Mining the IBD 100, striking gold

[peanuts]

thanks, Doug

I think you mean April 14th. But the markets are closed on Good Friday:

http://www.nyse.com/pdfs/tradeday_06.pdf

Yeah, I meant April 14. Thanks for letting me know about markets being closed on 4/14, now the last day this portfolio is active will have to be April 13- closing price that day at 4:00 will be final.

It should be an interesting day... long weekend for Christian holiday... I wonder what the last hour or so will look like? My guess is a sell off.

[skiracer]

Peanuts,
I'm alittle confused. Is this group of stocks up or down for the period to date.

[peanuts]

skiracer

Peanuts,
I'm alittle confused. Is this group of stocks up or down for the period to date.

look here:

IBD Gold Mine (IBDGM) -4.67% $6,415.62

ASVI -1.04
ERS -5.01
NWRE +0.17
SNDK -1.52
WDC -0.35
WSO +0.58

WEEK 6 RESULTS:

Total portfolio value gain / (loss) to date: $415.63
Total portfolio percentage gain / (loss) to date: 6.93 %
Largest individual return to date: ERS, 41.18 %
Lowest individual return to date: WDC, (19.64 %)

Under "WEEK 6 RESULTS:", the first line is the return to date- (positive $415.63)

For the daily results, you can look at the first line and see the gross value and the percentage change in gross value from the previous day. The starting value for the portfolio was $6000, $1000 in each position.

I am tracking all this in Excel and have all the charts ready to go. I just need 2 more weeks of information.

Does anyone know how to post an Excel chart on this website? Otherwise, I will have to upload the chart images to a different website, then link to that site from here. It would be nicer to just be able to post the chart right in the message space.

[IIC]

look here:



Under "WEEK 6 RESULTS:", the first line is the return to date- (positive $415.63)

For the daily results, you can look at the first line and see the gross value and the percentage change in gross value from the previous day. The starting value for the portfolio was $6000, $1000 in each position.

I am tracking all this in Excel and have all the charts ready to go. I just need 2 more weeks of information.

Does anyone know how to post an Excel chart on this website? Otherwise, I will have to upload the chart images to a different website, then link to that site from here. It would be nicer to just be able to post the chart right in the message space.

Look at the Pick of the Year thread...I post the standings in .xls...Just do a Print Screen... Paste in Paint...Save to My Pictures...Crop and Compress...Go to http://Imageshack.us ...Upload...Copy the first Forum link...Paste here in your post...We will see the .xls sheet you have...IIC

[peanuts]

Image Test

Thanks for the guidance, Doug.

I hope this works:



This should be a chart of IBDGM to date. The starting value is $6000.

[peanuts]

IBDGM week 7 complete results and chart

Day 30
IBD Gold Mine (IBDGM) +1.12% $6,490.88

ASVI -0.09
ERS +1.65
NWRE +0.59
SNDK -2.28
WDC +0.40
WSO -0.45

Day 31
IBD Gold Mine (IBDGM) +0.79% $6,542.05

ASVI +1.36
ERS -0.25
NWRE -0.44
SNDK +1.67
WDC +0.67
WSO -1.18

Day 32
IBD Gold Mine (IBDGM) +2.82% $6,726.63

ASVI -0.03
ERS +1.00
NWRE +0.38
SNDK +5.51
WDC +0.44
WSO +0.35

Day 33
IBD Gold Mine (IBDGM) -0.40% $6,699.70

ASVI -0.76
ERS -0.27
NWRE +0.15
SNDK +0.90
WDC +0.26
WSO -1.52

Day 34
IBD Gold Mine (IBDGM) -1.60% $6,592.50

ASVI -1.00
ERS +0.71
NWRE -0.22
SNDK -2.30
WDC -0.72
WSO -2.35

WEEK 7 RESULTS:

Total portfolio value gain / (loss) to date: $592.50
Total portfolio percentage gain / (loss) to date: 9.88 %
Largest individual return to date: ERS, 55.70 %
Lowest individual return to date: WDC, (15.30 %)

Here's the chart of IBDGM ($6000 beginning value):



Here's the chart of the components of IBDGM ($1000 beginning value each):

[peanuts]

This week's screen results

CHRW
BOOM

[peanuts]

Motley Fool Article

I found this article pretty important for this thread, so I am posting it in its entirety:

http://www.fool.com/news/commentary/2006/commentary06041201.htm?source=eptyholnk303100&logvisit=y&npu=y

The "Highest-Rated" Stocks, Debated
By Selena Maranjian (TMF Selena)
April 12, 2006
I recently took issue with Investor's Business Daily's list of "10 Highest-Rated Stocks," objecting to what I saw as a heavy emphasis on several quantitative factors, at the expense (to some degree) of more extensive and qualitative analysis.
As is often the case when we Motley Fool writers wax provocative in an article, I received some strongly worded emails from readers:
· "If you can't provide actual information, you shouldn't be taking up Internet space complaining about what other people provide."
· "You obviously have no idea what you are talking about when you write about IBD's list."
· "You apparently have been assigned to attack Investor's Business Daily."
More interestingly, and not surprisingly, I heard from the folks at IBD. As I did last time we disagreed, I'm hereby devoting an article to offering much of their response, since it seems like a fair thing to do (and because they made some good points). The response was prepared by the executive editor of IBD, Chris Gessel, and the content editor of investors.com, Ken Shreve.
The objections and clarifications
First and foremost, Chris and Ken wanted to clarify that, "[Your] premise assumes this is a buy list. It is a watch list." To my comment that, "It's usually a bad idea to invest blindly from any list, but lists can offer you ideas to investigate more closely," they replied: "Yes, that is our position also -- you must research."
In my article, I'd pointed out that their "IBD 100" list "has performed quite well, trouncing the S&P 500 both in the past year and since its inception." If anyone is wondering why that might be, they offered this interesting tidbit: "The vast majority of stocks on the list also had high annual return on equity (ROE), which is probably the best indicator of a well-managed company (it wasn't a screening parameter)."
To back this up, they included the ROE figures below:
· Joy Global (Nasdaq: JOYG), 30.2%
· Tenaris, 42.6%
· TradeStation Group (Nasdaq: TRAD), 32%
· Gilead Sciences (Nasdaq: GILD), 32.2%
· The Pantry (Nasdaq: PTRY), 31.4%
· Western Digital (NYSE: WDC), 36.5%
· Ceradyne (Nasdaq: CRDN), 25.1%
Point by point
Let me now go over a few of my points and their related responses.
I said that that placing a lot of importance on earnings, especially earnings per share, is problematic, since companies can manipulate their earnings in many perfectly acceptable ways. I suggested that it's sounder to look at cash from operations, or free cash flow, to get a more dependable idea of the firm's progress. They said: "All financial numbers can be altered, including cash flow and sales. Enron and WorldCom are prime examples. Our studies for over five decades show that EPS gains correlate highly with stock appreciation."
I pointed out that "per-share numbers, in theory, can go up just because of share buybacks, reflecting no operational success." They retorted that "buybacks are a sustainable and good reason for EPS to increase. [Home builder] Ryland (NYSE: RYL) has boosted its EPS numbers for years by continually buying back shares. It's up 572% in the past five years, while its homebuilding industry group is up 347%. We'll take the extra 200%, thank you." To this, I'd just like to point out that buybacks are indeed wonderful -- except when the shares being bought are overvalued. If a stock's intrinsic value is $25 per share and the company buys back shares at the current price of $40, it's wasting shareholder capital. It would be better to pay that money out as a dividend or invest it where it will offer a bigger return.
I said, "The attention paid to the stock's price also troubles me. Although some rapidly growing stocks will continue their swift rise, others may run out of steam." They replied, "RS (Relative Strength) is the other primary indicator of a stock's future gains. Investors might not like it, but the market is not about making you feel good."
Perhaps my main objection was this: "I think there are some qualitative measures that no screen will catch -- first and foremost, quality of management. Fool co-founders David and Tom Gardner agree -- they've made quality of management a core component of their recommended companies in the Motley Fool Stock Advisor newsletter service."
Chris and Ken explained that, "We are very interested in management and the story behind a company. It is why we have New America stories, the IBD 100 Profile, and Leaders & Success features. The numbers are reflective of superior management. IBD Ratings help you efficiently screen through 8,000 stocks to find those gems."
Finally, they took issue with my advocacy of fundamental stock analysis and my mention of David and Tom's market-beating Stock Advisor service (which has averaged returns of 45% and 73%, respectively, against 21% for equal amounts invested in the S&P 500 over roughly four years). They pointed out that the newsletter was launched near the bottom of the recent bear market and opined that, "A strict fundamental approach is more likely to collapse again in the next bear market." (The market actually continued to fall for another six months after Stock Advisor's launch.)
They then referred to their proprietary stock evaluation system, "CAN SLIM," saying: "If you compare performance as a goal in determining best methods to make money in the market -- you might also review an outside group using CAN SLIM -- the CAN SLIM Select Fund. It is real money based on the same principles as the IBD 100, and so far performs very much like it. Through Friday, March 24, the CAN SLIM fund was up 10.3% in 2006, vs. 4.4% for the S&P 500 and 10.4% for the IBD 100." [In our discussion board community, we have a busy CAN SLIM board, featuring more than 20,000 posts.]
There you have it. Ponder my thoughts and theirs and make up your own mind on these issues. Having digested their response, I don't think we're as far apart as I originally expected. I encourage you to check out any of our investing newsletters to get a feel for our investment approaches. (You can do so for free, so you've got nothing to lose and everything to gain.) I also encourage you to check out IBD for yourself. It's a newspaper that you can find at many newsstands and libraries. It's also at Investors.com.
Here's to big profits in your future!

[peanuts]

week 8 results and charts and conclusion of experiment

Day 35
IBD Gold Mine (IBDGM) -1.89% $6,466.03

ASVI -0.98
ERS +2.28
NWRE -3.35
SNDK -1.86
WDC -0.63
WSO -1.50

Day 36
IBD Gold Mine (IBDGM) +0.38% $6,490.59

ASVI -1.62
ERS +1.76
NWRE -0.74
SNDK +0.88
WDC +0.18
WSO -0.63

Day 37
IBD Gold Mine (IBDGM) -0.97% $6,427.52

ASVI +0.49
ERS -1.63
NWRE +0.29
SNDK -0.57
WDC -0.15
WSO +0.68

Day 38
IBD Gold Mine (IBDGM) +1.86% $6,547.02

ASVI +0.37
ERS +1.17
NWRE +0.93
SNDK +2.43
WDC -0.13
WSO -1.75

WEEK 8 AND FINAL RESULTS:

Total portfolio value gain / (loss) to date: $547.02
Total portfolio percentage gain / (loss) to date: 9.12 %
Largest individual return to date: ERS, 74.02 %
Lowest individual return to date: WDC, (18.32 %)

Here's the chart of IBDGM ($6000 beginning value):

click on the image for full size

Here's the chart of the components of IBDGM ($1000 beginning value each):

click on the image for full size

Here is a link to the Excel File that I created for the data tracking and charting:

http://www.savefile.com/files.php?fid=8771161

You have to click this link, then scroll to the bottom of the page and download the file. It should open in Excel. Use Ctrl button plus the scroll wheel on your mouse to change the zoom level

All in all, we had 3 up and 3 down from the beginning. Total portfolio gain over 2 months was 9.12%, which isn't too bad on an annualized basis if there is a continuation of the trend. It is difficult to analyze the complete action of the portfolio because different events were occuring in each stock which affected price to some degree.

I must admit, there are faults to the portfolio if you just go by the criteria listed in the first post. For instance, I have noted the the poorest performers had an SMR ranking of "B" prior to being included in the portfolio. I am amending the screen criteria to eliminate all stocks with lower than an "A" rating in SMR. Further, P/E has no real correlation with price performance in regards to these stocks. P/E will not be considered.

If this screening method is to provide people with quality stocks to invest in, then it is essential, as pointed out in this message thread, to consider proper entry points, stop losses, and possibly even points where profits should be taken or exit points. I have done no research in regards to this, and I look forward to ideas and mechanical strategies in order to:
1.) reduce losses in any or all stocks in the portfolio
2.) realize gains at proper valuation prices
3.) take all emotional response to price action out of the investing equation
4.) determine proper entry prices / timing.
I am interested in the focus of these 4 things, however, I will appreciate any other ideas of getting the highest return through this mechanical type of investing. Please make all comments directed specifically to the results of this experiement, not GENERAL market information. Please keep the discussion IBDGM specific, this will take some research on your part and if you need more information than what I have provided, please PM me.

Help me to build a system that works! You are smarter than I, and can offer better guidance than most. I really look forward to your seasoned views and educational responses. Together, we may be able to build a viable investment vehicle for my (or anyone's) retirement. Thanks in advance.

[peanuts]

just to let everyone know, this portfolio is up +20% as of today

[billyjoe]

peanuts,
IBD advocates buying stocks priced at $15 and up with strong fundamentals etc. Many of their parameters or screens are based on past performance. The thinking being that stocks above $15 with good performance are likely to outperform similar priced stocks with not so good track records. Since most $15 + stocks started out at a lower price (except for many IPO's), wouldn't a sub $15 stock exhibiting good fundamental and technical qualities offer more potential appreciation ? They might be a bit harder to identify.

billyjoe

[peanuts]

I hear that IBD sucks eggs

billyjoe,

There are a few things about the $15 level:
1. the price alone opens the stock up to the big money- mutual funds and other institutions
2. stocks trading below 15 are there for a reason- either they made their way DOWN there due to poor performance / industry / strategy, or they haven't made it UP there because they have lacked the ability to prove their growth strategy to investors, have not shown the earnings growth needed, lack a certain catalyst to launch it into the eyes of serious money, or the company management cares more about their investment (time) than shareholders investment (money) and choose to neglect the company to the point where it cannot blossom into a "quality" company.

I'm sure I've missed some things in there

3. psychology- people think that stocks below certain levels seem "cheap" as in quality, and stocks above a certain level seem like good products. With inflation, I expect this perception to change

4. as you described it, momentum from say $9 to $16 can continue to drive that stock to say 30+ (PEIX) much easier than a stock that has been stagnating at 17 for months. investor sentiment

However, you have an excellent point. I say excellent, because that is exactly what I look for: a few stocks which trade under $15, show positive earnings, low mkt cap, low shares outstanding or float, positive projections for the next year, new products, markets, or people, acquisitions of synergistic companies at cheap prices, cash on hand, and recent chart action indicating positive price direction. These are the stocks which have been making me some crazy returns. I've been trading in and out of MVCO since $8, and I have been doing well. I found USLM at $9, but unfortunately missed some of its biggest gains (11-13 and 26-36), but I have currently wised up to the company and I have decided to share my ownership with my inheritors. I just came across DWCH and it is my very first entry into the POTW contest. They reported earnings yesterday morning.

[peanuts]

Anyone remember this thread?

...

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, 2006. 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

Wish me luck.

I don't blame you if you want to forget about this. If this experimental portfolio was still active today, it would now be worth $3,990.68. A loss of $2,009.32, or -33.49%. During this same time period, the S&P 500 appreciated approx. +16.28%

According to the screening parameters, these were the stocks which were exhibitting some of the highest ratings according to IBD. At the conclusion of the experiment's time period, the portfolio was net positive, and beat the performance of the S&P 500 during that same time period.

What conclusions can / should be drawn from this information, if any?

edit: I also highly recommend reviewing the entirety of this thread- start at the beginning. It is not only entertaining, but highly informative, and also gives some good insights to your fellow members.

[skiracer]

I don't blame you if you want to forget about this. If this experimental portfolio was still active today, it would now be worth $3,990.68. A loss of $2,009.32, or -33.49%. During this same time period, the S&P 500 appreciated approx. +16.28%

According to the screening parameters, these were the stocks which were exhibitting some of the highest ratings according to IBD. At the conclusion of the experiment's time period, the portfolio was net positive, and beat the performance of the S&P 500 during that same time period.

What conclusions can / should be drawn from this information, if any?

might be indicative of how important good technical analysis and chart interpretation is. also the timing of the trade. is the chart exhibiting the right signals at the proposed entry date. another point is the exit strategy. these might have all been winners a month ago so how long you hold them through some decent up times without taking the gains is important because you can give back big gains and end up losing on what should have been a winning position if held for a shorter time frame.

[IIC]

Peanuts...Maybe you should apply to be a stockpicker at CSSGX?