Smartstock typical Example

Following is a descriptive example of how the theory works.

Let us assume that there are two investors : Investor A, thats you, who use Smartstock and Investor B, who does not use Smartstock, but is a buy and hold investor.

Assuming brokerage to be zero for all trades.

Both the investors start with Rs. 10,000 /- each. And both of them invest in the same stock priced at Rs. 10 /-. Investor A, invests 50 % i.e. Rs. 5000/- in the stock and remaining Rs. 5,000 /- he keeps as cash, as per the advice of Smartstock. While investor B invests the entire amount i.e. Rs. 10,000/- in the stock.

Take a look at the following...

Investor A (Smartstock User) and Investor B bought the same stock that bounced from Rs. 10 to Rs. 4 and back. While, Investor A used Smartstock recommendations of 5 trades 3 Buys & 2 Sells over the time, Investor B just held on to the stock. The working is shown in the following table :



Now both these guys bought and held the same stock for the same period of time, but the Smartstock trading software user deployed his cash strategically and reaped huge benefits over the buy and holder.

• The Smartstock user is up 44% with a profit of Rs.4,356 while the Investor B i.e. buy and holder is only even.
• The Smartstock trading software recommended 5 trades 3 Buys & 2 Sells over the time period, and allowed an average of only 67% of our 10K investment to be at risk.
• The buy and hold investor was 100% at risk the entire time.
• Its too bad really, because the return on capital at risk was not a mere 44%, it was a whopping 66% and better still, we now own 842 shares at an average cost of only Rs.5.90 Per Share.

So overall we started with ...
Beginning Portfolio Value Rs.10,000 , The same as the buy and hold investor.

But now we have...

• Current Portfolio Value Rs.14,356, way better than the buy and hold investor.
• Current Stock Value Rs.8130/- 62%, hmm what do you know... more than we started with.
• Current Cash Reserve Rs.6,226/- 26%, wow! actual clean profit, off the table and safely in
• the bank!
• 813 Shares Owned @ an average cost of only Rs. 4.64 and currently worth Rs. 10.00

To sum up.......



This looks better all the time. But if you knew that the more times you compound like that the better it gets, its just like compound interest, only you are actually compounding shares. Every serious investor that wants a REAL strategy that works should try Rupee Cost Averaging.

If Investor A got to ride this roller coaster just 2 more times from 10 to 4 and back he would be up to a portfolio value of Rs.27,302! And all this on a stock that never once went over the ten Rupees we paid per share on our initial purchase.