Goal:
This website offers timely insights on stocks and market trends to help subscribers make informed investment decisions, powered by the StockTell system.
What is StockTell:
StockTell is a system of algorithms and heuristics designed to manage a hypothetical diversified portfolio of stocks over time through simulated buy and sell transactions. The system maintains a hypothetical portfolio with active stock holdings, records buy and sell decisions, and documents reasoning behind those decisions, which form the basis of insights shared on this website. The system allows for the simulation of trading strategies and back-testing of portfolio performance across extended periods without using actual capital.
The StockTell system and portfolio have been back-tested over 15+ years through several periods of uncertainty: the 2008-2009 financial crisis, bear market of 2015-2016, crash of late 2018, the COVID meltdown of 2020, inflation fears of 2022, and tariff-induced crash of 2025. The system consistently beats annualized performance of both the S&P-500 index and the NASDAQ-100 index by several percentage points for most years.
The StockTell system evaluates factors such as a company’s revenue and earnings growth, balance sheet strength, free cash flow, valuation, and stock price momentum to select good candidate stocks at any given time. This process takes into account overall market sentiment, macroeconomic conditions, and the parameters of its hypothetical portfolio, including available cash and number of active holdings. The system may occasionally select individual stocks that lose value. However, it aims to manage risk through diversification, setting limits on losses for each holding, and conducting regular portfolio rebalancing to preserve gains.
Historical Context:
The StockTell system serves as a simulation of an Algorithmic Trading System, integrating principles from both Computing and Finance to facilitate automated and potentially profitable trades. Algorithmic Trading has existed in various forms since the 1970s and 1980s. The field experienced significant growth in the late 2000s with the advent of High Frequency Trading. Currently, majority of transactions on U.S. exchanges are conducted by algorithmic trading systems, and their prevalence is expected to increase further with advances in Artificial Intelligence. Although Algorithmic Trading systems are now widely implemented, their true effectiveness remains uncertain or is closely guarded information. Notably, the S&P-500 and Nasdaq-100 indices continue to be benchmarks that are seldom consistently outperformed.
StockTell began as a part-time experiment in 2021 during the pandemic stock market boom. We set out to determine if algorithms could build stock portfolios without frequent trading and consistently outperform benchmark indexes. When markets shifted in 2022 due to rising inflation and tighter monetary policy, many pandemic stocks and portfolios lost more than one-third of their value. This made our quest even more relevant. After all, algorithms should be able to sense a shift in market and economic conditions and make better overall decisions free from emotions of fear and greed that often cloud human judgement. By the end of 2023, we had developed a framework to back-test strategies, and by mid-2024, a promising buy/sell strategy emerged. We continued to refine winning strategies using first principles and avoided overfitting for specific scenarios and market patterns. In general, we tuned our strategies to improve not just the overall portfolio performance but also the number of winning stocks within the portfolio. In late 2024, we started emulating the system with real investments, seeing positive results. Emulation is a practical possibility because the system trades once a month instead of frequently. We continue to monitor and improve StockTell, aiming to offer a valuable tool for investors and speculators.