Anyone Interested in This Free Stock Returns Simulator?

I received the following email from Mr. Jyoti Kumar, Director- Development (Co-founder) at Bazaar Analysis Pvt. Ltd on LinkedIn (blue text within the message is mine)

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Dear Sir, 

I read your article

Understanding the Nature of Stock Market Returns

I was really surprised by the figure
…for 15 years will have returns ranging from 15.8% – 5.4% to 15.8% +5.4%…

(Context: Long term stock returns. “68 out of 100 investors who have stayed invested for 15 years will have returns ranging from 15.8% – 5.4% to 15.8% +5.4%.”)

We have also reached to close to the same figure but in a different approach. We have a tool PortfolioBuilder using which we ask users to select 20 stocks from list of BSE500 (with certain condition of diversification) and we analyse the 5 year returns of selected stocks.

Tool provides two kinds of return

1. Spot,

2. APS.

Spot means investor had bought those stocks 5 year back and just held the same (APS has some service associated for buying selling alerts).

Your analysis is close to Spot concept and we have found even for last 5 year data users get on an average 14% return with +/-5% variation for 80% users. Actually, this tool is open on website ( http://www.SafeTrade.in/PortfolioBuilder.aspx ) and anybody can use it.

We log the results and get average statistics on the same data.

Thanks for Your Article!
Jyoti Kumar

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Investors with experience in stock picking may find this interesting/useful. Newbie stock investors can also use this to test their choices.

Note:  

  • The tool does not work with Firefox. Use IE or Chrome.
  • I am sharing this because I find it interesting. This is not a recommendation. There is no monetary gain involved for me. If you are interested in using their paid services, please be sure to make an informed decision.

What do you think about such tools?  Do you know other online tools like these or ones better than this?

Related Articles:

1. Understanding the Nature of Stock Market Returns

2. Sensex Return Simulator

3. How to invest in current market conditions?

 


About the Author M Pattabiraman author of freefincal.comM. Pattabiraman is the co-author of two books: You can be rich too with goal based investing and Gamechanger. “Pattu” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners. Contact information: freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints.

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Updated: July 27, 2013 — 11:25 am

9 Comments

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  1. Investing is more of a art than science. yes it needs some calculation here and there but its more about faith. I always recommend people to invest in a company not in stock market not in stock itself. I have seen people analyzing stock markets movement since i came to knew about financial world. Most of them use past studies of the market and there is no tool available which can tell you the stock price after 5 year or so.

    It’s very important for us to understand the business of the company we investing in, how good is their vision, whats their fundamentals looks like and most important of all if you believe in the company and its progress in upcoming years or not.

    This is a personal opinion and i do not recommend my clients to build a portfolio using past averages.

    1. Hi Piyush,

      Thanks for your views. That is indeed good for thought. Especially for me. I have quite a bit of equity exposure but all of via MFs. I am learning to pick stocks and have minuscule direct equity exposure. One question that has always been troubling me: I can handle math and analysis. However I am terrible in understanding a business. Especially all the factors that influence it.

      Is efficient stock investing possible, if I just use math? Your comment indicates otherwise. It also seems to imply that if someone understand business they do not need to worry about PE or PB ratios!

      Yes I can understand both matter but it seems to me understanding a business is crucial. I can spend a lifetime reading WB and still not get that. What do you think?

  2. Investing in mutual fund is completely different from investing in a company. Mutual funds returns indicates more or less how economy is performing or the sector its connected to. And we buy it following two basic principal i.e rupee cost averaging and diversification. I always recommend people who want some risk exposure and good returns over time to put their savings in mutual fund and not for less than 10 years. It will reflect the overall market return in long term.

    But according to me investing in a company or stock is completely different aspect. To buy low is very critical but people usually go with volatility of the market and how much the stock is in news. I have seen people playing around same 5-10 stocks for more than 10 years. It is not essential to buy a stock of a known and big companies only,we should always keep our eyes open for the new markets in the field. It could be company who set up big recycle plant and after reading their vision statement you are agree with them that they have good knowledge of business, strong and directive leadership and they are supporting a good cause too by helping environment.

    Now some people debates over following point that to go with a new and completely unknown company is quite risky. My answer to that, when you are in field to play soccer you can’t complain about football hitting on your abdominal and causing you a serious injury. While investing in equity directly you should have 100% exposure to risk and you should be brave enough to deal with looses too.

    Yes math is always interesting to me also and we can use it but to tell the company future from 200 days moving average or their ability to run business from the rumors in the market is blind analysis. Faith is very important just like when you need funds to start up a new venture a investor puts faith in you and your plan just like that you should have faith in your ideas and theory you used to pick a company which will give you fantastic return over time. Because i am not investing directly in equity to get 12 or 14% return i want much more than that.

    Regards

    1. That is very nicely put Piyush. Many thanks for sharing your view. I appreciate it a lot. Investors thinking about entering the market must surely read your comments.

  3. Thank sir, I enjoyed reading your post every now and then.

  4. If you are interested in direct Equity, I would recommend valuepickr.com. Excellent high quality discussions. Thanks for your post – much appreciated

    1. Hi, thanks for your comment. Yes I have a valuepickr account. I am yet to explore it though.

  5. Very nicely explained Piyush. I too agree with your views. Also thanks to you pattu for posting very informative posts.

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