LAZY DOG Picks

[skiracer]

I did a review of my trades keeping in mind what ski has mentioned.

I stopped out every trade that hit –7%.

It turns out that 4 of my winning trades would have been stopped out.

I also had 6 trades that were down over 7% that I finally took a loss on that would have been stopped out early.

The result of the exercise was that if I had taken the 7% stop; I would have been money ahead.

The data shows that out of the 25 trades I would have had 10 winners; 14 losers and one break-even trade (AAPL)

My Realized gain would have gone from 15.64% to 16.51%

Another interesting piece of info is that I held my winning positions for an average of 12 weeks. I held my losers for an average of 20 weeks. Since I have been following Mr. Market his record for winners is similar. Holding for an average of 12 weeks. Holding his losers has bought that average holding period for losers up to 32 weeks and climbing.

Here’s the thing that dawned on me. By not cutting my losers quickly I am losing the opportunity to find another winner.

Based on the 25-trade sample I have; it calculates out to earning 4¢ for every dollar I put in the market. Averaging the winning and losing trades; every time I make a $10,000 trade I earn $400. If I leave that capital tied up in non-performing or losing trades I’m losing the opportunity to earn that 4¢.

Another rule I shall add: Reassess every trade after 12 weeks. Does it still meet the criteria that I require to buy the stock? If not; goodbye!!

When you exit a trade at 7% there is nothing that prevents you from a re-entry an hour later, 4 hrs. later, 1 day later, or a week later. the big thing is stopping the loss and preserving capital to last longer. You can always jump back into a play you have exited but holding on in "hope" is a losing proposition and only ties up capital that could be put into some other situation that will make you money or maybe lose another 7% perhaps. but the discipline and emotional control will pay off big time over the course of time.

[Deaddog]

I did a review of my trades keeping in mind what ski has mentioned.

I stopped out every trade that hit –7%.

It turns out that 4 of my winning trades would have been stopped out.

I also had 6 trades that were down over 7% that I finally took a loss on that would have been stopped out early.

The result of the exercise was that if I had taken the 7% stop; I would have been money ahead.

The data shows that out of the 25 trades I would have had 10 winners; 14 losers and one break-even trade (AAPL)

My Realized gain would have gone from 15.64% to 16.51%

Another interesting piece of info is that I held my winning positions for an average of 12 weeks. I held my losers for an average of 20 weeks. Since I have been following Mr. Market his record for winners is similar. Holding for an average of 12 weeks. Holding his losers has bought that average holding period for losers up to 32 weeks and climbing.

Here’s the thing that dawned on me. By not cutting my losers quickly I am losing the opportunity to find another winner.

Based on the 25-trade sample I have; it calculates out to earning 4¢ for every dollar I put in the market. Averaging the winning and losing trades; every time I make a $10,000 trade I earn $400. If I leave that capital tied up in non-performing or losing trades I’m losing the opportunity to earn that 4¢.

Another rule I shall add: Reassess every trade after 12 weeks. Does it still meet the criteria that I require to buy the stock? If not; goodbye!!

[skiracer]

It’s been almost a year since I started the Lazy Dog Portfolio. What I found was that picking stocks is simple; managing a portfolio is a lot more complicated. Now that I’m 100% cash; I reviewed my trades and the way I handled the portfolio. Here are some of the things that struck home.

What really matters is how much money you make at the end of the year.
It’s not how many winners you have in a row, or how huge an annualized return you calculate for an individual stock. Without the portfolio composition those numbers, although they look very impressive, are really meaningless.

The old Wall Street adage “Don’t confuse brains and a Bull Market” was reinforced. If the overall market is in an uptrend, the majority of the stocks will rise. If I can’t have positive returns when the market trends down or at least keep most of my money out of the market, I should be reviewing my risk management strategies.

Choosing stocks with excellent fundamentals seems like a no brainer but I’m not so sure it makes a lot of difference in a bull market. A portfolio of high momentum stocks, regardless of fundamentals, with a good risk management strategy would more than likely perform just as well. Fundies may be of some use in putting together a “Value Portfolio” where you are looking to buy undervalued stocks at a deep discount but with a momentum portfolio you are trading on hype. Again it comes down to risk management.

One thing that stands out is I had a number of stocks in my portfolio that had declined over 20%. 15 to 20% was my target so I was cutting my winners and holding my losers, not really a good thing. I have to come up with a better methodology to exit a position.

I’m not sure that having fixed stops or targets is the answer. One methodology that was suggested on another forum is to use the same criteria as you use to enter a position. Determine targets and stops when you enter the trade; when one or the other is hit; rerun your criteria as if you did not own the stock, if you would still buy the stock keep it: if not sell it.

All in all I found putting your picks and performance out on the internet has its good and bad points. I had trouble following my plan because I didn’t want to take a loss then have the stock come back. Fear of looking really dumb!!! On the plus side having to justify my decisions to someone else did help maintain discipline. Overall a positive learning experience.

having a plan beforehand is key. entry, exit or stop loss, and target or exit upon realization of pre-targetted gains is realized. this takes as much discipline and control as exiting at stop loss point. I think you are realizing and on to something that is going to become a significant factor in your trading. one other thing, dont give a shit about what others think of your trades. its your money to do with as you please. the only thing that counts is who lasts the longest, who ends up with the money, and if your pile is larger at the end of this year than at the beginning.

[Deaddog]

This old dog is going to try and simplify Mr Market’s stock picking method.

It’s been almost a year since I started the Lazy Dog Portfolio. What I found was that picking stocks is simple; managing a portfolio is a lot more complicated. Now that I’m 100% cash; I reviewed my trades and the way I handled the portfolio. Here are some of the things that struck home.

What really matters is how much money you make at the end of the year.
It’s not how many winners you have in a row, or how huge an annualized return you calculate for an individual stock. Without the portfolio composition those numbers, although they look very impressive, are really meaningless.

“Financial genius is a rising stock market…Sir John Templeton”

The old Wall Street adage “Don’t confuse brains and a Bull Market” was reinforced. If the overall market is in an uptrend, the majority of the stocks will rise. If I can’t have positive returns when the market trends down or at least keep most of my money out of the market, I should be reviewing my risk management strategies.

Choosing stocks with excellent fundamentals seems like a no brainer but I’m not so sure it makes a lot of difference in a bull market. A portfolio of high momentum stocks, regardless of fundamentals, with a good risk management strategy would more than likely perform just as well. Fundies may be of some use in putting together a “Value Portfolio” where you are looking to buy undervalued stocks at a deep discount but with a momentum portfolio you are trading on hype. Again it comes down to risk management.

One thing that stands out is I had a number of stocks in my portfolio that had declined over 20%. 15 to 20% was my target so I was cutting my winners and holding my losers, not really a good thing. I have to come up with a better methodology to exit a position.

I’m not sure that having fixed stops or targets is the answer. One methodology that was suggested on another forum is to use the same criteria as you use to enter a position. Determine targets and stops when you enter the trade; when one or the other is hit; rerun your criteria as if you did not own the stock, if you would still buy the stock keep it: if not sell it.

All in all I found putting your picks and performance out on the internet has its good and bad points. I had trouble following my plan because I didn’t want to take a loss then have the stock come back. Fear of looking really dumb!!! On the plus side having to justify my decisions to someone else did help maintain discipline. Overall a positive learning experience.

[Deaddog]

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[skiracer]

AAPL sold on stop @ 399.46
A whopping gain of 1/4%

May have bailed too early but thought that break even wasn't too bad. Had other things to do so I set hard stop.

Now 100% in cash.

I think this is a great opportunity to pick up some shares of AAPL or some options on it.

[Deaddog]

AAPL sold on stop @ 399.46
A whopping gain of 1/4%

May have bailed too early but thought that break even wasn't too bad. Had other things to do so I set hard stop.

Now 100% in cash.

[Deaddog]

Almost all gone: Sold most everything this morning: Have hard stops in on EBIX and AAPL;

Gotta go; so I'll see what the damage is this afternoon.

PS EBIX sold as I was writing this.

[Deaddog]

Looks like the new rule might take me out of the market:

HAL closed below the stop as did ACAS and TC. EBIX is now below break even: NANO is getting close. Even AAPL printed a reversal bar.

This portfolio could wind up tommorrow.

HAL was especially ugly, down over 7% on huge volume.

[Deaddog]

ATML:
Sold the rest today with a hard stop just above 10
Average selling price ended up being $10.20 for an 18% gain.

[Deaddog]

Here's a Seeking Alpha article on HAL, that you have probably seen. I'm concerned about the "punishment" re. Deepwater Horizons. Do you think it's built into the price or maybe a drop in the barrel compared to earnings, etc.? Ugly chart -- but bottom fishing may be good here.

RB:
The way I see it any time we get to read a blurb about a stock it’s already priced in. I rarely look at the news. I’m basically a price action trader.

HAL showed up on one of my fundamental scans and I thought that the price action warranted a shot. The sell off on high volume Aug 16 th to the 22nd and the recovery suggested a floor. It was tested again on high volume on Sept 14th. It didn’t make a new low and closed the day near the high again suggesting that there are interested buyers sitting at the $38 range. We’ll see how it plays out.

It’s testing the lows again today and they seem to be holding. I’m prepared to fold my hand quickly if I’m wrong.

[riverbabe]

This morning I bought AAPL and HAL

AAPL @ 398.47; Stop @ 370.50.

HAL @ 38.29 Stop @ 36.00

AAPL keeps showing up on all my scans. I have been ignoring it because of the high price. (By high I mean I’m used to buying stocks valued from $5 to $100). So it finally sunk in; I don’t have to buy 100 shares. If I want I can buy 25 shares. So AAPL is now in the portfolio.

HAL: Bottom Fishing here; Testing the lows again. Has all the fundies I look for. ROE over 20, Profit margin Over 10, reasonable debt load, and a PEG ratio under 1.

Congrats on AAPL! Here's a Seeking Alpha article on HAL, that you have probably seen. I'm concerned about the "punishment" re. Deepwater Horizons. Do you think it's built into the price or maybe a drop in the barrel compared to earnings, etc.? Ugly chart -- but bottom fishing may be good here.

http://seekingalpha.com/article/294468-5-stocks-primed-for-gains-in-the-coming-quarter?source=yahoo

"Halliburton Company (HAL) was down a bit last Friday, as fallout from the Deepwater Horizon oil spill continues to affect this stock. Now it appears that the U.S. will punish the company for the oil spill, along with BP (BP) and Transocean (RIG). The problem for Halliburton is that it mixed the cement for the well in question. Regardless, analysts like Halliburton now because of the immense amount of products and services it provides during oil operations. This is especially important because of the one-stop shopping that oil companies do now. Its presence at the Bakken and the Eagle Ford is also duly noted here. On the other hand, Halliburton is certainly at risk if the U.S. goes into another recession. Even if it doesn’t, the company’s margins may not improve very much. Gross margin for the company is 19.11% and operating margin is 17.88%. This is pretty strong compared with companies like Baker Hughes (BHI), Schlumberger (SLB), and Technip (TKPPY.PK). As for measures like price to earnings, price to sales, and price/earnings to growth, Halliburton falls about in the middle of these other companies. Cash flow for Halliburton has been mixed: $684 million flowed out of the company during 2010, and $40 million flowed during the first half of 2011."

[Deaddog]

This morning I bought AAPL and HAL

AAPL @ 398.47; Stop @ 370.50.

HAL @ 38.29 Stop @ 36.00

AAPL keeps showing up on all my scans. I have been ignoring it because of the high price. (By high I mean I’m used to buying stocks valued from $5 to $100). So it finally sunk in; I don’t have to buy 100 shares. If I want I can buy 25 shares. So AAPL is now in the portfolio.

HAL: Bottom Fishing here; Testing the lows again. Has all the fundies I look for. ROE over 20, Profit margin Over 10, reasonable debt load, and a PEG ratio under 1.

[Deaddog]

it is so important to understand yourself and what you want to accompolish and how to get to that goal. not many traders ever reach that point of discipline.

I'm working on it

[skiracer]

everyone looks at it differently. Ernie certainly has his own methodolgy and him and I have discussed the differences in our strategies numerous times. but that has no bearing on what you do for yourself. you must seek out the plan that fits your personality and that you feel the most comfortable with. you could both trade the same stock and come out with much different results depending on the timing and your strategy. one thing about Ernie is that he has a plan and he sticks to it so you have to respect that regardless if it works or doesnt work for you. it is so important to understand yourself and what you want to accompolish and how to get to that goal. not many traders ever reach that point of discipline.