Momentum Portfolio

The Calm Investor | Momentum Portfolio

What is the momentum portfolio?

The momentum portfolio is a satellite portfolio that offers my core value portfolio some much-needed strategy diversification. This [link] post provides context on how the momentum portfolio was formed.

A portfolio of 8 to 12 stocks selected from the NSE 500 based on a set of rules about price momentum. The rules are a combination of positive price movement in the past 12-9-6 months combined with “quality” of price movement to try and identify stocks likely to continue strong upward movement over the next one to three months.

Key points about the momentum portfolio

  • An equal-weighted long-only portfolio of 8 – 12 stocks from the NSE500 bought based on strong price momentum
  • The underlying assumption is that rising stocks will continue to rise and falling stocks will continue to fall in the short-term
  • Portfolio is reviewed monthly. Stocks with stronger momentum replace those with weaker or weakening momentum
  • There is no hedging against potential falls in the index
  • No derivatives or leverage are part of this strategy

What does signing up for the momentum portfolio subscription give you?

Simple. It gives you access to the constituents of my current momentum portfolio and email updates of changes as and when they happen. The portfolio itself is shared through a google sheet. Each change to the portfolio is also sent over email to subscribers of this service.

Currently, a 3-month subscription is available for a nominal fee of ₹699.

The not-so-fine print

A momentum-based strategy is risky by definition and has a decent probability of blowing up if markets see sudden broad corrections. This service is not a buy or sell recommendation but a view into actions I take with my momentum portfolio. I emphasise that momentum forms a minor component of my overall allocation (~ 5%) and therefore I do not mind the risk of permanent capital loss using this strategy. Your decision to replicate this portfolio should be taken based on your risk appetite.

For any queries about this service, please write to thecalminvestor [at] gmail [dot] com