Month In Review

I wish the month had ended on June 18th. I was up over 9% for June on that day. Unfortunately, I ended the month with only a 2.8% return. I guess it's better than losing.

Week In Review 6-29-2007

This was a rough week for me. I ended up down 3.20%. My worst screen lost 4.82% (Punk's Zweig RS 5) and the best made .82% (To The Moon). You can probably look at my returns and tell which screen I'm focusing on lately. VSEC rallied a bit today which tempered my losses, and I avoided buying SYNL on Monday (thank goodness).

I'm glad the week is over and we'll see if I've got some new prospects for this next week.

I hate the summer. Down 1.65%. It'll be nice when this week is over.

Goals

Pradeep has a good post about trading goals. He's right. I've spent time finding the "perfect way to trade" and never have. During that time, I've passed up opportunities to make a lot of money. There have been times when I talked myself out of some trading rules because I thought, "This can't possibly work. It's too easy. If it worked everybody would be doing it."

I've shown my Dad the way I trade and the returns I've made. He's not interested and skeptical. He always asks, "If it's as easy and lucrative as you say it is, why isn't everybody doing it?" I think the answer to his question is that it's NOT easy. Until you've been doing it a while, it is incredibly hard to handle the ebb and flow of the market. Every loss punches you in the gut. You feel like you are being irresponsible--like you don't know what you are doing--like you're gambling away your hard-earned money.

There are ways for individual traders to take advantage of the market. If you find something that works (and anything that beats the market works) then stick with it. Don't chase after the newest idea, newsletter, hot stock or whatever. Have confidence in your system and make some money.

I guess my persistence paid off today. I was down nearly 2% in the early going and ended up gaining .76%.

Stay on Target

I've been getting hammered this last week. Last year I would have been sick to my stomach (and I was because I got hammered last summer too). This year, I've been able to look at things differently. There are a lot of people that are focused on the minute to minute fluctuations of the market (I am too--way too often). But when I am able to step back and look at the big picture, crummy weeks don't look so bad.

Charles Kirk linked to a good article about persistence. I'm learning that persistence is the key to making money in the stock market. When I dump a screen because it has lagged in performance for a month, I invariably end up losing more than I would have if I had just stuck with it for the long term.

If you look at my performance in 2005, you can see the result of constantly jumping from idea to idea, chasing good performing screens and dumping screens that were having bad weeks or months. In 2005, one of my screens made nearly 1,000%. I followed that screen for a few weeks and it tanked miserably during that time. I bailed and the screen went on to go nuts the rest of the year. I was petrified to jump back in because of the loss in that short period of time. My fear (and stupidity) kept me from doing well.

So, if you're having a tough couple of weeks like me, hang in there. Persistence pays off.

Ouch! I've lost 6.33% since last Monday when the portfolio gained 4.48%. It always seems like a losing streak comes right after a good week or two.

Today the portfolio lost 2.09%. That was worse than any of my screens because of my decision to weight VSEC more heavily.

Here's an old Motley Fool article about mechanical investing that I enjoyed reading recently.

Not the best day to reveal my stock screens. The "To The Moon" screen was the only screen to make money today thanks to SMTX. I bought some this morning, but not enough to keep my portfolio out of the hole. I was down a bit over 1%.

That was quite a reversal. I looked at lunch time and I was up about a percent. I ate a sandwich and looked again and I was down a percent.

StockPunk Stock Screens

Many StockPunk visitors have shown interest in the way I screen and how I trade stocks. I was a bit hesitant at first to reveal exactly what I was doing because of the irrational fear that if I revealed how I did things that it would stop working. That's silly. The market is too large and too complex to work that way.

I wouldn't be able to trade the way I do without what I've learned from others. Most of what I have learned has been from others sharing their wisdom for free. I think the constant sharing of information is what makes the internet an incredibly powerful tool.

Each week I will post my screens for the week along with their YTD returns and the compounded returns since I began tracking the screen. The results are from my own calculations of screens that I've followed on a weekly basis since 2005.

Since I don't have much time for analysis and I get distracted easily when I have a large list of stocks to look over, I concentrate on just a few stocks each week. My main focus has always been the Zweig screen that AAII has been tracking since 1998. My goal continues to be to use my own ideas to experiment with the Zweig screen to create my own screening technique that beats the basic screen. My goal has also been to limit my portfolio to between 5 and 10 stocks so that I can easily track and research each stock with the limited time I have.

I think it will be helpful to show the weekly fluctuations of the screens to give everybody an idea of what they could expect from their own small portfolio of stocks.

Many of you have expressed a great deal of interest in my use of Zack's Research Wizard as well. I've developed my own screens with RW as well and will post those screens on a weekly basis. The results of those screens are from backtesting and the verdict is still out on how accurate Research Wizard is in its backtesting algorithms.

Changes to the screens will be posted on Monday morning before the market opens.

Week In Review 6-22-07

A good Monday kept me from having a crummy week. I ended up for the week by 1.27%. I think I'm learning to keep my emotions in check. I feel I handled this week pretty well. SYNL went on to loose more today and I avoided an emotional buy in the morning.

I've learned that it is best to set up rules that I don't break. It's when I break rules that I become emotional and stupid. For example, this week with SYNL I set up a rule that if it lost more than 2% of my total portfolio value that I would sell. I set up a trailing stop because SYNL had been really strong the week before and I wanted to make sure that major weakness would get me out of the stock. After a few weak days, SYNL plummeted hard on Thursday. Today it continued downward and I was happy to be on the sidelines.

I'm back home now and should have more time to post this weekend. My plan for next week is to start sharing some of my best screens on a weekly basis. Instead of just a list of "Punky Stocks", I'll be letting you in on specific screens that I use and the stocks the currently qualify in those screens. I'll be posting the weekly gains or losses of each screen along with the cumulative return of the screen.

SYNL triggered a stop today when it dropped nearly 8%. It came back and ended up mocking me by losing only 2.85% at the close. I'm still a bit up for the week but I lost over 1% today. I'm hoping for a wimpy day tomorrow because I hate it when stops trigger and things rally the next day (which seems to happen to me 99% of the time).

At least I drug everyone down with me today. If you made money, I congratulate you. I lost about 1.5% today. I am still up for the week but another day like today will wipe out my gains for the week. This was the first day this week that I was able to monitor the market all day, and I've been reinforced to avoid doing that anymore (those of you who know me are chuckling under their breath).

This vacation has been good for me. I've read 3 books so far, and I've been able to get caught up in school. I have some assignments due tonight, so I'm dragging my feet--I'm on vacation dang it.

There was some profit-taking on the stocks that were screaming yesterday. No big deal -- the portfolio was down .51%. I toured downtown Chicago with family and friends today and saw the new Millennium park -- pretty nice. I liked the shiny giant "bean" and the glass brick waterfalls with the animated faces were pretty cool as well. The Field Museum hasn't changed much since I was last there--1988.

I've finally worked my way into a position where the daily fluctuation's are bothering me less and less. It's nice to build up a bit of a buffer and let things work themselves out. Endurance really is one of the best attributes a trader can have.

I'm in Chicago and I found some bandwidth to steal. Thanks, kind neighbor. It was a good day for the portfolio--up 4.48%. I don't have my regular computer with me so I don't know how that fits in with my historical returns but I'm guessing that it is pretty good for one day. It was nice being unable to obsess over things as I sped down the Interstate.

On the way, I read a good book (my wife was driving) about alternative energy and the harm gasoline engines have done to people over the years. It's called Internal Combustion by Edwin Black.

This Week with StockPunk 6-18-2007

My screens didn't vary much this week so I'm continuing with the portfolio the way it was last week. I'll be in Chicago all week this week, so I'm not sure how easy it will be to follow things. I'm staying with a friend who makes retro amplifiers and he has a terrific website http://www.gabtone.com/, but he has no internet access at his home, the crazy guy. So I'll have to see if any of his unsuspecting neighbors are willing to share their bandwidth. If they aren't, my posting will probably be pretty spotty next week. So to the both of you who read this blog, have a good trading week.

Week In Review 6-15-2007

This was my best week in a long time--since May of 2006. The portfolio moved ahead 7.02%. I implemented more of a weighted strategy this week and it worked out well. My best screen made 3.48% and the worst made 2.32%.

Even though AZZ made an impressive comeback today, it ended up losing 10% for the week. My decision to keep AZZ out of my portfolio paid off well. My screens would have come closer to my performance if some of them hadn't included AZZ.

SYNL had a good week this week making 15.84%. As I said before, I weighted SYNL heavier in my portfolio and that paid off this week. I plan to continue to use this strategy in the coming weeks. It has proven itself in the past, but I've been working on ways to keep the risk level from being too extreme.

Another good day. I'd like to have one of these days when the market it drifting lower, but heck, I'll take it. The portfolio was up 3.09%. With the exception of Tuesday, this week has been exceptional. Today was my largest one day gain since February 8th.

I was helped by a big gain in SYNL which is my highest relative strength stock this week.

You'd have to be feeling pretty crunchy today if you didn't do well. Even though volume wasn't extreme there were a LOT of stocks making impressive gains today. My portfolio was up 2.41%. I'm starting to creep back after my thumping last week. If I can maintain a 20% return through July I'll be very happy.

A wild day. I lost all of yesterday's gains in the morning, came back to break even by lunch, and then ended up down .86% at the close.

I can chalk up my decision to NOT buy back AZZ as one of my better choices of the year. I know I was whining about how it gained 8% last Friday, but I made the right decision to stay out of it. I should label this post with "good decision" to help me keep better track of them. On the other hand, I average about two good decisions a year, so I guess I can kind of keep track on my own.

Amir writes,

"Thank you very much for your very interesting Blog. I am learning a lot by reading it.

I am wondering if you can help me,either by commenting on your blog or here by email. I am trying to make sure I understand your method of Relative Strength with AAII Stockpro and Zweig.

My question to you is how do you define Relative Strength and over what time frame do you compute it?

Reason I ask is I downloaded several older sets of data from AAII AtockPro and used their internal Relative Strength to rank the stocks and pick the top 5, but when I looked at the performance a month out, I did not see such an advantage in performance.

I am thinking I did not do something right or did not do this with enough different weeks perhaps? Not sure.

Also, do you find that in Zacks that you can implement the Zweig screen so you can do the whole process and also add backtesting in Zweig. Or do you have to do 2 step process of AAII and then Zweig?"

Scott Responds:

That's a great question, Amir. A lot of claims about performance don't look as good when you investigate them for yourself. Backtesting is more art than hard science when you look at the constant flux of the market. For that reason, I only trust the screens that I've been tracking in real time on a day to day or week to week basis.

I've followed my top 5 Relative Strength idea for close to two years on a daily basis so I know that the returns are real. I've followed the top 1 relative strength idea on a daily basis for the last 3 years so I am certain about those numbers as well.

Beyond that, I've done what you did and downloaded historical stock information and laboriously checked how stocks meeting certain criteria performed over time.

It seems that Relative Strength is calculated in different ways and means different things to different people. Relative Strength is supposed to compare a particular stock's return with the return of the stocks in the S&P 500. If a stock's relative strength is 90, that means the stock's return is better than 90% of the stocks in the S&P 500. I use the 26 week relative strength that Stock Investor Pro calculates each week.

As far as Zack's is concerned, I have not been able to replicate a Zweig screen that delivers results similar to AAII's Zweig screen. The staff at Research Wizard said they will put one together for me and I've given them the criteria. I'm not sure if I'll be able to do much analysis with it because Zack's backtesting won't work with certain criteria. I'll keep everybody informed about how that all comes out.

Right now, I take the weekly information from AAII and type it into a Zack's portfolio. Zacks will then give me the Zacks rating on each of those stocks which I use to make decisions that week.

My favorite days are when the broad market does nothing (or loses) and I make some money. That happened today. I was up 1.39%. I was on the road until 7 pm so I wasn't able to look at the market. Those Wi-Fi hotspots along the interstate aren't powerful enough when you're driving by at 70 mph.

I have modified my strategy a bit this week. I have really been impressed by the way relative strength plays a role in the performance of my screens. My sub-screen of AAII's Zweig screen that looks for the top 5 relative strength stocks is blowing my other screens out of the water. Lately the model portfolio is up nearly 40% YTD.

I've written before about how out of those 5 stocks, the stocks with the highest RS outperform the others substantially. So I'm planning to put more weight on the highest relative strength stocks in the portfolio. That paid off today --SYNL brought in over 5%.

The highest RS stock in the AAII's Zweig screen (rebalanced weekly) has made nearly 95% YTD.

I'm glad I listened to my gut and stayed out of AZZ (I really didn't have any money to buy it anyway). One of my few good calls (unless it zooms up 25% tomorrow).

StockPunk Q&A 6-10-2007

Welcome to the first ever StockPunk Q&A. Thanks to all of you who sent in questions! Let's get to it.

Jordan asks:
"Do you trade full time or part time?"
Scott responds:
I have a full-time job and I am a post graduate student so I would have to say that my trading is less than part time. With my style of trading, I only need a few minutes a week to set things up. Any time beyond that is spent because I enjoy the whole market experience.

Steve asks:
"Do you have any financial or securities experience?"
Scott responds:
No, I'm pretty much an amateur. I got interested in the stock market in 2003 and have been hooked ever since.

Dustin asks:
"What tools do you use to pick your stocks?"
Scott responds:
I use AAII's Stock Investor Pro to screen for stocks on a weekly basis. I focus on the best performing screens over the past 10 years. My favorite is the Zweig screen and I've developed some "sub-screens" that I've used to improve on the already impressive returns that the Zweig screen has produced over the years.
I just purchased a subscription to Zack's Research Wizard and I am evaluating it to see if I can integrate it into my trading strategies. I also use Zack's Premium service to further refine my screens using the Zack's rating.

Adam asks:
"You seem to find the Zack's ranking system quite useful. Possibly I am not taking a full advantage of it but I am not sure about its usefulness. Rankings change quite frequently and additions and deletions happen ridiculously often - latest example - some of the stocks added on June 2nd as #1's were deleted today. If i would use the #1 ranking as a strict filter i am not sure how often I would need to rebalance the portfolio?"
Scott responds:
I do find the Zack's ranking useful. Before I purchased the Premium service, Zack's offered their rankings for free. The rankings were posted early Monday morning and didn't change until the next Monday. I used those rankings as a guide. When they converted the ranking to a paid service I did notice that the ranking was more volatile. I still use Monday morning as a guide. It doesn't matter much to me if the ranking changes during the week. The returns that Zacks claims for their number 1 stocks is based on monthly rebalancing so it makes sense to avoid emphasizing daily fluctuations too much.

Seth writes:
"What kind of technical analysis do you do on the stocks you buy?"
Scott responds:
I think technical analysis is cool and I've watched in awe as guys like Charles Kirk utilize a chart to make a 45% gain on a day trade, but that's not my bag. I sometimes use a MACD indicator to get a better "feel" for where a stock is headed. I like looking at charts. I like printing them out. I like to file them. But, I really don't use them too much.

Terry asks:
"Would you mind sharing the details of how you rebalance weekly? Traders have differing methods for rebalancing, and I'm always interested in learning how successful traders manage their trades."
Scott responds:
Each week I evaluate the stocks in my screens. If they continue to pass my screening criteria, I leave them alone. If they don't show up on my screens any more, I usually put a 3% trailing stop on them to catch any further gains. The screens don't take a lot of factors into account, so just because a stock drops off the screen it doesn't mean that the stock will immediately tank. However, if the stock has underperformed the market, I'm happy to get rid of it quickly if it disappears from my screens.

Sean asks:
"Are the returns you post on a portfolio of stocks or just some individual stocks you've owned? Also, why do you put your returns out there for everybody to see?"
Scott responds:
The returns are calculated on my personal trading portfolio and reflect the compounded return of the portfolio each Friday. It seems to me that very few stock blogs share information and I want people to see the my real results of using real money. I also want to show that it is possible to beat the market using a system that doesn't require a lot of time or market knowledge.

Thanks everybody for sending in your questions. I had a lot of fun giving my 2 cents worth!

What This Week Taught Me

I did pretty well with my trading this week. I regret the sell of AZZ (I had a stop on it at 2% of my portfolio). I guess I wouldn't regret it if it had gone down 30% or if it had continued down today. That's the breaks, I guess, but it sure makes me question even a more conservative use of stops (the disaster-avoidance kind).

Week In Review 6-08-2007

I almost wish that the market hadn't come screaming back today. I'd at least have a better feeling for where things are headed.

My portfolio ended up down 3.01% after my biggest loss in a year yesterday. The week started off really well and I was a bit unprepared for what happened Wednesday and Thursday.

My best screen made 1.85% and the worst lost 4.24%.

I guess I shouldn't be too concerned because I received an e-mail from this Joko guy. It looks like all my financial problems have been solved:

How are you doing with your family? Hope fine, Please pay attention and understand my reason of contacting you today through this email, My name is JOKO DOMMY, A Bill and Exchange Manager in Bank Of Africa Ouagadougou Burkina-Fafo. In my department, during the Auditing of the year 2006, I discovered an abounded sum of NINTEEN MILLION,THREE HUNDRED THOUSAND UNITED STATES DOLLARS($19,300,000.00) that belongs to our Late Mr. Morris Thompson, an American prominent man who unfortunately lost his life in the plane crash of Alaska Airlines Flight 261, which crashed on January 31st 2000. You may read more about the crash on visiting this C.N.N News internet website below.

Protected from Profits

Once again a protective stop keeps me from losing a little bit and gaining a lot. I sold AZZ yesterday and missed out on the last 2% of declines. Today it bounces back over 8%. So I missed out on -2% so I could miss out on +8%. When am I going to learn?

The Meltdown Begins

The woodshed is calling my name today. It's not going to be pretty for most of us out there. Fortunately, I've been working on not getting bothered when things go south. I've got my protective stops in place and I'm going to let the market do it's thing. I'll crunch the numbers after the close, but I'm done looking at this disaster until then.

I wish I had more experience under my belt. If I did, I could do a better job of managing the summertime insanity. Last year at this time was awful too. Maybe I just need to take a vacation at the end of May and come back to things in August.

But for now I plan to continue to plug along throughout the summer. If anything, I'm being forced to learn some additional money management lessons. Hang in there everybody!

After the close:

Ouch. The final tally--down --5.54%--my worst showing since June of last year. AZZ took a plunge that tripped my protective stop on the way down. VSEA was my next biggest looser. I didn't have anything that made money today. These are the kind of days that shake the uncommitted out for good.

Days like these make keeping a trading journal essential. It's easy to get emotionally wrapped up in a terrible day like today and think that all is lost. But when I looked back to this same week last year I was down 6% for the week. So far this week I'm down just 4.27%. Despite some awful days last year, the return on the portfolio was still pretty good.

So, I hope everybody is taking things in stride and setting themselves up for the comeback--whenever that may be.

No bragging today. I'm down 1.66%. This little "correction" is a good thing for the market and for me. When things go up for too long, I get emotionally distraught and make mistakes to preserve my gains and to avoid the "big correction" that usually never comes. I'm still nearly 100% invested and I plan to remain that way for at least the rest of the week.

Dow's down, I'm up. I like days like today. The market is down and I managed to squirm into .43% of gains. I only checked the market a couple of times today which was good because when I last checked I was down about a percent. I'm doing a better job at controlling my emotions (making money always helps). The true test will come when things take a turn for the worse.

Not too shabby. I was too scared to use any of the stock screens that I've gleaned from Research Wizard yet. So I just went with what I knew and it worked out pretty well for me today--up 2.48%. I'd be sitting pretty if I hadn't made mistakes the past few weeks but hopefully I've learned from them.

KRSL mocked my sell last Friday with a 4.62% gain today. I knew that would happen, but I'm happy to be rid of that stinker.

This Week With StockPunk

I'm planning to slowly integrate some of my Research Wizard screens into my portfolio. My current screens didn't change much this week so I don't have a lot of free cash to drop into my new ideas. I plan to follow some of the screens that backtested real well in the following months to see if they are truly reliable.

Don't forget to send in your questions for StockPunk's first ever question and answer session. I'm nearly at my limit for questions, but I can still take a few more if you send them in before June 9th.

What This Week Taught Me

I shouldn't have purchased KRSL and held on as long as I did. I missed part of the huge sell off a couple of weeks ago and thought because it still qualified on one of my screens that there was still opportunity there. There wasn't, and it has been my experience that after one of my stocks drops that much, I need to leave it alone and move on. I've seen very few come back from a 30% sell off and I should have applied that knowledge instead of mindlessly following my screens.

I should have held on to PCP. It hasn't left my screens and my stop was too tight and triggered last week. That kept me out of about 5% of gains.

Week In Review 6-01-2007

This was a better week for me and my trading. I avoided the emotional spasms that have encumbered me the last few weeks. I really set my mind to follow what I know works, and to let things happen the way they were supposed to happen. My portfolio was up 1.99%.

My best screen made 3.47% and the worst made 1.23% so I'm getting better at not over-managing my screens. I'd like to be closer to the best screen than to the worst.