Peanut's Potent Plethora of Profit

[peanuts]

Hey Peanuts.... Remember when you were hot on Q (September I think)? I posted that it might set up as a good short trade soon (with a nice short gap target @ $7.01).... Well I think it is setting up now with a pretty well formed SHS top with increased volume on the down side of that right shoulder.

Can you put up a chart, Lye? I don't see the SHS formation, but my indicators do tell me that Q needs to find traction or it will continue to slide downward. The slope is pretty steep lately, so I would look for the kind of support that comes back to Q and then make a decision. If it continues to drop sharply, this is a no brainer short to $7.00-$6.20 range.

Without checking my records, I think I lost money on the long side before... This was in breakout mode for a little while, and then died.

[skiracer]

I've met alot of people over the years that have come and gone with their strategies and disciplines for the short term, midterm, and long term holding trading plans. There have been a small number that have impressed me and lots that didn't but talked a good concept. When it came time to adhere to the plan and implement it for a winning percentage over long periods of time there have been very few that have impressed me. Spike is one of the very few that over the time that I have known him through this forum that has laid his strategies out for everyone to see and has implemented them for a winning system because he doesn't just talk it but really honors it. His technical analysis is top rate and can be taken to the bank. But the best part about Spike and a few others like him is that he honors his strategies and plan. He's in at his planned trigger an if things go wrong he's out at his stop loss point taking the loss and moving on to the next setup. Personally speaking he is one of the few that I feel has developed a discipline and sticks to it. Regardless of anyones style or discipline you have to develope a trading strategy and adhere to it. When he speaks of specifics those concepts are the backbone of developing a trading strategy and anyone that doesn't have that in place and the emotional control to follow it will not be successful at this.

Flip flopping back and forth on your plan as it suits you will only end up frustrating and confusing your state of mind. The killer instinct of being able to stop the losses and live with them and move on can be learned and implemented but few have what it takes to actually do it. Controlling the trade rather than having the trade control you is the exception when it should be the norm. Spike knows this and is very good at it. I could talk until I'm blue in the face about this but the only way to do it is to do it and keep doing it everytime until it is ingrained in your psyche and second nature where you do it automatically without thinking of alternatives or relying on hope.

[skiracer]

Everybody point and laugh at peanuts. hehehe!

TGE is really turning out to be a stinker. I mean, WOW! - down nearly $2 from my entry at $9.40. I'm terrible at this stock picking stuff

This model has been working for me for 2 years, now. Current results are by far the worst they have ever been. Not sure if it's me, the screen, or the market...

I've been contemplating the day that the screen no longer works. At that point, I sell them all, and start anew... working with the right breakout / momentum parameters for the current market environment.

It's losses like these that actually give me the best education. I've heard others refer to this as "market tuition" and I think that is a perfect term. Sometimes that education costs money. It is important to learn equally from any mistakes that we make and the successes we have.

side note: AOS is not being nice to me, either

You cannot let good money stand dormant in positions that have taken a wrong turn. Especially if the loss becomes 20/25 % of the positions value or your portfolio. At that point it becomes a matter of hope rather than controlling the trade and your own destiny. You nor anyone else can say that a stock is going to come back or not. And waiting for that is a waste of time and money. The terrible thing about not cutting the losses off a a reasonable % early is that once you have let them go past a reasonable point the decision is much harder because the amount is much greater. There is no free money or lunch. That is just deceiving oneself to rationalize the behavior that got you into the fix in the first place. Capital is important and capital preservation is the name of the game in investing and trading stocks. Everyone can make a wrong play through their analysis and interpretation of a setup and we also have no control of what is going on behind the scenes with a stock we have bought that could adversely effect the outcome of our trade. We only have limited control of the trade through our entry and exit disciplines. You cannot sway from that. Doing so ties up your capital in the name of hope rather than control of the trade.
Peanuts, I'm not trying to make you look bad or any other negative motives but I have been doing this most likely longer than your are alive and the one thing that I have learned and now live by is that you must cut your losses short and keep your capital free and working for you in as much a positive way as you can. If you or anyone else cannot not do that then you are going to end up losing all of your hard earned money over the course of time.

[peanuts]

I like gna over todays high..

Runner and NBB,

Not sure if you guys are in front of the screen, or not, but GNA is having a wonderful morning!

[peanuts]

Peanuts, I'm not trying to make you look bad or any other negative motives but I have been doing this most likely longer than your are alive and the one thing that I have learned and now live by is that you must cut your losses short and keep your capital free and working for you in as much a positive way as you can. If you or anyone else cannot not do that then you are going to end up losing all of your hard earned money over the course of time.

I don't think you are trying to make me look bad. My trade in TGE is doing that for me.

Keep in mind Ski, I have been working with this investing style for 2 successful years. I have explained to Lyehopper in a private message the amount allocated to this portfolio, and how I manage the money. Because of the success of this portfolio, I have to trust the results. I've analyzed what I did with the TGE and TIII trades and it is nothing different from previous picks. TIII was down big, but it has come back. I think that same thing will happen to TGE. I strongly disagree with your assessment that I MUST cut losses. Cutting losses in this portfolio only happens when something fundamentally changes within the company which alters the value or the attractiveness of each share. That has not happened with TIII or TGE. These are solid companies. I am aware that the market can price equities out of synch with actual value, and I am willing to accept the time it takes for the corrective price action to occur.

I would never place too much of my total worth into one trade. TGE is not affecting my overall performance at all. I can afford to hold it for 3 years or until it gets to zero, and it will not affect my overall performance by that much... Until this portfolio begins to consistently fail, I must continue to use it.

I'll tell you Ski, this portfolio has awarded me very handsomely over these past 2 years. The results are all posted here at Mr Market's Forum since March 2006. My first MOMO pick here was GV, and shortly thereafter (2 months time) it more than doubled in price. Prior to that, I have had consistent returns of 10% or better. I remember 3rd Q of 2005 being extremely good to me! I have to respect this portfolio!

as a side note: I remember Doug saying that the GV pick was the "Call of the Year" at the time. Now he tells me that I'm not that good...

[Lyehopper]

Q

Can you put up a chart, Lye? I don't see the SHS formation, but my indicators do tell me that Q needs to find traction or it will continue to slide downward. The slope is pretty steep lately, so I would look for the kind of support that comes back to Q and then make a decision. If it continues to drop sharply, this is a no brainer short to $7.00-$6.20 range.

Without checking my records, I think I lost money on the long side before... This was in breakout mode for a little while, and then died.

From where I pulled the fibonacci retracement, the 61.8% line is about $6.65 (20% profit) and there's a nice gap @ $7.01 or about 16% profit from current price of $8.37..... If Q breaks $8.20 it should fall pretty quick. I think the overall market will need to contuinue it's selloff for it to happen though.

[Tatnic]

Peanuts, thanks for that steel link, I was wondering where it was. As a reward for your hard work, I pasted this article (I'm not sure if I should divulge where I copied it from or not, I'm no lawyer).

You guys will enjoy this article...about James Simons, probably the top dog of the hedge fund industry (the first sentence got chopped off but it just asks "how does he do it?" Read it all the way through, its fascinating IMO. (For what its worth, I think Jack Haddad's style is elegantly simple and effective, but I don't think it can be duplicated by most of us since we have to pay commissions and our slippage would be much worse..I could be wrong):

.....Simons uses when he's not at the Long Island offices of Renaissance Technologies, the money management firm he founded in 1982. He was wearing an elegant shirt and tie, and loafers with no socks. He took a drag from a cigarette, the second of three he would smoke in the course of a long interview.
I had indeed come to ask him what his secret was. In the hedge fund world, that's what everybody wants to know.
Mr. Simons, 67, who rarely talks to journalists, is hardly a household name like Warren E. Buffett. But Mr. Simons, who got into the hedge fund business after abandoning a stellar career in mathematics, has a track record that is jaw-dropping. This summer, word leaked out that he was starting a new fund -- people took to calling it the ''$100 billion fund'' because its marketing materials say that it could conceivably grow to that enormous size. Not surprisingly, that has caused Wall Street types to be even more curious about him.
Here are Mr. Simons's numbers: from 1990 to 2004, Renaissance's primary hedge fund, called Medallion, has delivered annualized returns of 33.21 percent. (The Standard & Poor's 500-stock index has returned, on average, 10.98 percent during those same years.) Since the end of 2002, the fund, which has $5 billion under management, has disbursed $4.9 billion to its investors -- with another $1.5 billion to be delivered at the end of this year.
And these returns are after Medallion's 5 percent management fee and 44 percent share of the profits -- surely the highest hedge fund fees in the land. Medallion's returns, and its fees, have helped make Mr. Simons a very wealthy man, with a net worth that Forbes estimates at $2.7 billion.
When I showed Mr. Simons's returns to a hedge fund friend, he looked startled. ''Nobody has numbers like those,'' he said. But here's the real eye-opener: no one outside the firm's 200 or so employees has a clue how he does it.
Medallion, you see, is a quantitative fund. In quant funds, trading activity is generated by complex computer models rather than human judgment. Most quants are secretive about the algorithms that drive their models; after all, that's their investing edge. But of the handful of big-time ''black box'' investors, as they're often called, Mr. Simons's box may well be the blackest.
HERE'S what we do know. Medallion's portfolio contains literally thousands of stocks and other financial instruments that it trades in rapid-fire fashion. The firm's scientists are constantly searching for repeatable patterns, and other signals, in the enormous amounts of data they compile. The computer models they devise tell them when to make trades based on those signals.
As Mr. Simons put it -- and this is about as specific as he would get -- ''Certain price patterns are nonrandom and will lead to a predictive effect.'' He also told me that Medallion sticks with highly liquid securities that trade in public markets around the world. Why? ''Because there is a lot of data on such instruments, and we're very statistically oriented,'' he said. He stays away from exotic derivatives.
Not even Mr. Simons's investors know much more than I've just described. ''We trust Jim and we think he's smart,'' said one longtime Medallion investor. ''So we stopped caring what the computer was doing.'' When this investor began describing Mr. Simons's investing approach, he admitted he was guessing.
Mr. Simons shrugged when I suggested to him that his firm's lack of ''transparency,'' as they say in the business, was bound to make people nervous. Humans fail in the market all the time, but somehow we are willing to keep giving our money to human beings to manage because we understand investing based on human judgment. Or at least we think we do. But black box investing feels different. It feels scary somehow, precisely because it is not something most of us can understand.
''How any great investor does it isn't in the least obvious,'' Mr. Simons responded. ''How we do it isn't any more mysterious than how a great fundamental investor does it. In some ways it is less mysterious because what we do can be programmed.'' Then he stopped, took another drag from his cigarette, and let out a small chuckle. ''Well,'' he conceded, ''it's less mysterious to us.''
Mr. Simons wasn't always a quant. A former crypt analyst -- a code breaker, that is -- he did important work in mathematics that helped lay the foundation for string theory. When he began managing money in the 1970's, he did it the same way most investors did: he used his own judgment. ''At first,'' he said, ''I didn't think about investing in a scientific fashion. But I was trading currencies, and it gradually occurred to me that there might be some way to create models that would allow you to predict currency movements.''
Although Mr. Simons and a partner made an absolute killing in the currency markets the old-fashioned way -- they made huge bets that turned out to be right -- he began surrounding himself with scientists who developed models for all sorts of tradeable securities. ''By the end of the 1980's,'' he said, ''I was a model man, and didn't want to do fundamental analysis.''
One advantage, he said, is that ''models can lower your risk.'' Another, though, is that ''it reduces the daily aggravation.'' With old-fashioned stock picking, he said: ''One day you feel like a hero. The next day you feel like a goat. Either way, most of the time it's just luck.''
Indeed, trading the way he does, making thousands of small trades aimed at capturing small price movements, doesn't generate the kind of ''10 bagger'' that investors love. But when done well, quant investing is less likely to have the kind of disaster that is always the danger when one bets big on a stock.
To those who point to Long-Term Capital Management as an example of the dangers of black box investing, Mr. Simons's defenders point out that his fund has far less leverage than Long-Term Capital, and that in any case, while Long-Term Capital had several Nobel laureates on board, human bets were what caused it to go awry.
Clifford Asness, another well-known quant hedge fund manager, said that while he knew no more about Mr. Simons's methods than anyone else, ''It's hard to believe that there isn't a measure of safety in Jim's approach.
''Presumably, he's got a highly diversified portfolio, high turnover, and he's capturing small inefficiencies. It's hard to lose a ton of money doing that. It is always possible that someday his models might stop working. But that's different from 'blowing up.' ''
''You know,'' Mr. Asness added, ''human beings have a black box, too. It's called the brain.''
As for the new ''$100 billion fund,'' Mr. Simons was even more constrained than usual, thanks to regulatory restrictions that limit what he can say publicly while the fund is raising money. People are buzzing about it nonetheless, for it seems to be a major departure from Medallion. Medallion's investors were almost all wealthy individuals; the new fund, called the Renaissance Institutional Equities Fund, has a $20 million minimum investment and is aimed at institutions. It has a much lower fee structure. It will invest in -- or sell short -- only publicly traded equities. Instead of making rapid-fire trades, it will be much closer to a buy-and-hold portfolio. And so on.
In one critical way, though, it is similar to Medallion. As the marketing document, which I obtained from a person unconnected to Mr. Simons, put it: ''The company's risk control, variance and covariance estimation, execution techniques, slippage models, and predictive signals are all derived from those employed by the managing member in trading the Medallion Funds.''
In other words, Mr. Simons believes that computer models similar to those that have worked for Medallion will also work for a fund that can hold $100 billion worth of stocks over long periods of time. It is absolutely audacious.
What interested me most of all was: why? At an age when most men are contemplating retirement, with more money than he can count, why was Mr. Simons still at it? ''I enjoy the challenge,'' he replied.
He then began describing a demonstration he saw recently of a new nuclear accelerator at the Brookhaven National Laboratory, where he is on the board. Two atoms hurtled toward each other, colliding with great force. ''A huge number of particles are thrown out,'' he said, ''and the job is to analyze everything that results from the collision.''
''Watching the spray of particles on the screen made me think of the stock market,'' he continued. Every trade, even of a hundred shares of a company, affects every other trade. And every day there are thousands upon thousands of such trades, all of them affecting the rest of the market. His work, as he sees it, is to analyze that incredibly complex mosaic and try to figure out how it all fits together.
''The subject may not be the most important in the world,'' he concluded, ''but the dynamics of the market are really interesting. It's a serious question.''
I suddenly understood the motivation behind Mr. Simons's new fund. He's doing it because he wants to see if it can be done. Once a scientist, always a scientist.

[peanuts]

Peanuts, thanks for that steel link, I was wondering where it was. As a reward for your hard work, I pasted this article (I'm not sure if I should divulge where I copied it from or not, I'm no lawyer).

Hey Tatnic, that was a great article! Thanks for sharing. I won't tell who posted it if anyone asks.

Perfect evidence of the old saying, "the rich get richer"

[peanuts]

From where I pulled the fibonacci retracement, the 61.8% line is about $6.65 (20% profit) and there's a nice gap @ $7.01 or about 16% profit from current price of $8.37..... If Q breaks $8.20 it should fall pretty quick. I think the overall market will need to contuinue it's selloff for it to happen though.

Lye, thanks, dude! I see what you mean now. I'll be keeping an eye on it in the short term. It'll be part of my watchlist next week as a possible short

[Lyehopper]

Right HERE

The PSI is the "Peanuts Steel Index" jejejeje It is a compilation of the publicly traded companies which are directly affected by the health and direction of the steel industry. Most are producers of iron ore, or steel. Few are processors, and even fewer are suppliers.

I have all the opening prices for the year for all of these (or, in the case of KYCN.ob, I have the price at which it first traded) and to this date, the PSI is up a combined gain of 32.17% since Jan 3, 2006. Let me know if you want the prices in order to track these as well.

Here's a great metals site.... http://www.amm.com/

Here's Vector-Vest's Basic Steel Sector graph (daily) and how I see the sector retracing.

[Tatnic]

Hey Tatnic, that was a great article! Thanks for sharing. I won't tell who posted it if anyone asks.

Perfect evidence of the old saying, "the rich get richer"

Its interesting that he's starting the new 100 billion dollar fund based on a buy and hold strategy, after having such a successful fund based on just the opposite.

[billyjoe]

Peanuts Lucky 13 Results week ending 11/03/06

Not as good as last week , but he's still got more gains than losses

CLDN 19.35-18.52---4.29%
FCX 56.00- 61.15--+9.20
STLD 58.12- 59.37--+2.15
ALB 62.00-64.10--+3.39
AME 46.20- 46.11---.19
CPSS 6.59--7.17--+8.80
GSBC 30.38-29.67---2.34
PH 81.01-81.09--+.10
RLI 53.45-54.04--+1.10
RS 34.12-33.46---1.90
UNP 90.83-90.19---.70
USAP 29.90-29.71---.64
AP 33.75-31.99---5.21


-------------billyjoe

[Tatnic]

Here's a great metals site.... http://www.amm.com/

Here's Vector-Vest's Basic Steel Sector graph (daily) and how I see the sector retracing.

lye...that conference call confirmed what you've been saying lately. Its just a question of timing now.

[peanuts]

last week's results

IBD 100:
FMD $65.46
LQDT $17.88
CPA $36.46
ANST $26.09
GROW $31.94
CTCM $26.73
HWCC $23.27

CANSLIM:
AXR $67.00
CPA $36.46
UARM $46.62

Major Indices move last week: DOW: -0.86%, NAZ: -0.84%, S&P500: -0.95%

TICKER, $beginning price, $ending price, 1 week % return (positive or negative)

IBD 100:
FMD, 65.46, 65.40, -0.09%
LQDT, 17.88, 16.15, -9.68%
CPA, 36.46, 36.76, 0.82%
ANST, 26.09, 24.10, -7.63%
GROW, 31.94, 30.15, -5.60%
CTCM, 26.73, 22.64, -15.30%
HWCC, 23.27, 19.94, -14.31%
CANSLIM:
AXR, 67.00, 60.60, -9.55%
CPA, 36.46, 36.76, 0.82%
UARM, 46.62, 45.22, -3.00%

As evidence of the past week's market direction, nearly all results are in the red. Profit taking in the 3rd week of a strong earnings season may actually just be a rebalancing and readjustment of positions to reflect recent quarterly results. The market is in churn mode and currently resides at the first level of support for the major indices. If this minor pullback continues into the next week, look for major areas of support to see if the market will bounce. The failure of these support levels to hold may suggest a possible reversal confirmation of the trend established in mid-July.

This screen works really well. I've been developing a pretty good trading scheme to it, but it's a secret

[peanuts]

11/03/06 screen results

The IBD Weekly Screen

IBD 100:
GROW $30.15
EVR $35.50
FMD $65.40
CPA $36.76

CANSLIM:
UARM $45.22
CPA $36.76
GES $62.80