Stock Accumulation Strategy

4 min readOct 11, 2021

Every investor’s objective to ‘maximize profits’ , is a given . However, the unanswered question is , what is the optimum way to achieve that goal ?

There are two possible ways to get there;

1) Buy at the lowest price and sell at the highest price, wonderful if one could pull it off, consistently.

2) Accumulate as many shares as possible at the best possible prices.

Clearly , in the first instance , the investor has little if any control of the final outcome . How about the in the second ? More on that later ….

The truth is, it’s all about the narrative . What is buy and hold ? It’s just a narrative to help stock prices move up .

What’s a cyclical stock vs a consumer stock ? They are just narratives to get people to do something …

Well , Apple was a cyclical stock when its PE was 20 , a growth stock when it’s PE 30, a value stock when it’s PE was 10 and then a dividend stock … the business is just the same , nothing has changed , except the narrative. Narratives are as old as the hills .

Allow me to. engage you in a. little thought experiment.

Two investors ;

The first one is a set and forget type .

The second investor decides to use the stocks ebb and flow to. tweak his portfolio a couple of times a year.

He does so. by scaling in and out of just 10% of his total position size , if and when the opportunity arises.

In doing so , he is marginally successful .

He decides to redeploy the profit earned from these transactions into acquiring MORE shares of the stock, albeit at a lower average cost.

Please refer to the illustration below ;

Selling and repurchasing 10% of the existing position 2 times a year for an average of a 10% gain on each transaction , would increase the return by 2.50% on the overall position size.

Assuming his endeavour was successful , he would now own 17 more shares of. Apple stock , which resulted in a 2.49% positive return ( not including dividends) as compared to the ‘Set & Forget’ , investor, measured over the same time period.

(Note: the adjustments are for only 10% of the existing position size. ).

The objective of the exercise is to provide a 200 basis point fillip to the overall portfolio. Is it attainable ?

Let’s take a look. …

Following is a random selection of stocks that have experienced double digit % pullbacks on one or more occasion, over the past 12 months.