Mining the IBD 100, striking gold

[peanuts]

Hey guys and gals, been watching for a while and decided to write my first real post:

I'd like to first share my picks from the IBD 100 which I have recently mined. OK, so you're thinking that I'm trying to be like Mr. Market by searching the IBD- well, he does have a pretty good record. (Nice FRGB pick, by the way) So, why not idolize the man with the plan and mimick his technique. Here they go:

ERS
WDC
NWRE
SNDK
ASVI
WSO

The picks above all have: RS and EPS ratings in the 90's, are listed in the top 20 performing industries of the 147 different industry groups listed by O'Neil, have 1 to 6 consecutive quarters of rising institutional sponsorship, have either an A or B SMR ranking, and are all listed in the IBD 100. Additionally, they all are trading at trailing P/E's below 50, which makes me think that all of these are selling at a discount to actual value, and now seems like a reasonable time to purchase some shares. So, this is what I'll do:

I will be tracking all 6 of these for the next 2 months and I will keep everyone updated as they progress. On paper, I will purchase $1000 worth of each stock at the closing price on Friday, Feb 17. This is the beginning of the portfolio:

Symbol / Shares / Price Per Share
ASVI / 30.7125 / $32.56
ERS / 51.1509 / $19.55
NWRE / 39.6040 / $25.25
SNDK / 17.4246 / $57.39
WDC / 41.3565 / $24.18
WSO / 14.573 / $68.62

Week 1 starts on Tuesday!

Wish me luck.

8/5/06 edit: click here for the results of this experiment


Also, I'd like to post this link to an article relating to the way oil may be traded: http://www.energybulletin.net/7707.html If you are interested in the article, you may then want to look at this stock: ICE It is expensive right now, but that does not mean someone else won't buy it for more than what it costs today.

Good luck with your personal portfolios!

[New-born baby]

Nuts

Hey, I like your little peanuts work. Keep posting!

I've been watching the Iranian Bourse idea. I don't like the idea of trading in Euros rather than USD. I think it might make big trouble for the USA.

[Lyehopper]

Welcome Peanuts DUDE!!!!

We LUUUUUV IBD over here @ $MM$ forum!!!! $MM$ "himself" often says it's his "FAV-O-RITE"!... ain't that right fellas?

DUDE!!!!?.... Would you care to enter one of your HUGE picks in BillyJoe's "Portfollio of the week" thread?.... We'd love to have you play! Just enter before the market closes on Tuesday. Below is a copy of the "POTW rules" for your reading enjoyment.

[RL]

Glad your on board Peanuts and glad you posted picks from IBD I cannot afford to purchase It.

[skiracer]

Hey guys and gals, been watching for a while and decided to write my first real post:

I'd like to first share my picks from the IBD 100 which I have recently mined. OK, so you're thinking that I'm trying to be like Mr. Market by searching the IBD- well, he does have a pretty good record. (Nice FRGB pick, by the way) So, why not idolize the man with the plan and mimick his technique. Here they go:

ERS
WDC
NWRE
SNDK
ASVI
WSO

The picks above all have: RS and EPS ratings in the 90's, are listed in the top 20 performing industries of the 147 different industry groups listed by O'Neil, have 1 to 6 consecutive quarters of rising institutional sponsorship, have either an A or B SMR ranking, and are all listed in the IBD 100. Additionally, they all are trading at trailing P/E's below 50, which makes me think that all of these are selling at a discount to actual value, and now seems like a reasonable time to purchase some shares. So, this is what I'll do:

I will be tracking all 6 of these for the next 2 months and I will keep everyone updated as they progress. On paper, I will purchase $1000 worth of each stock at the closing price on Friday, Feb 17. This is the beginning of the portfolio:

Symbol / Shares / Price Per Share
ASVI / 30.7125 / $32.56
ERS / 51.1509 / $19.55
NWRE / 39.6040 / $25.25
SNDK / 17.4246 / $57.39
WDC / 41.3565 / $24.18
WSO / 14.573 / $68.62

Week 1 starts on Tuesday!

Wish me luck.




Also, I'd like to post this link to an article relating to the way oil may be traded: http://www.energybulletin.net/7707.html If you are interested in the article, you may then want to look at this stock: ICE It is expensive right now, but that does not mean someone else won't buy it for more than what it costs today.

Good luck with your personal portfolios!

Those aren't your finds as much as they are the work of the IBD 100 people who control that list. You didn't mine them or find them through your own research an it won't be that long before you will learn your lesson and the disillusion and truth of the matter will set in about O'Neil and IBD in general. Better to get it out of the way early on and be done with it. You're not informing us of anything we already don't know an you're certainly not going to impress anyone here with those selections as all of us here already know about the IBD 100 and their whole concept. But track them by all means and it will be interesting to watch their progress over the next couple of months. I'm sure we all can't wait for your progress reports. Good luck with them.
What was of alot more interest was the article on the upcoming Iranian oil bourse. Decent read.

[jiesen]

Those aren't your finds as much as they are the work of the IBD 100 people who control that list. You didn't mine them or find them through your own research an it won't be that long before you will learn your lesson and the disillusion and truth of the matter will set in about O'Neil and IBD in general. Better to get it out of the way early on and be done with it. You're not informing us of anything we already don't know an you're certainly not going to impress anyone here with those selections as all of us here already know about the IBD 100 and their whole concept. But track them by all means and it will be interesting to watch their progress over the next couple of months. I'm sure we all can't wait for your progress reports. Good luck with them.
What was of alot more interest was the article on the upcoming Iranian oil bourse. Decent read.

pretty harsh, there, ski.... but true, nonetheless. I will also be interested to see how this experiment plays out, so please, peanuts, by no means let any of our skepticism keep you from updating us on your progress. Also, I guarantee that if you stick around here for a while, you will progress!

[skiracer]

pretty harsh, there, ski.... but true, nonetheless. I will also be interested to see how this experiment plays out, so please, peanuts, by no means let any of our skepticism keep you from updating us on your progress. Also, I guarantee that if you stick around here for a while, you will progress!

Just getting him acclimated to the environment Jiesen. I'm sure he'll survive if he can perservere.

[Lyehopper]

Just getting him acclimated to the environment Jiesen. I'm sure he'll survive if he can perservere.

What do you drive Ski?.... I'll bet it ain't an Audi.... I drive a Ford F-350 (6.0 L powerstroke)....

[rivercitydan]

Good luck Peanuts.

This board has lots of room for your independent thinking. I also have those stocks on my list except for sndk, which has to shake off its current weakness, it is below its 50 day ma.

[peanuts]

Thanks for the kind wishes.

Skiracer, I appreciate your objective view. I said I was new here, not to the market. Don't worry about my development here or believe that I live and die by the IBD. As a matter of fact, my actual portfolio has only 2 stocks currently listed in the 100, and that is not how I came to the decision to buy. I appologize if I came off as trying to educate anyone on the merits of IBD- this is only an test of the IBD, not an advertisement. To clarify my original post, these stocks were not randomly selected by me. What they represent are the winners taken from the IBD 100- the cream of the IBD crop in terms of the rating system offered by IBD itself. What they have in common, is that they are the ONLY 6 of the 100 which fit the criteria listed. It was a process of ellimination using Excel. So, yes, in a way, I did "mine" them. You don't dig in your backyard for diamonds, do you? Nope, you go where you know there are diamonds - in this experiment's case, it was the IBD. Statistically speaking, it offers readers some of the best stocks to own, and I picked the best from that group according to my own criteria.

It is an experiment which I thought was extremely pertinent to this board. The picks offered by Mr. Market are from the IBD, so why not do experiments of the IBD. Theories need to be tested all the time. I never tried to be a cheerleader for the picks offered. I was under the impression that the IBD 100 list was a computer generated list of the top performing companies based on the rating system IBD has established over the years... you say that people generate the list? skiracer said: "Those aren't your finds as much as they are the work of the IBD 100 people who control that list." Have I been misled?

As stated, my actual portfolio differs greatly from the IBD listings. If you'd like to know where my real money is, I'd be happy to share ideas. I did not feel that is was necessary or relevant to post my portfolio here, as that is often a personal thing, and nobody here knows me, and I have no reputation yet as far as quality picks... so, what's the point?

Lyehopper,
Thanks for the offer, but normally my picks are for longer than a week, so I don't know how much constructive involvement I can offer to your weekly list.

Raylong,
I am not recommending the picks, this is only an experiment

[ParkTwain]

Up to 6 consecutive qtrs of increased institutional ownership would lead me to believe that it is increasingly unlikely that further such buying, if it ever occurs, would buoy the stock's price going forward.

Using a trailing P/E of 50 or less doesn't indicate to me that you're using P/E to find a "bargain." Plus, what a given P/E number indicates must be examined relative to the company's own rate of earnings growth (PEG ratio) and is a function of the industry in which the company participates. For instance, we all know that the P/E of home builders are historically always low (sub 10) by general stock market standards. Plus, the P/E of the "average" stock must be examined relative to the prevailing interest rates set by the Fed's FOMC -- the lower the prevailing interest rate the higher the stock market will bid up stock prices (the so-called "Fed model").

[peanuts]

Up to 6 consecutive qtrs of increased institutional ownership would lead me to believe that it is increasingly unlikely that further such buying, if it ever occurs, would buoy the stock's price going forward.

Using a trailing P/E of 50 or less doesn't indicate to me that you're using P/E to find a "bargain." Plus, what a given P/E number indicates must be examined relative to the company's own rate of earnings growth (PEG ratio) and is a function of the industry in which the company participates. For instance, we all know that the P/E of home builders are historically always low (sub 10) by general stock market standards. Plus, the P/E of the "average" stock must be examined relative to the prevailing interest rates set by the Fed's FOMC -- the lower the prevailing interest rate the higher the stock market will bid up stock prices (the so-called "Fed model").

Did you look at the P/E of each of my picks? Thanks for your insight to effectively evaluating P/E ratios. I use it as a loose determination of when to buy. Which, I thought, was outlined pretty well. I'm not bargain hunting, but testing the effectiveness of IBD. (FYI: SYMBOL P/E- ERS 23 - WDC 18 - NWRE 49 - SNDK 32 - ASVI 36 - WSO 27)

Some stocks that I had to eliminate from the list had increasing sponsorship in the previous 12 quarters, so your assumption is not well founded. Good companies can attract a lot of institutional money from several sources over an extended period of time. If you want to eliminate stocks with less than 2 quarters of increasing sponsorship, then take off SNDK and WSO- they each have only 1 quarter... WDC has 4, and the rest have 2.

[New-born baby]

Thanks

Peanuts:
Thank you for your posts and picks. I appreciate very much your work, and look forward to your comments. I also will watch these stocks move and hope to gain knowledge from your experiment. Thank you!

[mimo_100]

Hello Peanuts,

I, for one, really appreciate it when someone puts a lot of effort into providing information for the group. So, thank you for all of your work on this. I too will be watching.

One of the problems with simulating and testing is that we tend to extrapolate from the results, when in fact, we do not know whether the trend we have identified will, in fact, continue.

Let's assume that the particular issues you have chosen outperform some base index by 15%. Does this mean that successive picks chosen the same way will also have the same results? Of course, one would hope so.

In reality there is only one person that has consistently been correct 85% of the time (79 in a row, 14 open === >79/93 = 85%), the $$HUGE$$ one himself.

Good luck.

Tim

[skiracer]

I don't think that Ernie's picks come from the IBD 100 list. He has his own scanning model, which you can access from his homepage, and probably some of his scans will turn up a few stocks that are also on the IBD 100. O'Neil and his whole organization are solely interested in generating subscriptions to his newspaper and the related resources that come with the subscription. They change their model, views, opinions, disciplines, and strategys as the need arises to keep their subscribers on board.
Everyone is entitled to their ideas and beliefs and to voice them here. It certainly isn't my intention to inhibit that concept in any way but just voicing my opinion. I also feel that paper trading is a waste of time but that is only my feelings. There is no way you can persuade me to believe that if you paper trade a system for months and then change over to real cash that the emotional side of putting up and risking the real money isn't going to influence your rationale and decision making processes. Controlling those emotions will get you farther along than any of the other stuff. You might as well buy $100,000 of each stock with the paper money since none of it is real and has no specific bearing on your real capital account.
Any number of people here have spent alot of time and money, myself included, subscribing to Investors Business Daily and following their discipline only to have come to the conclusion that it just doesn't work in real time or the real markets on a regular basic all the time. I do think that the CANSLIM methodolgy is a good practice to apply in searching for decent stocks but again don't see following it to the letter as the only way to Nirvana. My own feelings are far removed from any of that.
I would spend more time developing my own screens and scans and looking for setups that work for me than relying on the IBD 100 as a source even if you were to try and pick only the creme of the 100.
Good luck with your test drive on that list of stocks and I really do hope you are successful with all of it. I would have to agree with Park that he is absolutely right with his take on the PE thing. So much depends on your own strategys as to how you perceive all of this. By the way how long have you been a subscriber to IBD?