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!