Mr Market -- After having read through your stock picking model, one question sticks out. You clearly state in your model to "Buy this stock. In a typical bull market, the stock will, on average, achieve a 15% gain within 4 to 6 weeks. Sell the stock and repeat the process." And yet, in your "open positions" table you list six stocks (PTSI, ACMR, FRED, AXL, OHB, and CHKE) that have an average loss of 15.8% and that you've held for over a year. By holding those positions for so long you're going against your model, tying up capital, and potentially compounding unrealized losses. Can you please reconcile this? Wouldn't it have been better to dump these stocks after 6 weeks and free up your capital to put it into more productive positions? If you add your current holdings that are older than 6 weeks to your closed trades (since the start of 2002), you have 27 trades for an average gain of 8.35%. Still impressive, but roughly half the return of what you're claiming.
I recommended that Mr Market swap over to HOV Wednesday. RE NFI I suggested that entering the market is done by letting the market move to your entry order. I have posted two charts on NFI. When I see a formation that ,to me looks like an inverted saucer, I usually do not take the play until the money velocity picks up. Your views on the market are nifty for your strategy. We do not know much about how they work out yet. Mr Market is an intermediate term investor. I do 6 to 8 day cycles and have a 10% standard for profit as a minimum. What you do is not too clear to us as yet. You mention a 30 day horizon for making money; in 30 days, vis a vis HOV MrMarket would hold, I would trade it both ways a couple of times and you would, at some point use what you posted to short it once. I can't see when you would take on the trade exactly. The charts I posted show you how I look at NFI and HOV. They are actually instructive to some people. Most people do not agree with my views; 4 out of 5 is a measured value of how many disagree with me. Your comments about my not entering NFI and deeming that a poor performance on my part is a pragmatic expression of how you handle your trading and that I fail to perform as great as you do. So you entered NFI either long or short who knows. You may short HOV in the next 30 days as well. My recommendation was to leave NFI as a swap and take a trade in HOV. Doing that only puts a person ahead 8% in two days. You comments on my stuff, I believe, could be upgraded best by dealing more specifically with what is wrong with my TA analysis and my anticipatory algorithm. You basis for actions is trite and superficial at best. I was hoping to pick up some learning on the two missing parts of Mr market's approach, i.e. his monitoring decisions for entry and exit and his P/L performance in the normal manner. He has a job and kids so he can't spend the time with that stuff and his followers do it for him somewhere else. He has 17 profits of a % but not in terms of capital. He carries loosers indefinitely but not stated in terms of capital potentially lost. If we knew each value we could get the net and then see the ROI stuff. He has a very high lost opportunity cost he is carrying as well. He went to Wharton where I was considered grad faculty vis a vis UCSC. I would expect a student of mine at Wharton to distinguish himself with the facts instead of any alternative. We all know how you perform. You have put your performance on the record here.
All of the stocks listed (PTSI, ACMR, FRED, AXL, OHB, and CHKE) are still growing both earnings and revenues substantially and are undervalued in my opinion. While carrying these positions is indeed contrarian to my stock picking methodology (good observation), I've found that holding these kind of companies, as long as their fundamentals are rock solid, does indeed outperform the market. In many many many cases, these companies do hit my sell target and the net return, from trade open to trade close, outperforms the market. Your question is raised over and over again in my Yahoo Group and many group members feel exactly the way you do. Remember, I concede the fact that I don't know how to time the market. I do know how to outperform it, by selecting superior companies. Since the market is upwardly biased, in the long run. This strategy will prevail for me over my anticipated investing horizon of 40 years. Using this model, I have outperformed the S&P 500 each and every year since 1990.
I was asking for what rolegario provided to us. I see that he calculates out the three segments of your investing and the way, that when you do not follow your rules you have specific lost opportunity costs. Second and unanswered is your specific manner of investing. That is the way you enter, hold and exit. We know how TM does it and tells us to do it too. I know you are too busy to add the details , etc. Thanks to rolegario. The cost you have engendered to have 17 conscutive somethings are very expensive. If you want to pick up your ROI, you should consider: 1. adding a protective stop process. 2. Exiting all non performers that you didn't stop out on within a shorter period than you 4 to 6 week target time for gatting a return. 3. redo your front end to add a beta minimum to your selections. 4. drop half of your selection segments, especially the non qual ones. you are going overboard with your segments. Look at your looser list and see that it came from segments that would no longer pull up the stocks out of the pile. 5. You are bridging cycles of trading by using an investment strategy, Why not just take out the 15% the first time you get it instead of taking it out after it has occurred several times. By doingthis you would have, it looks like at least three times the meat and twice the cheese. 5. change the bar duration of the monitoring mechanism you have. The peaks on these babies you choose are eluding your vision at this point. It is great to buy on fundamentals but you do need to come up with an exit strategy that is tuned to making money is a shorter time instead of making it twice or three time on paper before taking it on an exit. If you add stops, then you canatleast get trailing ones that take you out in the first profit cycle. I know you have wax in your ears, three kids, a full time job. these are normal newbie handicaps that people have. you are like a carpernter with 10 years experience. You have repeated the first year's experience 9 more times. time to buy a new car by shaping up mentally; skip the physical stuff for now just get a big boat to drive.
when you say "Using this model, I have outperformed the S&P 500 each and every year since 1990." Unfortunately, there's that little thing thread you started way back when that stated "I've made 53 consecutive profitable trades of 15% or more". It's hard to give you any credibility when you make a "53 consecutive prfofitable trades statement". Hey, I went to business school at city college, and I understand statistics. But as my signature says...
Jack, I don't mean to personally atck you , but what the F#%* are you talking about????? MM made a statement and a pcik....he went out with NFI and said BUY......You countered with " OOPS" and talked about it not being a good play.....but thru it all you never said whether it was going to go up or down...which is fine but don't criticize a selection ( especially one that worked) and then hide behind " i was analyzing it".....do you know what i mean? I found you comments very enlightening and informed but you never stepped up to the plate like MM did and put it on the line....I mean, If NFI was 47.00 right now, he would have been crucified here ( most likely by me)
Good point, but wouldn't it be better to set a protective stop, get stopped out, and, if you still like the stock, reenter at a lower price? The longer you hold a losing stock, the higher the bar is set for you to exit. I give you credit for your system, and for sharing the specific steps with the public. But, are all the hairy half-naked photos really necessary?
My streak was indeed 53 consecutive profitable closed trades of 15% or better. I don't really care if you believe me or not, but to call me a liar, in a public forum, would be inaccurate and highly inappropriate.