The tongue twister "Chart-Chancen-Schach" (=Chart-Chances-Chess) is a wikifolio of mine, for which, to be honest, I was sceptical at the beginning whether my investment strategy would work.
In fact, it has been very successful and has performed very well over the last few years compared to large indices such as DAX, Euro Stoxx 50 or Nasdaq 100 (see figure on the right).
The last 12 months also saw a very positive difference (almost 20%) compared to the two prominent indices MSCI World and S&P 500.
What is the idea behind this wikifolio?
The "pawns" (shares) should regularly be optimally positioned through clever chess moves. This is done using a small calculation model that I have developed and update regularly with the help of an Excel spreadsheet and freely available data (e.g. analysts' price targets). You can read exactly how this works directly in my wikifolio under the section "Trading idea".
Updating the data and executing the trades requires a lot of time, so it can also happen that I don't execute any trades for a certain period of time. However, the portfolio is relatively stable with 40 large public companies, so a trading pause does not have a major negative impact.
Nevertheless, I aim to carry out these updates as often as possible, as the trading idea is to further optimise performance.
Judging by the performance of the wikifolio so far, this attempt at optimisation has been successful.
How do I determine this? The performance, as can also be seen in the figures above, was better compared to the indices to which the stocks in the wikifolio belong. With my valuation model I select the 40 best stocks from the companies of the Eurostoxx 50, the 10 largest stock companies of the Dow Jones and the 5 largest of the Nasdaq. You can see exactly these indices in the figures above.
Why was I skeptical in the beginning?
I am more of the type of investor who basically decides on the basis of fundamental analysis. What does that mean? I read the news, look at the current economic and political situation and similar information to make my decisions. With this information, I then make decisions based on my "gut feeling", to put it simply.
This means that, for example, I do not normally calculate the exact shares in my portfolio with a model, but decide them relatively freely. Factors such as sector diversity, geography (not all stocks from one country, for example), among others, I do have in mind, but I do not perform calculations of.
Before I came up with the idea of chart chess, I was not convinced that I could achieve significantly better results with such a model compared to my previous strategy. But I wanted to try it out and so, despite my scepticism, I invested a lot of time in this new portfolio, including the valuation model. I have not regretted this:
Why the wikifolio has been successful?
As already mentioned, the Chart Chess portfolio is created by evaluating a mix of very large companies.
The Euro Stoxx 50 represents the 50 largest public companies (measured by market capitalisation) in Europe. In addition, I have included the 10 largest from the Dow Jones and the 5 largest companies from the Nasdaq 100 in my valuation table. (Actually, there are currently only 64 as a result, since Apple is represented in both the Dow Jones and the Nasdaq).
The 40 companies that are at the top according to my respectively updated valuation then flow into the wikifolio in different weightings. Thus, the portfolio even has a certain similarity with the Euro Stoxx 50, although it consists of somewhat fewer stocks and is supplemented by companies from the USA. In addition, it is crucial that the weighting is different than in the European index. As a result, the performance in the end deviates from the Euro Stoxx 50 despite the similarity, even though there is a similar movement in prices (also visible on the chart). This divergence has been positive so far, as already mentioned. Accordingly, my valuation model has so far led to successful weightings and shifts (=changes in weightings and composition in the portfolio through trades).
By the way, if you want to take a look at how this wikifolio has performed so far and compare it with other indices or set other time periods, for example: You can do that directly on Wikifolio if you are registered. All you need is your email address and two minutes of your time.
In my opinion, the wikifolio has been successful because, although it contains large companies that promise a certain stability of value, the weighting of the individual stocks is always updated. By orienting myself to analysts' price targets and the chart performance, I have brought in a reference to current events that has optimised performance in my opinion.
What does the future hold for "Chart-Chancen-Schach"?
Right at the beginning, in order to remain serious: Forecasts are relatively difficult in the equity sector, as many components have an influence on the economy and on the success of companies (politics, climate, war, etc.).
Apart from that, however, I assume that the strategy behind this wikifolio will continue to be successful. The basic idea of focusing on large (supposedly stable) companies and at the same time filtering out the most promising ones through some valuation approaches should continue to work. I do not expect extremely large deviations compared to the Eurostoxx50 or Dax, but the goal is to continue to achieve slightly better performance over the long term. The strategy of focusing on very large companies also promises a certain degree of security against negative price trends. This has also been shown so far in the course of the price of Chart Chess in rather difficult market conditions.
It is precisely this observation of the price trend to date (combined with the comparison to large indices) as well as my conviction of the idea behind this wikifolio that leads to my personal confidence that this goal of long-term positive performance can be well achieved.
Did the article arouse your interest? 😊
Then why not take a look at Wikifolio or simply browse through the Investpocket website.