It looks nasty out there

Looks like were in for an unpleasant day after Intel's disappointing report. This has been the most difficult market for me to trade since I started in 2003. This must have been what 2000 through 2002 was like.

If today sucks badly, it would be good to see a bit of a panic so that we can finally get that over with and move on. We still haven't seen any sort of capitulation like we did in August.

I have a maximum of 6% loss for a month before I quit trading for the rest of the month. I'm at -4.5% right now.

Thought I was all bad and stuff

I thought I'd put some money to work after lunch because I was down a piddly amount despite the market's lousy showing. So I did some aggressive (for me) trading and got kicked in the teeth. I had one do a round trip in an hour (bought it--lost 10%--sold it).

I didn't follow any plan. I just bought a bunch of stocks that were showing strength or might show some strength tomorrow. I'm dumb. Down 1.17%.

Put a little $$ to work

I bought four stocks today. All but one were duds. Up .47%.

This Week with StockPunk

I'm not anticipating that things are going to get too much better with the market this week. I might try and take a few positions, but I don't have more than a couple of candidates. Things will turn around eventually. Patience is key during crummy times like this (I need to take my own advice).

AAII Stock Screens

Most of you know that I love AAII's stock screening ideas and that I have focused on the Zweig screen since 2005. The site hasn't reported year-end numbers for the screens yet, but there are some interesting things to note for 2007.

November 2007 was one of the worst months for the AAII stock screens since they started tracking the returns in 1998. It's comforting to know that some of the difficulties we faced as traders in 2007 were felt far and wide.

Many of the screens that consistently out-perform the market struggled this year. Others that haven't really kept up over the years had banner years.

AAII provides an excellent spreadsheet that details every screen with monthly returns, turnover, average number of stock picks, and cumulative return. It is worth spending several hours on their site and soaking in some of the knowledge and experience that they offer.

Week in Review 1-11-08

That was a good week to be watching from the sidelines. For the most part, I was. I still managed to give back .42% this week despite having only 30% of my portfolio committed. By Tuesday, I was all cash and remain there today.

It's hard to know what next week will bring us. The constant see-sawing of the market is getting quite irritating, and it sure isn't easy to find a place to jump in without getting smacked.

This market is killing me . . .

I feel good about not trading at the beginning of the week, but the last couple of days have been tough as I've sat on my hands as the market churns upward. I'm really not seeing any real signs that the worst is over and the see-saws we see every day aren't doing much to convince me to get back in (even though I so desperately want to).

I was just telling my wife yesterday how it is not even two weeks into the year I'm already unhappy with how my year is going. "How will I ever make any money this year?", I lamented. She called me an impatient baby.

I missed out

I didn't participate in the late day rally today, and you know what?--that's OK. The gains I gave up today more than offset the pain I would have felt over the losses from the last few days. I still don't trust the market, and today didn't convince me that it's time to put some money to work.

Right now I'm ahead of my screens by a couple of percent, but my guess is they'll catch up to me soon--they always do. I still don't have the guts to trade mechanically.

Oversold Bounce?

There's talk of an oversold bounce this morning. That may be, but right now (in my worthless opinion) there is nothing holding up this market. Until we start seeing some earnings numbers, I'm not willing to risk much.

Today should give us a lot of information about where we're headed in the next week or so. I suggest you sit back and watch the action and enjoy being a spectator.

Barchart reported this is the worst YTD performance for the market since 1930.

O.K., I'm convinced . . .

I was a bit unhappy to see the DOW climb 75 points while I sat on the sidelines, but as it rolled over in the afternoon, my angst turned to relief. This thing is ugly and now that we've taken out the August lows with out the sellers giving up like they did in August (red arrow) my guess is this thing is headed to the March lows.

It could turn around tomorrow, but there's not much in the way of news to do it.

What a mess . . .

This market doesn't seem to have any idea where it's going. We filled in the gap (blue arrows) but we still haven't seen sellers going nuts and then giving up (left red arrow). Today we had some action, but it wasn't enough to put an end to this see-saw action.

Tomorrow should be interesting.

That didn't last long

O.K., I'm back to cash again. This market ticks me off.

Still a coward

Despite my discovery that market timing hinders my performance (see earlier post), I remain a trading coward after the market has kicked me in the teeth. I've taken a position in GHM and nothing else. I would like to see some strength once again before I make any more commitments. I think the market is on the fence between a good rally and an awful downturn and I am too emotional to risk money in a downturn (I might even cry a bit).

Some day maybe I'll be able to put my money where my mouth is and trade mechanically no matter what the market conditions are.

Prudent Speculator 2007 Performance

If you had a rough year in the market, don't beat yourself up too much. One of the most respected and best performing (according to Hulbert Financial Digest) stock services over the last 20 years struggled badly this year. Most of their services lagged the market.

Charle's Kirk lamented this week that many of his members struggled to beat the market last year as well. I think this was just a really difficult year.

But as I said in the post before this, I think sometimes that we create our own problems. I know I made things way more complex than they needed to be and my portfolio suffered. Sometimes we think our plans are too simple and we modify them so much that they quit working.

I hope that in 2008 I am able to step back and re-focus my trading by simplifying the way I approach the market. I spent way too much time listening to the news, blogs, and other traders which really got me off track.

Another lesson from 2007

I always like to go back and analyze the previous year's data to see if there is something I can learn from what happened. I like to see if new information I've learned helps or hinders my trading. Most of the time, any new information causes me to perform poorly.

Last year was no exception. Although it was a pretty good year, I still didn't manage to outperform any of my screens. What that means is that all of my labor, sweat, knowledge, and effort created no advantage over a simple mechanical stock screen. I could have spent 15 minutes a week and created the same (or even better) results than I did with constant monitoring, reading, thinking and planning.

Don't get me wrong--I enjoyed every minute of all that hard work because I absolutely love what the market has to offer. I love reading about it, watching it, analyzing it and trading it. But I do think that I could spend a lot of the time that I spend on the market on other more productive things.

To give you an example, one of the things I've really studied this year is timing the market--going to cash when things suck and going crazy when things are going well. I put together several indicators that I think really capture the "underbelly" of the market and allow me to accurately predict the short-term direction of the market.

I went back and applied what I learned to my stock screens to see if I could utilize my timing models to capture the upswings and sit out the downswings. The results kind of shocked me. I expected to at least double my theoretical return. Instead, I cut it in half. For my style of trading and screening, market timing is counterproductive (at least over 2007 it was).

So, I'm back to the conclusion that I had at the end of 2006. If I stick to a mechanical plan in the good times and the bad, I have a very good chance of soundly beating the market.

Week In Review 1-4-2008

What an awful week that was. I got caught on the wrong side of this action and lost over 3% for the week. StockPunk's To the Moon screen had a good week however--if only I had invested in it.

Not much better today . . .

I made up part of the loss from yesterday, but I wanted to get rid of some stupid trades and I got greedy and put my limit orders too high. They came close to selling, but never did. So I'm stuck with them another day (or two).

Not a good start to 2008

I wish I would have followed the advice of my handy dandy Market Meter today. Instead, I held on to a few stocks from last week thinking that maybe this struggling market would come around. It didn't and I lost 1.37%.

Evil Kid Brother

My brother Mitch and I are in a constant battle for notoriety. Every time he comes over, he Googles his name just to rub it in my face that he can produce more hits than my name can. He easily wins that game--the only "Scott Carl" that shows up on Google is some lyric writer.

Now he's gone and done it again by appearing on the front page of the Omaha World Herald--with a color photo none-the-less. He's a punk. Here's the online version of the article.

I called him this morning and he said that it was one of his new year's resolutions to get on the front page of our paper. Two days in to the year and he's done, he bragged.

Honestly, I'm very proud of him and his accomplishments, and I've benefited from his expertise during our scuba trips together. He deserves the acclaim.

Changes to StockPunk for 2008

In the next couple of weeks, I'll be detailing changes that I'll be making to the site over the next year.

Here are a couple--

Weekly Stock Screens--
During 2007 I posted stocks that passed my screens on a weekly basis. I did this to allow folks to follow the screens and to show that the screens can produce real returns.

This year I will only post stocks that I come up with on my own. I will still post the returns of some of my favorite screens, but I will not post the actual stocks that show up each week. If you are interested in finding out which stocks qualify, you'll need to use AAII's Stock Investor Pro and/or Zack's Rankings.

StockPunk's Market Meter--
During 2007, I learned a lot about determining the overall direction of the market as a whole. I plan to use StockPunk's Market Meter to allow StockPunk readers to see my opinion on market direction on a daily basis.