Ken has discovered some inconsistencies with what I have written and my current stock holdings. Here's what he said:
You mentioned you are holding or have held SPAR, KRSL, PCP, HDNG, TSS. From the data on AAII's website which is as of 2/28, none of those stocks have a number 1 Zacks rank. As a matter of fact, SPAR, KRSL and HDNG have no Zacks rank, N/A. Only one stock in the screen, GRMN, has a number 1 Zacks rank.
Please correct me if I'm wrong, but it seems you're not only buying the Zweig's number one Zacks rank stocks. As a matter of fact, out of the five top long term performing AAII screen, four of them will not have five number 1 Zacks ranked stocks in them. Only the Est Rev Up 5% screen will have at least five but then again that screen plays right into the hands of the Zacks number 1 rank's criteria.
My response:
Thanks for your question, Ken. Here's the deal. As I've mentioned before, I've also been tracking whether or not a stock's relative strength impacts its performance in a screen. I've found that it does (see earlier posts). So I weight the top 5 stocks with the highest relative strength and also consider whether the stocks are rated #1 by Zacks.
I've found that a combination of the two gives me better diversification and allows me to choose more stocks. Last week, for example, only 3 stocks were rated #1: NOV, MS, and GRMN. So I picked a couple of more that were rated high in relative strength.
I won't sell a stock if it slips from #1 to #2 on the Zacks rating unless it is no longer listed on the screen (I'll put a 3% trailing stop on it then). PCP continues to perform and even though it rates a "2" on Zacks it is still listed on the Zweig screen so I'll keep it until it starts weakening.
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