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Strategies & Market Trends : The Art of Investing
PICK 49.91+1.0%Dec 19 4:00 PM EST
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To: sixty2nds who wrote (10519)11/5/2025 2:59:33 PM
From: Sun Tzu2 Recommendations

Recommended By
nicewatch
sixty2nds

   of 10711
 
My method was inspired by how S&P 500 is managed.

There is a light fundamental analysis for SPX: the company has to have been in business for at least 5 years and 3 of those, including the most recent TTM must have been profitable. There are standards on market cap and liquidity. And there is an effort to roughly match the mix to that the general market/economy.

But that is it as far as the fundamentals go. For example while there is a requirement for profitability, there are no requirements for the PE or other valuations.

After this initial filter, the index is weighed by market cap, which means that as the stock moves up it is weighed more heavily. In other words, this is a momentum scheme where you reduce your underperformers/losers and add to the winners.

In essence I am doing something very similar. Take 200 stocks, lightly vetted by the fundamentals and liquidity, then add to winners and take from the losers. But I drop/add to my portfolio faster than SPX because (1) I can, and (2) unlike SPX I don't have an ETF wrapper where everyone helps me continuously balance it.
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