There it goes again

Last week's gains are but a memory. Where do we go from here? I wish I knew. There are still folks out there saying a huge rally is building up. I hope so.

Today my portfolio was down 3.10% -- its worst showing since June. It has been very difficult for me to figure this one out, but I've learned that there are some bloggers out there who have devised some valuable indicators.

Stockbee has been cautioning his readers since the decline started and has implored traders to stay out until after Labor Day. I thought he was being a bit extreme, but now he seems quite reasonable.

Whatever happens, I hope to learn from this. I hope you do as well. Stay encouraged. People have been making money in the markets for hundreds of years. This last month doesn't mean a thing.

Not much there

The market kind of churned all day with nothing really notable. Every one of my picks was down today. My portfolio was down 1.18%.

I didn't see anything concerning today so I'll just keep following the program I guess.

Where are we headed?

There's lots of chatter out there about the direction the market is going to take this week. Stockbee says that this most recent bounce will end up heading south soon. Stox Investor says the bulls are "about to get smacked". The Kirk Report says the bears are on the run.

I don't think that anyone knows for sure. I'm planning to keep my money working this week unless things move strongly in the wrong direction.

This week I'm going to try to limit the time I spend watching the market. I usually spend 1 to 2 hours a day just watching the ticks and I've come to realize that it's a tremendous waste of time. I don't really learn anything by watching and often I make bad decisions when I get wrapped up in what's going on out there.

My best time for learning and thinking is early in the morning, the few hours after the market closes, and the weekend. I seem to make the best decisions when things are shut down and the data isn't constantly changing.

This Week With StockPunk

There are a few changes in my screens, but after a pretty good week, I'm hesitant to mechanically dump stocks that no longer appear on my screens. I'm holding on to last week's winners and dumping the poor performers that no longer appear on the screens.

I'm hoping that things continue positively this week, but there is still a lot of uncertainty out there. Have a good week!!

StockPunk Poll

It looks like the majority of StockPunk readers use stock screens to pick their stocks. The next highest choice was doing your own research followed by stock blogs.

Personally, I find stock screening the best way to go for finding my picks. I've tried using my own research, but I've found that my emotions and flawed logic always get in the way. I make assumptions that influence my decisions based on what they company does, trends, economic influences, etc. All that stuff just gets me confused and I end up holding on to losers too long.

Stock screens keep the emotion out of my decision making. If I'm doing what I'm supposed to based on my strategy, there is no reason to be upset about stocks plunging.

Stock Superstars and The Prudent Speculator

I am obsessed with looking over performances of newsletters, blog writers, and indexes and I on Friday it makes me giddy to compare my performance with the "big boys". Two of the newsletters that I check each week are The Stock Superstars Report and The Prudent Speculator. There are very few advisory services that are bold enough to post their returns each week, and both of these services do.

You'll notice that despite the brilliance of the managers of these services (I am not being sarcastic--those guys are SMART) both of them are struggling this year. Neither one of them is outperforming the market by much.

So don't be discouraged if you're struggling as well. This market isn't making things easy for anybody.

Week In Review 8-24-2007

"We've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children." Warren Buffett

I always insist that I have no idea where the market is headed at any given time. Great investors seem to say the same thing. Does that make me a great investor? Probably not.

Although I got beat by most of my stock screens, I still ended up having a positive week this week. The portfolio was up 5.22%. Another week like that and I'll be back to where I was a month ago.

I stayed pretty unemotional throughout the week. I barely even monitored things today. It was a pleasant surprise when I looked over things after the close. I wasn't quite sure where I would end up at the end of the week.

I have no idea where things are headed, and there are a lot of folks out there that are still very concerned, but I'm feeling better about keeping my money active.

Back Down Again

I made a mistake with a trailing stop I set today, but otherwise I stuck to the program. I was down 1.35% today.

I was hoping the jump at the open would continue throughout the day but no such luck. Things still look pretty solid if you ask me so I'm planning on sticking with things until I get some bad feelings about where things are headed.

FINALLY!!

It's been a month and a half since I've made over 2% in a day. Today I was up nearly 3%. Man, that felt like more like 6 months than 2.

Things are starting to click again, and it looks like the market is getting its legs back after a good punch in the nozzle. There is still a lot of uncertainty and confusion out there, but we are starting to see a lot more stability.

Is it OK to come out and play?

Another OK day today. I made some money again. Things continue to feel "right" and I'm nearly fully invested right now. The market still seems a bit skitterish but I haven't noticed any gut-wrenching swings that were common the last few weeks.

I MADE MONEY TODAY!!!

For the first time since July 27th, I made some money. That's almost one whole sucky month. It wasn't much, but it felt good to finally make some decisions that weren't to my detriment.

I have a better feeling about the market. It feels more like it did before the dark times. We'll see.

This Week With StockPunk 8-20-2007

I'm planning on putting some money to work this week. My gut tells me that the worst is behind us for a while, but then again, what do I know. Every stock on my screens is a bit beat up, so hopefully over the next few weeks they'll recover a bit.

Looking back over the last four weeks, I think my lack of patience is what hurt me. I got a little too cocky about being up 43% and doing well during the first week of the downturn. The second week bumped me out of all of my stocks, but I was so hurried to get back in and catch the bounce that I got my clock cleaned on several buys.

I did the same thing in March when the market corrected a bit. I jumped in the next day after the big drop thinking that I was going to capitalize on a bounce back up. I got burned badly that time too (but apparently not bad enough that it taught me a lesson).

I think it would be good to take a longer break after my stops trigger. The market isn't going anywhere, and it will welcome me back after sitting out a few weeks.

Thanks to those of you who voted in the StockPunk Poll last week. There were no big revelations. Some of us have lost a lot and some haven't during the last few weeks. Congratulations to the 15% of you who have made money in the last month.

If anybody would like to write in and share with StockPunk readers how you made money or some of the mistakes you made (like me) please do. Just e-mail me your story and I pick some good ones to post to the blog.

Hard Lessons--Week In Review

The last few weeks have been tough for me. It has seemed like every move I make has been the wrong one. I felt pretty confident at the beginning of this week that things were changing for the better and they ended up getting awful by Thursday. Then things seemed to turn around and I felt that I could put a bit of cash to work this morning. Unbelievably, I lost more money today--1.57%. I can't seem to make money even when the market does.

For the week, I lost 5.87%.

I Blame Star Wars

Personal Finance Magazines

I haven't been as excited about receiving my finance magazines lately. A few of them are starting to bore me. I guess there are just so many ways that you can say "Stay out of debt and own stuff."

There's a good article (with reviews) about the personal finance magazines that I subscribe to at Get Rich Slowly. Take a gander.

Where are you Kirk? We need you!!

Even members of Charles Kirk's Kirk Report have been getting dribbles of information during his vacation. He's off hiking with his wife somewhere in Minnesota while the market roils. Can't he use his trusty Blackberry to help us through this time of trouble?

I hate it when he goes on vacation. I feel like I need a voice of reason when the market sucks. I obsessively click on his RSS feed only to see "Forced Selling=Opportunities" over and over.

Help us Charles Kirk, you're our only hope.

What the FLIP was THAT?

I felt reassured as stops triggered on the way down. WOW! It was ugly. And then things turned around. I had a couple of buy stops that I canceled amidst the carnage. They were down 5%. Of course the ended up +15%.

I had two sell stops trigger and they came roaring back as well.

Pradeep said things would bounce soon, but nobody really knows if this is the end of the stinky market, or just a short stop on the way down. I know I sure don't.

I was pretty confident that I would stay out of things tomorrow, but now I'm not so sure. What's wrong with me?

Don't be a wimp

It's times like these that separate out people who beat the market and those who don't. Wimpy traders will be disheartened by several frustrating weeks and quit--possibly forever. They often jump to another strategy that continues to lose money and they grow even more frustrated. It's easy to do, but it is one of the worst things you can do.

The thoughts are difficult to stop. I know that over the long term, my strategy blows away the market. Even though I know that, these last few weeks have shaken my confidence a bit. We tend to have built-in biases that emphasize the downturns and obsess over losses. It's all part of trading, and the sooner you're able to handle a loss with the same emotions that you handle a gain the better off you'll be.

I've learned a ton during the last few weeks. Hopefully, I'll be able to use what I've learned and become a better trader in the future.

The Market Wants Me Dead

I have not had this many consecutive losses in years. This is the worst my screens have ever done. Today I was down another 1.57%. I have not had a positive day since August 2nd. Things look kind of bleak.

On the bright side, I'm still up over 25% while the S&P has just gone negative for the year. I couldn't have achieved that if I hadn't managed risk during the last 4 weeks. So I see that as a positive change in my trading.

I have never traded in a market like this and it has thrown me for quite a loop. I was pretty sure things would recover this week, and so far I've been quite wrong. All I can say to everybody is hang in there. If things do recover, there might be some amazing opportunities out there.

It doesn't look good

I made a decision to put some money to work on Monday. I should have waited, but I was feeling pretty good about the immediate future and I think my decision was sound. Things just haven't panned out the way I had thought they would yet.

I lost 1.80% today and .50% yesterday. I can't remember the last time I was on this kind of losing streak. As long as I am following my plan, there's no reason to freak and feel bad about my performance. No one has this thing figured out despite the many claims to the contrary. Losing money is all part of the game and the best traders are the ones who don't let it get to them.

I like to track the performance of other folks to benchmark mine. Two newsletters that I look at every week are StockSuperstars and The Prudent Speculator. They both post their YTD performance and it is my goal each week to stay ahead of them.

There are bright guys and gals managing these portfolios, so if you're keeping up with them you should give yourself a pat on the back. Both of them are struggling right now, so it gives me a good indication that things are tough all over right now.

I look to a few guys for their take on what's happening each day. Both Charles Kirk and Pradeep Bonde are on vacation now and their posting has been erratic. It makes me realize how much I read their stuff every day.

This Week With StockPunk

I have no idea what Monday will bring. Stocks in my new screens did really well on Friday, but in this market, there's no guarantee that things will continue positively. I'm ready to get back in, but I'm holding out for some strong performances. I've got 7 stocks ready to go. I'm waiting to see if each one continues to show strength. I have price targets set on each and if they blow through those, I'll buy.

There's still a chance that I'll get slapped around like I did the last two weeks, but I'm seeing some strength in some of the momentum stocks that got beat up over the last few weeks. I'm willing to take a bit more risk now.

I've noticed over the last three years (I know that's not a lot of time) that two to three awful weeks with my screens often are followed by a few really good weeks. We'll see what this week hold for all of us. Good trading everybody!

Week in Review 8-10-2007

What a ride. This was a frustrating week for me. EVERYTHING that I tried failed miserably. I'm all cash going in to this weekend. I lost 3.17% this week despite barely trading at all.

I almost wish things would have been worse today. I could use some confirmation that I'm doing the smartest thing by staying on the sidelines. There were several of my watchlist stocks making 5% or more today and that bothered me a bit. That makes Monday difficult to judge.

I'm not convinced we're out of the woods yet. My best bet is to take next week off and re-evaluate things next weekend. We'll see if I can hold out that long.

Must . . . Resist . . .Temptation

Despite the general market's slide, several of my watch list stocks are showing some pizazz this morning. What I need to learn, however, is that one day doesn't mean much. My lack of patience has caused me to lose too much over the last couple of weeks.

If you read the blogs of successful traders (ie Charles Kirk, Pradeep Bonde) you'll see that they aren't stressed about not being in the market. They barely batted an eye during the huge gains at the beginning of the week. They're just waiting for things to turn around. There is no hurry to get back into this thing.

Check This Out

Don't ask me how, but StockPunk got a tiny, insignificant, blink-and-you-miss-it mention in an article in the Wall Street Journal online. Laugh if you will, but I thought that was pretty cool. Here's the link. Look for it in the "Related Articles and Blogs" section at the bottom of the page.

Not Again!

Well, that was sure ugly. I finally have a day that legitimizes some of my decision making. I had one stock left this morning, and it's gone now. Down .50%. I still haven't gotten things figured out.

I almost jumped back in this morning. There were quite a few indicators that things were looking much better. It didn't take much to get the market all skittered. My screens are doing horribly with several stocks losing over 10% so far this week. VSEC was down 20% today and that was my most interesting candidate.

This is the first time since I started trading back in 2003 that my performance is beating most of my screens. Usually the dumb screens make me look foolish for trying to manage them. These last few weeks have ingrained in my brain the importance of risk management.

I hope everybody out there is using this craziness as a learning tool. I learn the most when thing are working against me. It's good to reevaluate and think through your trading philosophies. Don't be discouraged by this (unless you've lost everything). There are plenty of opportunities coming our way. Take a break and enjoy life and let the market take care of itself.

Dazed and Confused

I'm sorry to say that I have been unable to capitalize on this mini-rally that's taken place this week. Today I lost another .36%. My watch list continues to show wide swings with some stocks up 5% and some down 5%. I haven't been able to get a handle on what direction to take so I'm trying to be more of an observer than a participant.

STMX was down over 30% at the market open today and never recovered. Ouch. I'm glad I didn't own any of that one.

I'll be interested to see how my screens change this weekend. This has been kind of a wacky week, and if we're headed back up, I hope I can catch a piece.

I'm keeping a close eye on Stockbee because he's got some interesting indicators that he uses to tell him when to fold and when to hold. Today he's saying that things are looking more positive.

The Market Still Hates Me

I'm mostly in cash and the market has had two positive days in a row and I'm STILL losing money. Today I was down .14%.

A few stocks on my watch list had OK days today, but I'm still not seeing the type of gains that would indicate to me that I should jump back in. It's a lot easier to watch the market swing when you're standing on the sidelines, but to be honest, I'd prefer it to stay down when I don't own many stocks.

The market hates me

Charles Kirk wrote about the market's uncanny ability to read your mind and make you look like an idiot. That's what happened to me today. Despite a huge bounce today, my portfolio took a beating. It seemed like I got outfoxed at every turn. I was down 2.17% today.

Somebody made this comment on my post earlier today:

Do you really judge your trading by what happens within a few hours of putting on a trade? Reread Faith's section on outcome bias in his book.

My answer: No, I don't usually judge my trading that way. But when I trade for the wrong reasons (like worrying that I'm going to miss out on a big rally for example) I make major mistakes. That's what happened this morning. I saw a couple of stocks holding their own amidst the carnage of my watch list. I had planned to stay away from things and let them settle down a bit before trading again. Instead, I made some knee-jerk buys at their absolute highs and watched them quickly crumble. I even stopped out of one of them on a day the DOW rose 287 points. The problem wasn't with the trades I made. The problem was with the reason I made them.

You'd think I'd learned by now

My emotions suck. Despite all of my ranting about taking time, being patient, waiting for the right opportunity, I jump back in on a couple of stocks from my screens that seem to be bucking the trend. They both shot ahead over 5% in the early going as the market itself looked like it was going to have a pretty good day.

They held up when things very quickly went south. I'm a genius in ANY market I told myself. I then watched them plummet.

The day is far from over, but I wish that I would have taken my own advice and quit being so desperate to recover a little loss. I know better.

Cramer Meltdown

A few of you have directed me to the video of Jim Cramer's rant on the Federal Reserve's blindness to the struggles of the current market. CNBC has since posted a clarification of his comments on their website here.

I think people took his emotionalism a little too seriously. In his second interview he presented his case a little more rationally.

Although I'm not sure if this is the time to be buying stocks, I don't think that we need to blindly sell all of our holdings either. It won't be more than a few weeks (maybe months--who knows?) until our screens are "working" again and we're back to making money.

Let me stress again the importance of managing your trades. Despite my disappointment in some of my trading decisions, I've only lost 2.5% in the last two weeks. No big deal. The world is not over.

The advantage we have as individual traders is that we don't have to go with the flow. We can maneuver in and out the market pretty much at will. So use that huge advantage to make the most of these uncertain times.

This Week With StockPunk 8-05-2007

More stocks are showing up on my screens as the market struggles. That's usually a good sign. However, after getting knocked around last week, I'm very hesitant to jump back in this week. We'll have to see how things play out. It's harder right now to determine whether a bounce back up is going to last, or if we're in a losing trend for a while longer.

There are a lot of folks screaming out there about losing 20% or more over the last couple of weeks. That's probably what would have happened to me a while back. Controlling your position sizes and the risk of each trade is EXTREMELY important during times like these. When the market is pushing ahead as a whole, it's easy to think you've got things figured out and that you don't need to protect yourself from risk. There is a lot of uncertainty out there right now and thinking that you know what's going to happen is a sure recipe for disaster.

VSEC has appeared back on my screens this week. It lost 9% last week, and looked like it was recovering until Friday. I'll keep my eye on it.

SMTX still shows up on my "To The Moon" screen despite losing 50% since I sold it in mid-July. I'm starting to see why mechanical investing can create problems for a trader.

It should be a very interesting week this week. I still have a couple of positions open that I'm sorry that I took last week. They are very close to triggering their stops so we'll see if the portfolio is all cash by the end of the week.

Week In Review 8-03-2007

I guess if this was a stellar week and the bulls had come roaring back, I would have been upset that I had stayed out of the market and would have been cursing my timidity. Instead, I jumped back in on Monday and Tuesday based on my emotions and very little data and now I'm cursing my lack of patience.

Luckily, I had to wait for a portion of my portfolio to settle for three days so I didn't cause as much of a disaster as I could have. I would have been wise to follow the advice of Stockbee (and other intelligent traders) who called this week pretty accurately.

For the week, my portfolio lost 5.44%.

Well, that really sucked

There's not much good that can be said for this week's insanity. Today was just plain ugly. My portfolio was down 1.54%.

Over at Value Blog Review he's posted a list of the Best Stock Blogs. StockPunk is number 11 right now. I'm guessing the thing is broken or something.

I just got done reading Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders. It was interesting, but to be honest, any time someone writes about trading coffee futures my eyes glaze over. There wasn't a lot of meat in the book for somebody looking for interesting takes on the market or looking for better ways to trade.

A book I liked better that I read recently is Trade Your Way to Financial Freedom. There seemed to be quite a bit of information that I found very useful. I went back and read several parts two or three times and I don't do that very often with books I read.

Today I was up a little bit .19%. I haven't been able to figure this thing out yet. A few of you are ticked off because I appear to be "market timing", and I've whined about how that hasn't worked in the past. But it's so dang hard emotionally to stay on the sidelines. I'll discuss my internal struggles more this weekend.

I'm still dumb

The market has not been nice to me. Who can figure this thing out lately? It came roaring back late today but my portfolio barely noticed. I almost wish the market would just keep falling so that I could be sure I made a mistake by getting back in.

Today I was down again, 1.62%.

I jumped in too soon

I didn't seem so smart today. I jumped in during the morning rally--knee-jerk style. I was thoroughly spanked by the end of the day when everything turned. I said I was going to wait this week out. I should have followed my own advice.

Down 2.46%

Better Days Ahead?

Things looked shaky this morning, but the bulls proved themselves this afternoon. I was too timid to take advantage of the movers and jumped in near the highs of the couple of stocks that I bought.

I sold VSEC this morning with a tight stop. It went on to lose 12%. Goodbye, VSEC--it was a nice run.

Overall the portfolio lost 1.62%. I'll take it given the losses that a lot of people endured last week.

This Week With StockPunk 7-29-2007

After an awful week, some of my screens have changed dramatically. Two stocks that fared very well last week, VSEC and VSEA no longer appear on the Zweig screen. There are a couple of newcomers that haven't previously appeared, SILC and NE. Looking over the charts, none of them look particularly good yet.

With oil on the march upward again, several oil-related companies are showing up on my screens, NOV, HOC, GLP, and NE.

Valmont Industries (VMI), is right down the street from me and shows up in my Zweig RS screen. They make light poles--boring, but apparently profitable.

SMTX still shows up on the "To the Moon" screen. SMTX is down 30% in the last couple of weeks, so I'll keep my eye on it, but there's no way I'm going to predict where it's headed.

It should be an interesting week. I'm not sure how it will all play out, but I'm looking forward to another week of drama. Be good.

How I made money this week

I'm supposed to be doing homework right now, but who can concentrate on that stuff when they've got stock market stuff to write about? Not me.

My happiest days as a trader are when the overall market is taking it in the shins and I still make money. That's what happened this week and I owe my success to risk management and position sizing. I've been trading differently this year. Instead of mechanically following a stock screen (like I did last year), I am paying attention to a few more aspects in my trading.

Last year, I did very well by unemotionally buying and selling based on one of my stock screens. The screen I used was very simple, and I post the results of that screen every week. The screen was the Punk's Zacks and Zweig screen and it made an impressive +60% last year--not too shabby. It didn't matter what was going on in the general market, I just did what the screen told me to do--no questions asked.

I began the year concentrating on that screen again, but after doing some reading and learning, I decided to vary my approach a bit. I discovered I was risking way too much on each trade. Last summer I had my WHOLE PORTFOLIO in one stock for a month (Sothebys BID)! I made over 16% that month, but I had no idea how risky (and stupid) I was being (even with a 25% stop).

Basically, I employed two important concepts that saved me from getting slapped around this week. 1) I refused to risk more than 1% of my portfolio value on any one trade. I stopped out of nearly every stock I owned by Wednesday, but I held on to one stock that refused to go down (VSEC). 2) I didn't allow VSEC's position size to get too out of hand by following it with a stop that wouldn't risk more than 1% of my portfolio. VSEC has gained 57% since I've bought it, so I had to be careful to keep it under control--especially during the rapid losses we saw this week.

The first five months of this year were very frustrating for me (as you can read in previous posts). My dumb screens were kicking sand in my face as I managed my risk and got all protective of my equity. But this week my patience paid off as my returns blew by most of the screens.

I think most traders focus on picking the right stocks (as I have in the past). But a huge part of making big returns comes from how you manage those picks. I'm learning that blindly trading my screens puts me at too much risk for a big loss that will shut me down as a trader.

I highly recommend Van K. Tharp's book Trade Your Way to Financial Freedom if you are interested in learning some ways to better your trading through risk management and position sizing. Here's some free information on position sizing.

Week In Review

What a week! There are a lot of conflicting ideas about what happened this week and about what's going to happen in the near future. I have no idea.

The portfolio actually had a good week -- up 4.16% (more on that this weekend). However, every one of the StockPunk portfolios bit it big time this week with the Zack's and Zweig portfolio showing its worst performance since I started tracking in 2005. It lost 10.69%.

I haven't figured out what I plan to do next week and I'm sure many of you are wondering the same thing--what now? I don't short stocks, so if things don't improve, I'll probably watch from the sidelines for a while.

Gasp!

The bears continue to control this one. I've never shorted a stock, and I'm not about to now (it's too scary). I'll have to say that this is the first time since I began trading that a market move like this didn't bother me. I've actually been able to make money this week. I'll discuss why this weekend.

The portfolio was up .73% today.

Crazy

We ended up back in positive territory at the close. Don't ask me how. My portfolio was up 1.07%.

Yikes

My wife told me to stay out of the market today and she was right. That fake bounce would have cost me a lot of dough. Maybe she should be doing this instead of me.

Premarket Looks Promising

I'm watching SMTX, NILE, CTV, and DRYS closely. It looks like they'll do well today. But, I still think I'll sit this one out. I've been burned too many times when I'm too anxious to get back in because of the fear that I'll lose out.

Yuck

I called that one well. It was ugly. Besides GLP, not a single stock on my screens managed to survive. VSEC was ahead by 4% most of the day, but met the same fate as most other stocks. My portfolio was down .59%.

It feels good to have a day that finally confirms some of my concerns about the market. The bulls didn't come rushing back this afternoon to save the day. I was tempted to put some money to work this morning, and I'm glad I listened to my head because I would have lost a lot more.

Where do we stand now? I have no idea. But I think I'm going to wait the rest of this week out and see what happens. I still own VSEC and RUSHA, so we'll see if they can lead a comeback. I'll give the rest of my money a rest and let is settle.

Sitting this one out

Things look ugly this morning so I'd be wise not to buy anything. We'll see how this day plays out, but if the bulls don't come back after running to the exits I think it could get kind of sloppy out there for a while.

Some Good, Some Bad

My trading today was good overall. For the most part I avoided losers and kept winners. I sold all of my "copy cat" trades. It is time I stuck to the program that has made nearly 40% so far this year. Why am I grabbing trades from others who are making less and whose systems I don't understand? Stupid.

I put a 3% trailing stop on DRYS and it triggered after gaining 3% and dropping back down 3%. It then went on to gain 4% again. It no longer appeared on my screens, but I could have played it a little better.

I avoided mechanical trading today. SMTX lost 7.75%. SYNL continues to be a dog. What's wrong with that stock?

My portfolio was up 1.85% today.

I love the stock market. Another one of my passions is Bible Prophecy (yeah, I'm a freak). I find that they both have a lot of similarities. What got me thinking about this? An e-mail I received yesterday about the soon coming of the end times reminded me a lot of folks who try to predict the direction of the market. Here's what the e-mail said:

..Last Wednesday during a fast, the Lord spoke the words to me,
..."3 weeks until the dam bursts loose" I got the impression that it
...was slightly more - as in the 1st week of August.

...I believe He meant in the spirit and in the natural.

...I asked Him to confirm it. I had 3 direct confirmations 3 days in a
...row and one indirect one.

...The 3 direct ones were:

...Wednesday 1) My gas pump stopped at $33.00 even - without me
...trying or looking at it.

...Thursday night 2) I jolted awake at 3:30 am

...Friday 3) I had a client make a 3:30 appointment - the first one all
...summer for this time. She chose the time, as I had left the whole
...day wide open to her.

...Then, on Monday (I think), the Lord reminded me my birthday is 3/30.

...Last night, in the middle of the night, I heard the words, "2 weeks, 3 days".
...However, I was so tired and they did not register at the time. I only
...remembered them after I woke up. I DID hear them , though. Was it my
...own thought process or was it the Holy Spirit? I do not know, although I
...really think it was the Holy Spirit. It was somehow different than my own
...thoughts. More of an impression with the words, if you know what I mean.


That sounds like a lot of traders I know who think they've got an inside track on how the markets work. They use news, charts, rumors, or "gut feelings" to determine where things are headed. They often promote their "Trade You Way to Millions in Less Than A Year" schemes and sucker people in just like those who say they have a direct link to God do.

Trading is hard work. It takes patience, diligence, and knowledge. There are a few crazy traders out there who get rich quickly and effortlessly (I'm not one of them). But the majority put in hours of effort while avoiding the soothsayers who claim to have a direct link to Mr. Market.

With Biblical issues like prophecy, it doesn't take long to get way off track if you listen to what others think. You've got to figure out what makes sense to you by doing the legwork yourself. The same goes for trading. The only way to create a system that works for you is to design one that makes sense to you (and maybe no one else). You'll never stick to a system that somebody else designs because when the big loss comes you'll be disgusted with it and bail.

This Week With StockPunk 7-22-2007

PCP has finally left my screening lists after a pretty swell 6 month run. It made around 60% during that time. Thanks PCP.

This week brings VSEA back into the fold. It mocked me last week by gaining around 20% the week after I sold it. I don't know what I am going to do with it this week yet.

SYNL still remains on one of my screens despite a 50% decline. Something is there fundamentally, but it sure has been a dog as of late. It popped 10% for a few hours last week when they reported decent earnings, but it went back to its usual declines. I'm avoiding it this week unless it shows a change of character.

It should be an interesting week so best of luck to all of you. Happy trading!

Week In Review 7-20-2007

This was a pretty wild week. I started to drift off course a bit and made some poor decisions. Overall, though, I'm happy with most of the decisions I made--the portfolio was up 3.11%.

My best screen continues to rock. To the Moon added another 8.03% which is the only reason I made money this week. I am too much of a coward to go whole-hog into the To The Moon screen because the returns beyond this year are the result of backtesting. My cowardice has cost me as I continue to dabble with some of the stocks the screen suggests, but I am happy with the amount of hedging it has provided me over the past month.

Like an idiot, I bought a couple of stocks that didn't appear on my screens, but were listed on blogs of folks who know (or appear to know) what they're doing. Needless to say, I lost on all of them. I did the same thing last year at this time and lost my shirt then too. Maybe I've gotten too much sun.

Still going up

I'm not sure when this is going to end, but I sure am enjoying the ride. Today the portfolio was up 2.21%.

Wild Ride

I went from being down 2% to making a whole $13.59 today.

I'm starting to creep back into my old mistakes again. I bought a stock because it was bought by somebody else. It didn't appear on my screens. I got impatient and wanted to share the wealth. It drug me down today. Idiot.

The good news is that I've held out a bit on knee-jerk purchases this week. I've kept about 30% of my account in cash. I've got a couple of buy stops set on some of the screen candidates in case one of them has a big day.

Stupid VSEA

I owned VSEA for two stinking months and it gave me nothing but trouble. I sold it last week and it mocked me today by gaining 10%. Typical.

Not a bad day for the portfolio--up 1.60%. The "To The Moon" screen is screaming again. It's up 4.5% for the week so far.

Playing it safe

I tried to cherry-pick a few stocks from my screens today and I ended up picking poorly. My portfolio was down 1.01%.

Another Stock Blog

I'm adding another blog to the list that I read often. It's called Stocks, Trading, Investing: My Ambitions as a Trader and Investor.

It's got a sloppy name and minimal bells and whistles, but I like the guy's style. He has some similar ideas to mine and he shares a lot of information about what he does. One of his picks was up 33% this morning. Check it out.

Stock Investor Pro

I've had several e-mails about Stock Investor Pro. This one came today.

Sorry for the multiple emails. I wanted to ask you about Stock Investor Pro. Is it worth the $200 in your opinion? Also, are there backtesting capabilities and the ability to replicate all the
screens on the AAII website?

Thank you,

Mark,

Stock Investor Pro is worth $200 and more. The information that I can glean from it each week makes more than that each day.

The only way to backtest is to download each weeks' worth of data (about 35mb) and run the program. It's cumbersome and time consuming.

However, the numbers on the AAII website for each screen are accurate (I've tracked them myself to make sure) and every screen except Tiny Titans is included in the Stock Investor Pro software. (Tiny Titans is a two-criteria screen that is very easy to set up on your own).

I'm Back

Howdy everybody. I'm back from vacation.

I had internet access for minutes at a time which allowed me to get quick glimpses of the how my portfolio was doing. I did have access to cable news, (which I don't have at home) and I got a taste for why it is best to go without. People were flipping out about the DOW making all time highs. Monday's drop had gotten everybody worked up that the correction was here, but Thursday's gains changed all that.

It was easy for me to get caught up in all the hoopla, but my portfolio barely budged after Tuesday so I didn't miss much by being unable to monitor things.

I was one of those people that thought things were moving toward some selling so I had some tight stops set. Most of them triggered. By Friday I only owned VSEC and PCP. I'm a bit hesitant to jump back in so I'm going to monitor things on Monday a bit before I make any decisions. I've got a few new stocks showing up on my screens, but not many.

SYNL continues to qualify, but that thing has been a dog for a while now.

I'm Learning

I'm pretty happy with how I handled things today. I had many stocks take a big dive (SMTX, TRA, CPLA, SPTN, SYNL) and my decision to tighten my stops and keep my profits worked out very well. I was up 1.20%. I love it when that happens on a down day and I'm getting better at making sure it works out that way.

Ouch

An OK day. Up 1.5%. I cut my finger on some broken glass and I can barely type. I'm leaving on vacation on Wednesday and this time I won't be able to steal any wireless access. So, I can't guarantee any posting until Saturday. Have a swell week everybody.

This Week with StockPunk 7-9-2007

Not much has changed on my screens so I'm pretty much sticking with what I've got. I have shored up several of my stops to lock in some of the gains from the last couple of weeks. Generally, when a stock no longer appears on a screen, but has good performance, I'll put a 3% trailing stop on it. This allows me to take further gains if they occur and gives me a quick exit if things start to head south.

Zacks Research Wizard Review

It has been one month since I purchased Zacks Research Wizard and I've had many inquiries into how I like it. As most of you know, I'm an avid user of AAII's Stock Investor Pro and I like it very much. I will continue to use it because it has proven itself over the last few years and I've found the folks at AAII to be reliable and the information in Stock Investor Pro to be accurate (and profitable).

To be fair, I have very limited experience with Research Wizard. However, I have been able to run a bunch of backtesting and various screens over the last month and three of the four stocks listed in my "To the Moon" portfolio are stocks I pulled from Research Wizard screens that I've put together.

First I'll let you know what I like:

It's Fast.
With Stock Investor Pro I get information on a weekly basis that I have to download to my computer. I then have to unpack the file and run the screens using the program.

With Research Wizard, the data is centralized on Zacks servers. When I run a screen, my computer (which must be online) grabs information from the server and displays the results in one to two seconds. Even backtesting huge amounts of information only takes a minute or two at the most. That's cool.

Backtesting.
It used to take me hours (or even days) to test a theory I had about a particular screen. I often had to go through old spreadsheets or hard copies to figure out how particular ideas performed. Stock Investor Pro has no backtesting capability built in. To test ideas I would download historical data (on a weekly or monthly basis) and run the software to see what stocks met criteria.

With the backtesting, the process is almost instantaneous. That gives me the freedom to dream up an idea and test it almost immediately. I know that backtesting has its problems and inaccuracies, but it can give a very good idea of what works and what doesn't.

It's very easy to use.
I've worked with several screening programs. Some make my eyes glaze over as I read all of the mathematical formulas that I need to punch in to create a screen. Research Wizard is extremely intuitive. I really like the ability to pare down my screens and find the "Top" stock in a certain percentage, relative strength, volume, etc.

What I don't like:

It's expensive.
At $133 per month, it doesn't make sense to use it unless it is helping you to beat the market substantially. The verdict is still out on whether or not Research Wizard will make my trading better, but the results of the "To the Moon" screen so far suggest that the possibility exists.

Marketing for Research Wizard is confusing.
I'm not an idiot, but I had a hard time weeding through the Research Wizard web site to get the information that I needed. The folks on the phone are much more helpful (they have to be to make a sale), but I would have appreciated knowing the price up front ($1,600 per year). Also, there is an add-on that allows more complex backtesting that I assumed was included in that price. It isn't. It's $1,600 MORE. It looked interesting but I couldn't justify the price, yet.

I feel a bit isolated.
With the amount of information that Research Wizard generates, I'd expect to see some sort of community or forum dedicated to sharing winning strategies or interesting ideas. Zacks sends an e-mail every day, but it's kind of a conglomeration of all Zacks does. I love information and I would like to see more coming from Zacks about Research Wizard.

Well, that's my take so far on Research Wizard. I'll continue to keep you up to date about my satisfaction in upcoming months.

Week In Review 7-06-2007

This week illustrates why mechanical trading often trumps putting lots of intellectual labor into choosing stocks. Conventional wisdom suggested that this was a very poor week to trade.

1. The July 4th Holiday split the week in half
2. Volume during this week is historically tepid
3. Market news was infrequent and uninspiring
4. A lot of folks took the week off
5. The market is way overbought

I was contemplating cashing out and taking a break with everyone else this week. But I stayed fully invested. It wasn't because I had a good idea how things would work out this week. It was because I really have no idea what's going to happen and most other folks don't as well. It is when I start to get cocky and think I've got things figured out that the market sinks me like a 10 foot put.

If I had opted out, I would have passed up my best week in over a year. The portfolio was up 9.43%. My best screen continues to give credence to its name and it blew the others away 13.79% (To the Moon). My worst screen was still decent at 5.82% (Zweig and Zacks #1).

Things turned out OK at the close. My portfolio was up 1.16%

My friend Sean has been extolling the virtues of IESV.OB for the past month now. Apparently it's a company that harvests methane from cow manure. The stock is at about 5 cents and he's hoping that it climbs to a dollar. Maybe a few of you could by $10 worth and make the stock pop a couple of times to get him excited.

I've traded over the counter stocks in the past and I have had some success (I bought TRLG at $2.58), but I avoid them now. They are WAY too volatile and too hard to control. I've only had one pass my screens since 2005 and it lost 50% the couple of weeks that I owned it.

Sean thinks I'm insane, but I generally don't have any idea what the companies do when I buy the stock. I get too emotional when I'm rooting for a company because it makes a good product. I'd rather just trade symbols and let the fundamentals speak for themselves.

Why do I look?

My portfolio came screaming out of the gate this morning and my heart started racing a bit as I was up nearly 2%. Of course, I had to look again at lunchtime and I've given back most of that.

Charles Kirk posted a good article about being a perpetual student. He used a golf analogy. I don't like golf, but it made sense.

I've been using Zack's Research Wizard for about a month now. I'm putting together a "review" for this weekend.

I hope everybody had a swell 4th of July. I did.

I'm a Punk

I didn't realize that the market was closing early today so I couldn't figure out why my stocks we're staying the same for so long.

I lost .88%.

Maybe the summer's not so bad

This was my best day since May 2nd, 2006. My portfolio was up nearly 5%. Yowza. Now let's hope this isn't a repeat of two Mondays ago where I made nearly 5% and lost it all (and more) in the two weeks that followed.

The best performing screen today was the "To The Moon" screen which made 7.09%.

StockPunk Stock Screens

A few readers have expressed that they've been a bit confused by the screens that I posted last week. My intention was to discuss a screen a week in detail.

I've removed one of the screens that came from my playing around with Research Wizard. I think it's a bit too soon for me to post screens based on the Research Wizard because I've used it less than a month and I'd like to test things out over the next year.

The "To The Moon" stock screen is kind of a hybrid using AAII's Stock Investor Pro and Zack's Research Wizard. It encompasses my own ideas about what stocks are about to take off and is a short-term (week to week) trading strategy.

Those of you who are following the screens closely can see that there are just a few changes on the screens from last week. Let's hope this week treats us better than last week did. Weeks with a holiday are usually crummy.

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.