canadian Crisis strategy (68% in 2021).
I had a few stocks that were one day rockets and came right back down. I caught PALT at the right time and placed multiple sell orders on the way up for returns ranging from 140-252% after holding about 45 days. Its hard to sell those and not let greed take over.
Bought CAR (Avis) on October 18, sold some at a profit twice to rebalance, then sold the remainder at 220% profit on November 8. More like that, please!
The discussions calls for a general questions what are causes of difference in returns within the sample of ‘perfect stocks’
You could approach this research questions using either qualitative or quantitative approach.
First - quantitative - controlled experiment.
The sample (universe) would be all ‘perfect stocks’ - stocks that were on the top 10 positions during last year.
Then we could manipulate other factors that were not taken into account in our system to select ‘better perfect stocks’ and check the outcome.
Second - qualitative approach - possibly a multiple case study design using cross-case synthesis.
Two studies (groups): stocks that outperformed the market and stocks that underperformed the market within the sample of ‘perfect stocks’.
The goal is to synthesize evidence from multiple cases (stocks) within one group.
Evidence from each primary study is summarized and coded under broad thematic headings (management, country, shareholder structure, political risks, etc.).
The outcome: broad thematic headings for each group
This approach could inform you quantitative decisions.