NSP Value Plus Major Equity Moves

The graphs below represent a hypothetical equity balance curve based on the historical "Major Moves" of the NSP Value Plus method. "Major Moves" in this case are specifically defined as any upward or downward movement of a minimum of 10% before a turning point occurred. Turning points occur when at least a 10% move in the opposite direction takes place from the equity peak.

Now of course the actual ups and downs that occurred since 2001 are much more complicated than what is shown in a mere 30 plot points. In actuality, each week the resulting new equity balance is considered to be "re-invested" in the new selection of NSP Value Plus top 10 stocks for calculation purposes. Incidentally, it is easy for our Members to follow along with the process throughout the year. Again, what we are simply trying to graphically display here are the large upward movements as well as equity drawdowns that historically occurred to this point in both testing and real-time. Over what could be a number of weeks (sometimes a large number), overall equity balance changes that reverse at least 10% in the opposite direction are what is depicted. 

NSP Value Plus Major Equity Moves-Overall
(3/31/01-11/01/10)

 

In the most basic sense, the equity dollars on the Y-axis of the graphs depict what hypothetically could have occurred on a compound basis starting with $10,000 (and never adding any additional dollars). Think of it in terms of a portfolio that is re-balanced on a weekly basis. After the completion of each week's activity, the new balance is considered to be evenly distributed (10% of total for each stock) over the next week's selections.

The graph above is a snapshot of the overall activity. Considering all of the clutter however, we will proceed to break the graph down into smaller, more detailed sections.

NSP Value Plus Major Equity Moves-First Section
(3/31/01-7/19/04)

This first detailed graph will specifically examine points 1-10 from the overall graph of Major Moves.

X Axis Point from Graph above

 1- Represents starting balance of $10,000
 2- + 25.7% (Line from plot points 1-2) (21 Weeks-3/31/01-8/27/01)
 3- - 14.8% (Line from plot points 2-3) (4 Weeks-8/27/01-9/24/01)
 4- +180.4% (Line from plot points 3-4) (41 Weeks-9/24/01-7/01/02)
 5- - 13.7% (Line from plot points 4-5) (3 Weeks-7/01/02-7/22/02)
 6- + 53.8% (Line from plot points 5-6) (26 Weeks-7/22/02-1/21/03)
 7- - 12.0% (Line from plot points 6-7) (7 Weeks-1/21/03-3/10/03)
 8- +496.9% (Line from plot points 7-8) (56 Weeks-3/10/03-4/05/04)
 9- - 16.3% (Line from plot points 8-9) (6 Weeks-4/05/04-5/17/04)
10- + 20.2% (Line from plot points 9-10) (9 Weeks-5/17/04-7/19/04)

NSP Value Plus Major Equity Moves-Middle Section
(7/19/04-8/25/08)

This second detailed graph will specifically examine points 10-20 from the overall graph of Major Moves.

X Axis Point from Graph above

 1- Represents balance carried forward from plot point number 10
 2- - 10.2% (Line from plot points 10-11) (3 Weeks-7/19/04-8/09/04)
 3- + 83.0% (Line from plot points 11-12) (27 Weeks-8/09/04-2/14/05)
 4- - 17.6% (Line from plot points 12-13) (9 Weeks-2/14/05-4/18/05)
 5- +161.5% (Line from plot points 13-14) (3 Weeks-4/18/05-5/08/06)
 6- - 12.3% (Line from plot points 14-15) (10 Weeks-5/08/06-7/17/06)
 7- + 97.9% (Line from plot points 15-16) (52 Weeks-7/17/06-7/16/07)
 8- - 19.3% (Line from plot points 16-17) (5 Weeks-7/16/07-8/20/07)
 9- + 32.0% (Line from plot points 17-18) (19 Weeks-8/20/07-12/31/07)
10- - 18.3% (Line from plot points 18-19) (4 Weeks-12/31/07-1/22/08)
11- + 55.2% (Line from plot points 19-20) (31 Weeks-1/22/08-8/25/08)

NSP Value Plus Major Equity Moves-Last Section
(8/25/08-11/01/10)

This third detailed graph will specifically examine points 20-30 from the overall graph of Major Moves.

X Axis Point from Graph above

 1- Represents balance carried forward from plot point number 20
 2- - 34.7% (Line from plot points 20-21) (9 Weeks-8/25/08-10/27/08)
 3- + 51.5% (Line from plot points 21-22) (10 Weeks-10/27/08-1/05/09)
 4- - 12.1% (Line from plot points 22-23) (9 Weeks-1/05/09-3/09/09)
 5- +158.1% (Line from plot points 23-24) (32 Weeks-3/09/09-10/19/09)
 6- - 21.8% (Line from plot points 24-25) (2 Weeks-10/19/09-11/02/09)
 7- + 32.7% (Line from plot points 25-26) (10 Weeks-11/02/09-1/11/10)
 8- - 11.6% (Line from plot points 26-27) (3 Weeks-1/11/10-2/01/10)
 9- + 31.8% (Line from plot points 27-28) (12 Weeks-2/01/10-4/26/10)
10- - 13.5% (Line from plot points 28-29) (10 Weeks-4/26/10-7/06/10)
11- + 40.9% (Line from plot points 29-30) (31 Weeks-7/06/10-11/01/10)

Some Observations from this study

• We are looking at a total of 29 major equity moves (greater than 10%) since back in 2001. When considering the overwhelming effectiveness of the NSP in general it should come as no surprise that the upward movements far outdo the drawdowns.
• The mean average of the bullish moves has been more than +54% while the mean average of the declines has only been -14%.
• The mean length of the average move higher has been about 23 weeks while it has been a mere 5 weeks on the downside.
• All 15 of the upward trends have gained a minimum of +20%. 13 out of the 15 have moved at least +30% higher, and 10 out of the 15 more than +50%.
• Only 2 of the 14 downward trends were worse than -20% with the worst being almost -35% in the almost record-breaking bearish year 2008.
• No matter how successful a methodology may be, the markets should always be fully respected for potential volatility. For instance, even though there appears to be a huge overall slant in favor of moving higher here, markets can tend to fall much more rapidly in general (and from out of nowhere) than they rise. Human emotions such as fear can have a sort of viral effect at times.
• It all comes back to the "don't put too many eggs in one basket" adage. Again, what that specifically means can vary greatly between individuals. Even the NSP can experience quick and major losses. Therefore, the NSP Value Plus and NSP Top 10 NEVER place more than 10% in any one stock. Going a step further, the NSP Top 20 NEVER places more than 5% in a stock, and the NSP 100 Index never more than 1% for each stock.

So that is a basic summary of what the NSP Value Plus is all about. As you can probably tell though a boatload of possibilities may also exist even beyond that scope. For more insight into what can be done with the NPS stocks please refer to the page titled: Ultimate Swing Trading