Week In Review 3-1-2008

Well today was unpleasant. The beginning of the week was encouraging and it looked like I might pull out of my double digit losses but I ended up diving right back in on Thursday and Friday. For the week I was down .07% which was better than most of the screens, but still not very comforting.

The best performing screen was the Zweig MACD which made a measly .28%. The best performer among that group was GHM at 13.01%. The worst was AMED at -6.86%.

Zacks & Zweig was the next best performer at .08%. That screen still leads the pack for the year--mostly because it had no selections during January. ANDE performed well for that screen at 6.54% for the week.

Zweig Relative Strength 5 lost 3.23%. NGS was the only gainer at 6.51% for the week. Ironically it was the only stock I didn't buy. It blew past my limit order and I decided not to chase it.

To the Moon lost 1.69%. ICFI gained 6.11% and BYI lost 8.87%.

I spent most of the week managing an unwieldy portfolio and trying to pare down some of my unwise buys. Hopefully I can refocus and pull myself out of this pit I'm in. The broad market certainly isn't making things easy for me, but I'm beginning to see what works in markets like these. That's a good thing, because I'm sure I'll experience several of these before my time is up.

Warren Buffet speaks

Warren lives just down the street from me (OK, it's about 7 miles), so we're practically neighbors. That really doesn't mean anything. He hasn't ever stopped by.

I'm currently reading a book about investing the way Warren does. Dang Le (sometimes I wish my name was Dang) at Underground Value has done a nice job of putting together a transcript of Mr. Buffet's appearance at a college in Austin. That Buffet is pretty smart. Thanks Dang!

Things are looking up

My trading has been erratic and undisciplined over the last couple of months and my returns have reflected that. I'm attempting to return to my "bread and butter" which is mechanical trading. As I've written before, I do best when I avoid the emotions of the news and the internet and just focus on what has worked for me in the past.

I've got some house cleaning to do. I've still own a few leftovers from the last two months, but I plan to be rid of them soon as I transition back into my own ideas.

The last couple of days have been good, but I haven't really outperformed the major averages. My goal is to be out of the hole by the end of March and start working on another 40% gain for this year. It's not going to be easy.

I'm starting to see some optimism among my favorite bloggers and writers. Stockbee says that we've formed a bottom--he's been in cash since November. A few of the indicators that I follow show things turning. A lot of the gloom seems to be waning. Phil Grande says we're still heading for DOW 10,000. I've stopped listening to him--he's too negative and always makes me question my own trading plan.

The percent of stocks on the NY stock exchange above their 200 day MA has just popped over its 50 day MA for the first time since the beginning of November (blue arrow). I'm planning to get aggressive over the next few weeks.

Week In Review 2-22-08

Well, that week sucked. My screens all did better than I did. I completely over traded this week and my portfolio shows it. I've got stocks from four different "systems" in my portfolio now and I've got so many that it is getting difficult to remember why I bought each one. Stupid. I know better, but I get so desperate to make money sometimes that I grasp at anything that looks like it will work. Like always, I ended up hurting myself much more than helping.

The Zweig MACD portfolio continues to lead the pack this year with another good showing of 3.32% this week. The best stock in the portfolio was WFR at 7.37%. The worst was KEX with a loss of 2.11%. The screen picked 11 stocks.

The Zweig Relative Strength top 5 made 3.37% for the week.

Zacks & Zweig lost 1.36% and had 3 picks--ANDE, KEX, WW.

The To The Moon screen lost 1.59%.

I'm adding the Zweig MACD screen to the side bar because I think it has potential. We'll see.

My portfolio is down nearly 14% which means I've lost nearly half of the 40% I made last year. I guess I shouldn't look at things that way, but I can't help it.

And the Market taketh away . . .

The market took my gains from yesterday and helped itself to a little more of my portfolio--down 1.99%. I'm on the precipice of being down 13% for the year, a bridge I've never crossed before. I know that drawdowns are part of this whole gig, and I'm fully prepared to take a 20% hit--but that doesn't mean I have to like it.

Still struggling

I made money today, but I'm still kind of spinning my wheels. The portfolio was up 1.43%.

I was encouraged to read that members of the Kirk Report who picked their favorite stocks haven't done so well since the beginning of the year. All of the portfolios are down about as far as I am. Things are tough all over.

Interesting Screening Site

I saw a mention of Keelix.com on a mechanical investing website and found the information there very helpful. The stock screening tool isn't real easy to use at first, but it somehow utilizes the Stock Investor Pro database and allows backtesting! So far I've been able to put together some of the Zweig screens and back test them over years that I don't have data for. The data that shows up is exactly the same as my actual results.

I'm excited about the potential of the back tester. I've spent hours and hours backtesting ideas by hand, and frankly I've skipped a lot of ideas because I wanted to avoid the tediousness of the paperwork. When I get some time, I'll head over there again and see what I can discover. Cool stuff.

Combining Zweig Screen with MACD Indicator

I really like the MACD indicator even though I usually don't use it in my trading. Since 2004 I've tracked the highest relative strength stock in the Zweig screen and also tracked the same stock and only buying if the MACD is bullish.

Since 2004 and rebalanced weekly that one stock has made 3723%. That's pretty good and worth a look, but the MACD indicator helped to produce a 7553% gain over the same period. That's even better.

I don't know why, but I have never tracked a modified Zweig screen buying only stocks with a bullish MACD. I started to track this this year and so far the results are promising. YTD that screen is down only .08% compared to heavier losses in my other screens (and in the indexes). I look forward to having a few years of data under my belt so I can see if the MACD "qualifier" has potential.

If you are interested in the MACD indicator, Zacks Research has a good article here.

Week In Review 2-15-2008

Most of my problems this week came from trading mistakes. I held too long on stocks that I knew I should sell, and I didn't take gains when I had them. I decided to change my strategy a bit to take advantage of the volatility that exists in the market now. I am still using my screens to purchase stocks on Monday and holding them throughout the week. I do that with half of my portfolio.

With the other half, I am more actively trading some small-cap stocks and holding for just a few days (or hours). I could have made some decent returns this week, but I'm too used to trading on a weekly basis. The weekend allows me to make decisions that are much less emotional than when I am trading during the week. I need to work on being more mechanical in my decision making if I want to make the intra-week trades work out. There's potential there, but only if I can keep my emotions (and so-called logic) at bay.

I am now being beat by ALL of my screens. I'm pathetic. To The Moon had the best returns this week thanks to a big gain by CSIQ--21.17%. The solar stocks came roaring back this week. The Zacks and Zweig screen had a pick on KEX that made 2.48% this week. So far that screen has only produced two picks since the beginning of the year. I'm thinking that it would be wise for me to track the number of picks on that screen each week to see if it correlates with overall market direction.

The Zweig RS 5 screen managed to eke out a .15% gain for the week. It had GHM, KEX, WATG, WFR & WSCI in its portfolio with KEX doing the best and WSCI doing the worst -4.07%.

I am now officially down YTD more than I have ever been since I started trading in 2003. I assure you that I'm quite bothered by that. I am still convinced that I can get out of this hole and make some decent gains this year. It will be a challenge.

It's during times like these that record-keeping is so important. I need to be constantly reassured that what I am doing works. There is nothing to reassure me but the history of my trading and of the screens I use. When I look back at the last few years, this past couple of months are just a blip.

And . . .Back Down Again

Looks like I'm caught on the Stock Market Roller coaster right now. I lost almost all of yesterday's gains. Despite this ongoing volatility, I'm still feeling better about the direction we're headed.

And back up once again

Sometimes I feel like I have no idea what I'm doing. I think that all traders probably feel that way sometimes.

Today was my best day since December 10th. That was a long two months. I hope it's a sign of things to come because I'd really like to get myself out of the hole I've put myself into.

Back down again

Today, I lost my piddly gains from yesterday. Things looked encouraging at the open and through most of the day and then it all came crashing down very quickly. I don't like this market right now, but it's teaching me a lot. Hopefully, I'll apply what I've learned. Probably not.

Whatever

I checked the portfolio a couple of times today. It bounced around like a yo-yo. I ended up making .29%--yawn. I've been trading some more volatile stocks lately hoping to take advantage of the overall volatility of the market. They drug me down today. We'll see what happens tomorrow.

I'm still fully invested and my gut tells me that's an OK way to be right now.

Prudent Speculator Reports

The Prudent Speculator newsletter used to provide weekly updates on the condition of their portfolios. Since the market's decay in December, the updates have grown more rare. They've finally posted their portfolio results for 2008 YTD.

As you can see, they're not doing too well. They're doing better than me, but you'd expect that from a company that scores so highly in the Hulbert Financial Digest.

This market is tough right now--for everybody. AAII's Stock Superstars Report is down 10.8% YTD.

Personally, I don't think this nastiness will continue for the entire year. I'm glad it happened now, because it has thrown me for a loop and forced me to work hard to figure out how to maintain my portfolio. We still have 11 months to go and that's a good amount of time to apply the new lessons we've learned recently.

Week In Review 2-8-2008

Another crummy week--down 3.22%. I feel better overall about how I handled the week. Like I've said recently, I'm more comfortable putting money to work and losing than watching from the sidelines. It did feel good to be in cash on some of those awful days, but the days where the market surged forward while I watched made me feel crunchy.

My goal this year is now to stay fully invested and see if I can still accomplish my goals. My constant indecision about whether to be in or out has already cost me several percent. I'm doing worse than all the screens (except To The Moon), despite missing out on some big down days.

I really want to see this year if trading for a living is a viable prospect. It may be good for me to go through a rough time like this so I can prepare for them in the future. If I can recover this year, I'll feel a lot more comfortable going forward.

Yipee!!!

Today was the first day that my portfolio has advanced over 1% in nearly 2 months!! That's the longest I've gone since I started trading. A lot of that stems from my whole "market timing phase", but it has still been a long wait.

I was able to ignore the market for the most part today. I'm so much more happy when I do that.

Why I'm still in

Despite all of the negative news this morning and with the anticipation that the market is going to suck today, I have to question my sanity when I decide to stay fully invested. But that is what I'm going to do today (I'm actually planning on adding to my positions).

For encouragement I look to the past performance of the Zweig screen as determined by AAII. Although this screen is managed on a monthly basis rather than a weekly basis like mine, in 2002 (an awful year for the broad market--S&P 500 down 23%) the Zweig screen managed to make 16%.

It has always made sense to me that it is best to stay fully invested despite what the market is doing for a few reasons:

1. Even if the market in general sucks, there are always a few shining stars out there that make a lot of money.
2. If my goal is to trade while working full time, I really don't have time to monitor the market and make good timing decisions.
3. I've never been able to get the timing thing right. I don't know if I ever will.

Toward the end of the year I got off track and started listening to all the noise out there. Even though there were a lot of contradictory opinions, I felt that I could figure out a good way to judge when I should put money to work and when I shouldn't.

The jury is still out, but I've decided that it's easier for me to trust my system and take losses than it is to trust an indicator and miss out on gains. That's just me. Perhaps if I get punished enough, I'll reconsider.

Chris Perruna has a terrific article today on the futility of predicting market direction (or anything else).

Glimmer of hope

My portfolio shot forward over a percent today and ended up losing .30% by the end of the day. I lost less than the major indexes, so I guess that's a plus.

This is the worst YTD start for the the S&P 500 EVER so don't feel too awful about losing some money. Things will come back (they always have) and there will be some great opportunities to make lots of money.

As of today, the portfolio is down 12.23% which is my worst YTD showing ever. I am convinced that I need to continue trading because as soon as I go to cash things will turn around. I still think money can be made despite the declining tape. I might reconsider that when I'm down 20% for the year--we'll see.

The village idiot

Once again traders and investors turned to StockPunk to feel better about themselves after a unpleasant day on Wall Street. Yesterday brought the most visitors to StockPunk in its history. Maybe someday people will come to the site to see how I managed to buck the trend and make lots of money on a crummy day. Right now, I guess I can just be content that people are enjoying watching my portfolio disappear.

I have the worst stock market timing in the WORLD!

You'd think I would have learned by now. I hem and haw for nearly a month (and still manage to loose 8% of my portfolio. I get tired of waiting and jump in--right when the market gets spanked. Today I lost 3.53%.

Maybe someone should design the StockPunk Contrarian Indicator. Whenever I put all my money in, it's time to run for the hills.

Your Next Great Stock

I just finished up the book Your Next Great Stock--How to Screen the Market for Tomorrow's Top Performers by Jack Hough. Mr. Hough is a contributor to several magazines and news shows. I have enjoyed his Stock Screen article in Smart Money magazine over the past couple of years.

Hough has put together an easy read that's actually fun. Most of the book focuses on why stock screening works, while the last half of the book helps the reader put together some stock screens of their own.

Even though I've been creating screens of my own for years, I really enjoyed what Hough had to offer. I was never bored (as is often the case with poorly written stock books). Hough presented some very interesting history about the stock market and about stock picking.

He also does a nice job detailing why stock screens work, why they are the best way to find great stocks, and how to keep emotions at bay. He goes on to explain the mechanics of screening and how to put screens together on your own. He lists several screening tools that are free and some that carry a fee. One of his favorites is AAII's Stock Investor Pro (mine too).

Overall, if you are interested in stock screening, this is a great book that explains the process clearly with a sense of humor. If you are already comfortable creating your own screens, the book still offered a lot of encouragement and perhaps some new ideas for additional screening criteria.

Late to the party

I've decided that this market timing stuff just does not fit with my personality. I think it is easier for me to face a drawdown in my portfolio than to sit out while the market does its thing. Last week I missed out on a 10% gain for the portfolio because the indicators I watch said that we're still not out of the woods.

Maybe we aren't, but I'd be much better off right now if I had been fully invested. Maybe someday I'll have things so figured out that I can dance in and out of the market with emotionless conviction.

So, as of yesterday, I'm fully invested in my trading plan. Once again, my timing is way off and I'm losing money like crazy. But this is all part of the plan.

Stock Punk Goals for 2008

My goals this year are very similar to the ones I had last year. Here were last year's:

Goals for 2007 (In order of importance)

1) Beat the S&P 500
2) Beat the Stock Superstars Portfolio
3) Beat Charles Kirk's Yearly Return
4) Make 20% on Portfolio
5) Match or beat last year's return (62.44%)
6) Control my emotional trading and stick with the program

For 2008, my Goals are as follows:

1. Beat the S&P 500--Shouldn't be too hard, but I'm already behind on that goal thanks to my irrational trading.
2. Beat Stock Superstars and Prudent Trader Newsletters
3. Make over 20% on my portfolio--My goal is to eventually trade for a living. If I can eek out 20% each year, I'll be able to meet my goal in the next 5 years.
4. Beat last year's return--I'm not doing so hot so far this year. Last year at this time I was up 12%. I've got a ways to go.
5. Control my emotions--I'm a miserable failure so far this year. Hopefully, I'll get a grip and start doing better with this goal.

AAII's Stock Investor Pro

Members of the Kirk Report voted Stock Investor Pro their number one stock screener. I'm surprised that Zacks Research Wizard didn't make it in the top 10. I think Zacks has priced themselves out of the market when it comes to individual investors. That's too bad, because it really is a powerful screener.

StockPunk Market Meter

I'm changing the StockPunk Market Meter to neutral tonight. The Fed has whacked this market and not much is making sense. Indicators that I follow are all over the place. But I do think there is finally some opportunity to make some money (at least for a while).

Week in Review 2-1-2008

I got spanked.

This week was a mess for me and it is reflected in my account. I didn't lose anything (I gained a measly .5 percent), but when the averages looked like this (Dow +4.39%, the S&P 500 +4.87%, Nasdaq +3.75%, and the Russell 2000 +6.08%) I can't be too happy about my performance.

Here's where I went wrong (please learn from my stupidity):

• I lost focus and strayed from my plan
• I resorted to stops (and had no guidelines for how to place them)
• I paid too much attention to indicators, news, and other blogs which paralyzed my trading
• I worried too much about the broad market
• I waited for stocks to "prove" themselves and then got left behind as they rocketed upward
• I sold too soon

It has never paid off for me to market time, and yet I do it every time my account takes a hit. You'd think after years of doing this, I would learn my lesson. It just hurts so much to loose money even when you know it's all part of the game.

Now that January is over, I hope to get back to the plan and crawl out of this hole I've dug for myself.

All but one of the stock screens did very well this week. The ZZ#1 screen which filters AAII's Zweig screen with Zacks #1 ratings made 11.42% this week with it's one pick LXU. That is the first stock the screen has picked since the end of December which may be an indicator of its own (no #1 stocks--market sucks).

The Zweig Relative Strength screen made 4.05% this week but is still underwater for the year. The screen would have done much better if it wasn't for the blowup of GHM at the beginning of the week. I picked GHM up on Wednesday and have made a nice 13% on it so far which was my only good call this week. Without GHM the screen would have made over 10% this week thanks to a tidy 29% return for WSCI.

StockPunk's To The Moon screen is sucking wind and is down over 11% for the year so far.