Hi Praveen !!
First of all,excuse my english...not my mother language
Take my hat off Sir for sharing with everyone such a simple but powerfull investment system.
Great book,simplicity always works better...some people have a formula to build wealth in front of them and still cant see it !
In my experience over 10 years fighting the markets,if someone wants to succeed in this bussiness best thing can do,is to move against the herd.That´s why this system is so special: because you buy when nobody does.
If you buy and sell like everyone does,you are in trouble.
Over the years I have learnt that most of the time works better to do something that is the opposite of what is usually done.
No system is perfect and STR and Core Postiong trading has potential drawbacks as well.
You can let the magic formula do the dirty math,but if your timing is not right,you will pay for that mistake in terms of keeping dead money for a long period of time and opportunity cost of investing that money in another business.
I enclose Praveen´s STR Excel with Nikkei data assuming a rebalance the first of each year: starting 1990 and ending jan 2015.
I know it is a worst case scenario but its the kind of situation you want to face when you start testing a trading or investment system.
I really dont wanna mess with stocks,_I only trade ETFs,and as you can see,Nikkei was severy beaten down to the point that it takes 16 years to retrieve your money.
Having said that,I think its a good thing to invest in beaten down ETF sectors with 20-40% fall from the top.This way you limit the possibility of buying right at the peak and you limit the downward trend length in terms of getting trapped in the "dead money" cycle until market bounces.
Another interesting point I dont agree is related to cut the amount invested when the chart starts a new upward trend.
IMHO it might result much more effective to use a simple trailing ATR stop loss and follow the trend until is broken.Really dont see the necessity to diminuish market position when Mr Market paddles on the same side.
Hope we all can share experiences with this great system.
Y´all take care !!