fbpx
Skip to content
  • Investing Insights
  • smallcase Rationales
  • Inside smallcase
  • Postweek Reports
  • Subscribe

Stock Investing with The Naked Trader

Mentioned image
The Naked Trader
In spotlight
share: Icon-Whatsapp Icon-Twitter
Subscribe
smallcase Rationales ,  

Stock Investing with The Naked Trader

The Naked Trader by Robbie Burns
Author Vikas Bardia
Published October 7, 2019
Mentioned
Mentioned image
The Naked Trader
Share
Icon-Facebook Icon-Twitter Icon-Email
Collections The smallcase Rationales
Reading Time: 2 minutes

Disclaimer: The Naked Trader is not about a promiscuous trader. Nor is there a controversial Netflix series based on this story. Instead, this plot is set in the relatively less exciting world of finance, and discusses an interesting investment strategy of a self-taught investor who has made millions over the last 20 years.

The Naked Trader is a book by UK based investor Robbie Burns. A journalist turned investor, Robbie gained initial popularity in the early 2000s when he became one of the few retail investors to make more than £2 million in gains from investing in stocks

“Stock market investment is easier than you think, simplicity is the key”

says Robbie, who also maintains an online trading/investing journal on his website that details his investment rationale, performance, etc. It’s no surprise that over the years, both Robbie and his unique investment style have come to be known as ‘The Naked Trader’.

In his book of the same name, Robbie lists out his success mantra: a rules-based investment strategy based on fundamentals, without relying on many technical indicators.

This strategy looks for profitable & growing companies that aren’t debt laden, with a good P/E ratio to gain from in the long-term.

He also has a ruthless view on losing positions, insisting they are cut early on. The strategy aligns with what fundamental stock gurus also advocate – and it’s no wonder that it has resulted in great profits over the long-term and the many people around the world continue to replicate his investment style.

As simple as Robbie’s “Naked Trader” style of investing is, identifying and managing stocks that meet all his criteria still needs an understanding of  the stock market & time to execute. The latter especially, is something that many investors don’t always have – which is why we’ve created The Naked Trader smallcase that’s based on Robbie Burns’ ideology.

The Naked Trader smallcase has been adapted to the Indian stock market conditions, and uses the following broad methodology to screen for stocks:

  • Current stock price has increased over the previous 1 year
  • Current stock price is at least 5% higher than its 52-week low
  • P/E ratio is less than 20
  • Earnings & Dividends per share (EPS & DPS) and sales growth for most recent year is positive
  • Price to profit before tax is less than 15
  • Net debt is less than 3 times the operating profit for the most recent financial year
  • From the shortlisted stocks, 15 companies with the lowest P/E ratio are selected

Due to its aggressive criteria, the Naked Trader smallcase can include a mix of large-cap, midcap, and smallcap stocks – currently, the portfolio predominantly includes midcap/smallcap names like Gujarat State Petronet, NIIT Technologies, and Vaibhav Global. 

To ensure that only stocks that meet the criteria remain in the portfolio as well as to eliminate losing stocks, this smallcase is rebalanced every 3 months. This high-risk and high-returns strategy has a historical CAGR of ~32%, and requires a minimum investment of approximately ₹10,000.

If you’re investing to outperform the markets in the long-term, you can consider this smallcase. Happy investing!

Author

  • Vikas Bardia

    Investor + startup guy who loves to chase rooftop & sunset views. Go long and prosper! 🖖🏼

    View all posts

Gujarat State PetronetNaked TraderNIIT TechnologiesRobbie BurnsVaibhav Global
Icon-Facebook Icon-Twitter
Download App

Vikas Bardia

Icon-facebook Icon-Twitter

Investor + startup guy who loves to chase rooftop & sunset views. Go long and prosper! 🖖🏼

You may want to read

​
Digital India

Add to cart: An investment in Digital India

Imagine the state of our lives in India back in 2015 - smartphones were still a luxury, 4G was expensive...

Private Equity Stocks with PE List

What is Private Equity? How can you invest in PE?

When most investors think of equities or stocks, they think of particular single stocks, smallcases, mutual funds, risk & volatility,...

CANSLIM screening criteria

Understanding the CANSLIM criteria

CANSLIM is a stock-screening model created by William O’Neil, an American stock broker and investor known for blending technical &...

  • Previous postWhat is Private Equity? How can you invest in PE?
  • Next postRBI cuts repo rate for fifth time

Leave a Reply Cancel reply

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

You must be logged in to post a comment.

Welcome back to smallcase blog

New here? Create an account

Forget password
or sign in with

Sign in with Google

Register for this site!

Sign up now for the good stuff.

Lose something?

Enter your username or email to reset your password.

or sign in with

Sign in with Google

Your subscriptions

Weekly wrapup of all investment news and alerts from the markets

Lost your password?
  • smallcase – Invest / SIP in stock portfolios
  • About
  • Disclaimer
  • Twitter