StockPunk

Here's an e-mail I received this morning about a couple of my posts. I tried to clear things up a bit in my answer.

Scott,

I was amazed to see somebody actually implement one of the AAII screens with real money. Very ingenious of you to combine it with another system, Zacks, and achieve much better results, congrats on a job well done.

How is it that you're 70% cash if you are rebalancing weekly? Or have you started market timing?

The AAII strategy rebalances monthly, have you found weekly outperforms monthly? How much of an impact did the increase in transacation fee have, comparing to monthly rebalance?

Thanks for your interest! I'm still amazed that folks can find my website let alone read it.

I've been following the AAII screens since 2004 and I have run a host of scenarios. I even joined AAII's Stock Superstars for a year to make sure they were honest and reliable. I've found their information to be extremely accurate and well thought out. I would recommend anyone who is starting out and wants to learn about investing, risk management, portfolio management, tax implications, stock picking and analysis, subscribe to the Stock Superstars newsletter. I learned a ton by following their recommendations.

I think I misspoke when I said I rebalance weekly. What I meant is that I go over the screens and see if anything has changed from the week before. Many times nothing changes and I just hold on so there really isn't a lot of trading each month.

It is rare that I am have more than 25% cash, but it happens when my stops are triggered during the week. I will go over the screens this weekend and put some buy orders on enough stocks to be nearly 100% again. I've found that my market prediction abilities are elementary so I avoid market timing. I'm just not smart enough.

I have found that weekly evaluation beats monthly, but not by a huge amount (I guess it's huge over a few years). For example, my Zacks & Zweig screen rebalanced monthly made 43% in 2006 (not including transaction fees) compared to the same screen rebalanced weekly which made over 65%. This year the weekly screen has made 19.34% compared to 11.30% for the monthly rebalance. I really haven't measured the impact of transaction fees and taxes. Details like that bore me, but I might be surprised by the information.

I actually might make more if I were to mechanically rebalance each week, but my ego is too large and I want to think that my intellect has something to do with my returns.

Here's another e-mail--

Hi:

first of all thanks a lot for your blog. I found it very useful and a great source of ideas and your returns obviously speak for themselves !

I am sorry if this is repetitive but i am still not sure how your evaluation/rebalancing process works?

I use AAII screens myself and i understand they change/rebalance on a monthly basis? Although i do not currently subscribe to Zacks my understanding is their ranking system also changes on a monthly basis? Yet in your blog you mention weekly evaluation/rebalancing process?

If you subscribe to AAII’s Stock Investor Pro you can run screens each week. The same goes for Zacks. They send out new ratings early Monday morning each week.

Both services, however, base their documented returns on monthly rebalancing.

Scott