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.

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 5-18-2007

A crummy week for me. Lots of mistakes and regrets. Down 3.38%. All of my screens but one did better than me. The best made .84% and the worst lost 5.72%. The small cap stocks fared the worst and I had plenty of those.

What I learned this week--

My disaster with KRSL taught me to quit trying to outsmart my screens. I was lucky to get rid of that thing with a loss of 10%. The only other stop loss that I benefited from was with AZZ. I got rid of it at $27.01 and it ended the week at $25.63. The other stocks I stopped out of went on to embarrass me SYNL, VSEA, CPA.

I let my emotions get the best of me this week. Instead of seeking comfort in the returns of my "system" I turned to the opinion of others and tried to prevent big losses by second guessing. I should have been slightly up or at least even this week. It was a good lesson for me and I hope that I will apply it to my trading in the weeks to come.

I must admit, though, that I am a bit squeamish about things right now. I went back to see where I was last year at this time and was a bit astonished to see that I was up only 8.24%. Last May was pretty rough (and so was June and July) and I would be bothered if I gave up much more of the gains I've made so far.

About Me & My Trading

My name is Scott Carl. I am a full time employee and a graduate student. I don't have a ton of time to monitor the markets during the day, but I developed an interest in the stock market in 2003 after reading a couple of Motley Fool books. In particular The Unemotional Investor: Simple System for Beating the Market piqued my curiosity. It detailed how a simple unemotional trading plan could consistently beat the market without any unpleasant decision making. I dove into the market with a few thousand dollars and instantly made 20% in the first couple of months. I was a genius.

Success was fleeting as I continued making trades based on my own ideas about companies. I followed recommendations from just about every source out there, magazines, TV, trading newsletters, and just my own gut feelings. 2003 was a good year for stocks and it pumped up my ego.

In 2004 I discovered The American Association for Individual Investors through a reference in a Suze Orman book. There was a ton of good advice and information on the site and I became particularly interested in their computerized stock screens--in particular the Zweig screen--which was destroying all of the other screens with ridiculous returns year after year.

I started following the screens and paper trading different strategies on Smartmoney's excellent website. During that time I subscribed to AAII's Stock Superstars newsletter. I followed the newsletter's trading suggestions for over a year and learned a lot about stock screening, risk, and portfolio management. I did OK during those two years making a bit more than the market as a whole.

But I noticed that my screening strategies were making a killing compared to my returns. Worse yet, the strategies involved none of the "homework" that I was doing to try and find good prospects. So for 2006 I decided to pick one strategy and stick with it for the whole year. The strategy that I chose involves a group of about 5 stocks that are rebalanced on a weekly basis if necessary. The stocks are a combination of the Zwieg screen and Zack's #1 rated stocks each week.

The screen did very well in 2006 as you can see in my portfolio return for that year. Compared with the Zweig screen alone (which made around 17%) the combination screen screamed. I am following some other strategies in 2007 while continuing to use the Zweig and Zack's combination which I call ZZ #1.

I am not smart enough to be a chartist, and fundamental analysis bores me to tears. So this method works very well for me. The computer does the number crunching and I follow what it tells me to do without worrying about all the jibber jabber going on in the market and the world.