A VERY PROFITABLE METHODOLOGY I. Introduction I have been developing a trading methodology now for two years and decided, in light of the success I am experiencing, I will pursue this to the next level: professional money management. I decided on an initial release to elite trader as my forum for its broad exposure and the earnest value it provides as I post trades in a journal format it is accepted as actual and not fabricated. Ultimately I will participate in various âfarm leaguesâ where institutions monitor new talent for potential money managers. What is intriguing and profitable about my methodology is it identifies where capital is flowing in the market place at the present; here and now. And it does it by numbers not feelings, emotions or conventional wisdom. I want to invest in what is moving and making money now, not what may occur or waiting for a company to turn around. Keeping the time value of money in mind, capital tied up in investments going nowhere is detrimental. Furthermore, I believe markets, economies and the world in general moves too fast these days to realize success with historical strategies: buy and hold is a dead strategy. Life span of companies, product cycles and longevity is much shorter now compared to the past: companies and their products appear overnight and disappear overnight. Thusly, new strategies are necessary for profitability. To be successful in the new paradigm of the stock market you need a system that is adaptable: gets in with the best of it and out before the worst of it just as fast as the reality of the marketplace. II. Methodology My methodology is a quantitative analysis of the entire universe of stocks based upon earnings, sales, growth, valuation and share price action. Further analysis is performed to determine validity of the underlying price behavior based upon its history. I employ about ten different screens typically yielding 100-300 stocks, then perform additional screens to narrow the field and eventually I arrive at a manageable field of about 20 stocks that I can perform rigorous analysis, initially quantitative and then I comb their reports, filings, balance sheets, everything before I buy it. Details of my methodology are of course strictly proprietary; I am looking to manage money or sell my process. No stocks are excluded from the initial screen nor are any stocks favored according to sector or size, etc... I prefer keeping the methodology as mechanical as possible to attempt at eliminating human error and emotion from the equation. However, during the time of my research the methodology is favoring small caps as probably no coincidence the market has also been favoring small caps; I imagine as market conditions change it will adapt to again pick companies where capital is flowing whether it be small cap or large cap or growth or value by traditional measures. All of my entry and exit strategies are strictly proprietary. However I typically scale in and out, cutting losers and letting winners run. I also size positions as to not overweight a position based on share price. I want to be in with the best of it, when action is happening now and all of the market forces are flowing in my favor. Successful investing entails managing micro and macro realities: lining all of these market forces up at the same time is as close to the âholy grailâ of investing I have seen in my ten years trading. Conversely, maintaining cash positions at critical times when the flow of capital is weak, negative or slow due to cycles or even seasonal attributes maintaining is critical to achieve capital preservation and therefore increase bottom line. My system recognizes âcash is a position tooâ. I hold 0-20 positions typically but average about 10-20 at any given time; I will run my screen once a month and add positions based upon performance of existing positions, strength of potential positions and prevailing market conditions. III. Present results Despite the project being very part time for me the results are already impressive; I imagine with full time attention and improved software, results could also improve. My current track record over past two years: 32.85% annualized. My current positions are: Symbol Last Trade Paid Gain ARD 28.75 22.97 25.16% ASF 44.83 38.64 16.02% GMXR 36.69 22.61 62.27% HANS 77.48 43.82 76.81% HOLX 38.05 27.53 38.21% KNDL 25.85 28.08 -7.94% MTN 35.31 30.2 16.92% NTRI 40.12 31.75 26.36% SWN 35.4 34.65 2.16% YHOO 42.32 34.16 23.89% I have taken partial profits in MTN, HANS, and NTRI. I have also taken partial profit and SWN but as more of a defensive move looking to exit the rest of the position if it trades to my even point. KNDL is also on the chopping block. I will post results for these trades. IV. Future development I am currently working to apply a neural network application to this method, a venture very costly and intensive and at this time I do not have resources or time to aggressively pursue however itâs a work in progress. Feel free to post questions and I will respond when I get a chance.