Mi ATH 2 smallcase- On its way up!

Mi ATH 2 is a strategy that focuses on high momentum stocks hitting all-time highs. In this blog post, we will dive deep into the workings of this strategy and explore its potential benefits and risks.

smallcase journey:

Mi ATH 2, launched two years ago, initially faced some challenges in its first year. However, it managed to make a strong comeback in its second year, regaining momentum and recovering lost ground. The strategy revolves around the concept of tracking and selecting stocks that are hitting all-time highs. By doing so, it aims to identify stocks with a high probability of moving up even further.

Why are all-time highs such a crucial factor for this strategy?

The rationale is simple – stocks that reach all-time highs often continue to perform well. The probability of a stock performing positively after hitting an all-time high is significantly higher. Thus, tracking stocks at or near their all-time highs is an essential aspect of this strategy.

Alongside tracking all-time highs, Mi ATH 2 incorporates filters and exit strategies to ensure that investments align with expectations. If a stock does not perform according to expectations, the strategy allows for a quick exit. This flexibility is crucial in protecting against big losses and minimising potential downsides.

How has this strategy performed?

Over the course of two years and approximately 120 trades, the Mi ATH 2 strategy has yielded 41% winners and 58% losers, which is in line with expectations. On average, the strategy has delivered a 16% gain in winning trades and an 8% loss in losing trades, resulting in a favourable two-to-one average gain-to-loss ratio.

One intriguing aspect of Mi ATH 2 is the distribution of winners and losers. The strategy tends to yield more substantial gains in winning trades, with many trades reaching impressive percentages of 30, 40, 50, 60, 80, or even 90%. On the other hand, losing trades tend to be shorter and limited to the 10-20% range. This dynamic, where winners are allowed to run far while losers are cut early, is integral to the strategy’s success.

Understanding the Risk-Reward Balance:

Mi ATH 2 must be approached with caution due to its high-risk nature. While the strategy can yield substantial gains, it is not immune to fluctuations in the market. Strong momentum markets are ideal for this strategy, but it may experience difficulties during periods of low momentum. However, Mi ATH2’s nimble nature allows for quick exits from losing stocks, minimising potential losses. Weekly rebalancing ensures that one or two stocks are replaced on average, improving adaptability.

To truly evaluate the strategy’s effectiveness, it is important to consider it within a four to five-year timeframe. The strategy may encounter market cycles, but by the end of several cycles, it aims to generate alpha over the index. It is crucial to maintain a long-term outlook and exercise patience when subscribing to this strategy.

Conclusion:

If you are an investor looking to add a niche strategy to your equity portfolio, Mi ATH 2 may be worth considering. Despite its challenges in the first year, it has shown resilience and the potential for impressive results. By focusing on high momentum stocks at or near their all-time highs, and incorporating filters and exit strategies, the strategy aims to maximise gains and minimise losses. While it carries risks, a long-term perspective and faith in the strategy can prove rewarding. So, subscribe to Mi ATH 2 and uncover the potential of high-momentum investing.

Disclaimer: Investing in the stock market involves risks, and past performance is not indicative of future results. It is advisable to consult with a financial advisor before making any investment decisions.

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WEEKENDINVESTING ANALYTICS PRIVATE LIMITED is a SEBI registered (SEBI Registration No. INH100008717) Research Analyst