Test Portfolios

[Guest]

Hey guys. I've been around the website for a year now, and finally ready to get active. I'll be running some paper money portfolios at marketocracy based on mrmarket/karel and other gurus. Through all the data and strategies, I hope to find some good ideas for my real money trading. I'm open about all different styles as long as they work. Let's make some money.

[TraderPlayerPerson]

Update

Here is the first update for the funds. I'll be managing 9 paper money funds(5 long 4 short, and 2 real money accounts. I'm only going to update 2 paper funds here that are the most MrMarket themed. I might also update my personal account here once in a while.

MrM/Karel Fund:
In this fund I run a Finviz.com Screener similar to MrMarket//Karel's criteria. I look for stocks with a reasonable p/e, reasonable growth rate and consistency of earnings, yearly performance at least as good as the indices, and 0-10% below their 52 week high, or making a new high.

2 weeks ago on Monday I started the fund again by buying HITK. This past week I added ATRO on monday and MA on wednesday. This week I like DLTR and ATRI. I'll be adding them next week. I haven't felt comfortable staying in the market with this fund in recent months, but I've been trying to get back in.

Zweig Fund:
This fund is based on methods from MrMarket's fellow Wharton grad Martin Zweig. The most important aspect is market timing through statistically proven data. Among these are interest rates, Fed policy, seasonality, market action, and sentiment.

I've been waiting a few weeks for some fed catalyst or market crash to begin the fund. I was glad to see the news of Central Banks easing this past week, especially China's move for lower interest rates and reserve requirements. Along with the recent spikes in Bearish sentiment I track, this seemed like a good signal to put some money to work. Also, the seasonality doesn't get much better than this. December has seasonally been the best month for the market, and we are in a pre-election year going into election year which is bullish as well.

With this combination of elements, and recent positive market action, I've put the fund from 0% invested to 80% this past week. For individual stocks, I used the same screener as the MrM/Karel fund. I added FXI SPY QQQ ATRI ATRO HITK DLTR DIQ MA ROST THI TGI.

Real Money: I was mimicking my MrM fund with real money until July 27th. Since then, I've only been trading a few setups with 10% of my money.This past week I increased from 10% invested to 50% invested. I own market indice etfs in 1 account, and some mutual funds in another. I feel like anything crash-wise will be postponed until after the elections next year. I also feel like a good technical low has been placed, and I like the central bank stimulus theme announced this week.

[TraderPlayerPerson]

Update 2

MrM/Karel Fund: I added DLTR and ATRI this past monday. I really disliked the high volume reversal on HITK so I sold half the position after it closed down 10% on earnings. I still like the long term pattern in HITK but after that reversal I think it'll base for a while and I can get it back at a better time. For next week I like WCN(although it looks like it might be starting a longer term base) and BIIB. I'll add them sometime next week.

Zweig Fund: I added DECK PII and HLF on the down days during the week. I like their brand name appeals so I don't mind the slightly higher p/e's. According to their trading pattern I felt I could buy those 3 and use around 10% stop losses. I also trimmed HITK in half for the same reason as my other paper fund. Last week I accidently wrote DIQ as a holding when I meant DIA. The position sizes for individual stocks are all 5% for these two funds.

I became worried about the money in my accounts after reading some articles concerning the "rehypothecation" mess at MF Global. Many have suggested to get out of all paper assets, and that the money in our brokerages or mutual funds might not even be there. If anyone here can explain what is happening and what it means for us, I think that would be pretty HUGE. So can YOU explain this? You? YOu??YOU?!!

[Louetta]

...snip...

I became worried about the money in my accounts after reading some articles concerning the "rehypothecation" mess at MF Global. Many have suggested to get out of all paper assets, and that the money in our brokerages or mutual funds might not even be there. If anyone here can explain what is happening and what it means for us, I think that would be pretty HUGE. So can YOU explain this? You? YOu??YOU?!!

Well, there may be Communists under our beds too. It is possible that you might be doing business with people who are breaking the law or who just make bad investments. Lots of people did business for years with Bernie Madoff and their money disappeared. Lehman Brothers was 158 years old when they went under. Lehman might not have been crooked like Madoff but just took too many chances. I think that's what happened with MF but I don't know. I think about all you can do is put your eggs in a variety of baskets. Use a couple of brokerage accounts, a couple of banks, buy a house. Banks are among the worst rehypothecators. Put $10 in and they will promptly loan out nine of your dollars. But nobody worries about it that I know of. I'm a lot more worried about European debt than MF clones.

[TraderPlayerPerson]

Update 3

Louetta - I just hope our financial system stays alive long enough for us to make $$ on some stocks.

Anyways, it's alot more fun updating when the market is going your way. But like a wise man often says, if you wanna be here for the good times, you gotta be here all the time.

MrM/Karel Fund: This past week I added WCN and BIIB as planned. The fund has been holding up well thanks to a slow scale in, and also because of the picks themselves. I won't add anything for next week because the market is acting shaky lately.

Zweig Fund: This fund has slid along with the market. I sold half of DECK as it sliced through my mental stop loss. I'll sell the other half of it next week. THI is sitting right below my stop area, so I'll sell half on monday and keep a close eye on it. PII and HLF are also on a tight leash. The rest are acting fine for now.

Real Money: I went from 50% invested to 30% after Tuesday's selloff. I don't expect anything worse in December, but I'd rather play it safe and trim my position. January hasn't been good in recent years, so I don't expect to be invested unless the market action improves dramatically.

I'm on vacation with the family, hence the late update this week. It's nice to get away once in a while. Hopefully the markets will be better next week. Happy Holidays.

[TraderPlayerPerson]

Update 4

I hope everyone is resting well over the holidays. Thankfully the markets were up a bit last week.

MrM/Karel Fund: Like I mentioned last week I don't like the momentum/action in the market enough to be adding new names to this fund for now. I do like HUM for a pick here but won't be doing anything next week either. Although the indices have rallied some this past week, I noticed most individual names I track didn't do much, or instead trended lower.

Zweig Fund: I made a few changes in this fund last week. I sold the rest of the shares in DECK as well as half the shares in THI, PII, and HLF. I also considered making this a stock only fund, and ultimately did sell FXI SPY DIA and QQQ. The weakness in many of the stocks I sold has me skeptical of the market rally.

Real Money: I haven't done anything this week. I don't like the "feel" of the market at all, and I'm planning on selling everything after the holiday season. I see this as the perfect opportunity for "them/they" to dump with everyone overjoyed from celebrating new years. The same image of people celebrating in the streets (after Osama Bin Laden was announced dead) comes to my mind, and that marked the market top in May. I'm also looking into putting on a long/short trade to weather the possible selloff. Currently my idea is to go long HUM and go short MAR, but I haven't decided yet.

Anyways, I look forward to sharing my thoughts in the new year. See everyone then!

[Row]

Louetta - I just hope our financial system stays alive long enough for us to make $$ on some stocks.

The death of our financial system will render your stock profits pretty much worthless, so, why worry. Once you understand how to make money, you will be miles ahead of those who don't.

[TraderPlayerPerson]

Update 5

Row - I think I understand what you mean. We shouldn't just be thinking how to make money buying stocks. We should be thinking how to make money in general. When stocks weren't around, there were still investors making $$ with good decisions. Maybe stocks aren't the best place to be in the next few years.

From what I've gathered on the forums, MrMarket does not have all his money in a stock account and for his method. He also invests in real estate, sports gambling, other stock strategies, etc. MrMarket is diversified. MrMarket understands how to make money. MrMarket is huge. But this board is mostly for stocks, so I'll keep writing about them.

MrM/Karel Fund: Somehow this fund is doing pretty good while only being 32% invested. I didn't add anything last week, and I'm still worried about January as a whole, so I won't add anything this week.

Zweig Fund: No news last week for this fund either. I regret deciding to make this a stock only fund at the worst possible time - right when the indices started their holiday rally. This took the fund from 100% to 42% invested. Although I think the seasonality is poor this month, I'll wait for weakness in the indices/my stocks before I sell anything else.

Real Money: I've ridden out the holiday season for the most part. Today is the day I'm scheduled to sell, so luckily the market is having a decent rally.

I don't feel very good about January or 2012. There are many problems in the real world that should cause trouble for the market - eventually. I think buying stocks now with the idea of holding for a few months is like driving in the fog while knowing there is a huge cliff somewhere ahead. I'll keep looking for individual ideas and some seasonal plays, but plan to stay in cash for most of 2012.

Happy New Year everyone.

[billyjoe]

Trader,
Please make another pick. CWCO's dividend is below 3.5%.

--------------billy

[TraderPlayerPerson]

Update 6

Another late update! This week's excuse: I am unexpectedly travelling for another 3 months, so I've been busy getting set up with my papers and host family. Also, I'm not very interested in the market right now because it feels like a stale market. Now, on to the updates!

MrMarket/Karel Fund: I had some serious thoughts about selling the holdings in this fund last week, but I decided that's not very MrM like. I've been thinking of a way to manage this fund easier since I have no specific targets for taking gains. I've already got the habit of cutting losses into my brain, so I think I'll need a more mechanical approach to managing this fund. I think I've got the solution. Way back in the day, Karel "backtested" a portfolio of MrMarket picks using 10% position sizes, a 15% sell target, and a maximum 6 weeks holding period. This sounds like a simple and reasonable way to manage this Fund. I'll pick 1-2 stocks each week for 10% of the portfolio, and use a 15% gain or 6 weeks sell rule. With this new strategy in mind, I'll sell the holdings next week and replace them with one or two fresh 10% picks.

Zweig Fund: Despite my calls for selling on weakness, I couldn't resist selling all the holdings last Monday. I just don't see anything constructive in the market right now. No new picks or plans for this week.

Real Money: Still in cash. My thoughts haven't changed much from last week. No plans for anything this month. I think I'll be paying more attention to the elections and races than the market for a few months.

[skiracer]

Another late update! This week's excuse: I am unexpectedly travelling for another 3 months, so I've been busy getting set up with my papers and host family. Also, I'm not very interested in the market right now because it feels like a stale market. Now, on to the updates!

MrMarket/Karel Fund: I had some serious thoughts about selling the holdings in this fund last week, but I decided that's not very MrM like. I've been thinking of a way to manage this fund easier since I have no specific targets for taking gains. I've already got the habit of cutting losses into my brain, so I think I'll need a more mechanical approach to managing this fund. I think I've got the solution. Way back in the day, Karel "backtested" a portfolio of MrMarket picks using 10% position sizes, a 15% sell target, and a maximum 6 weeks holding period. This sounds like a simple and reasonable way to manage this Fund. I'll pick 1-2 stocks each week for 10% of the portfolio, and use a 15% gain or 6 weeks sell rule. With this new strategy in mind, I'll sell the holdings next week and replace them with one or two fresh 10% picks.

Zweig Fund: Despite my calls for selling on weakness, I couldn't resist selling all the holdings last Monday. I just don't see anything constructive in the market right now. No new picks or plans for this week.

Real Money: Still in cash. My thoughts haven't changed much from last week. No plans for anything this month. I think I'll be paying more attention to the elections and races than the market for a few months.

I dont think you really have a plan or a strategy in effect. you seem to be flitting around on the news and events. your comment regarding "staying out of the market for a few months" seems to place unnecessary limitations on yourself and the opportunities that are always available regardless of the economic circumstances. Players always play but dont necessarily "gamble". Players look for opportunities and are always in the markets, on top of the markets, and are only out when there are no real opportunities that fit their strategies. I dont think you are a player yet and you should rethink your plan and strategy.

[peanuts]

I dont think you really have a plan or a strategy in effect. you seem to be flitting around on the news and events. your comment regarding "staying out of the market for a few months" seems to place unnecessary limitations on yourself and the opportunities that are always available regardless of the economic circumstances. Players always play but dont necessarily "gamble". Players look for opportunities and are always in the markets, on top of the markets, and are only out when there are no real opportunities that fit their strategies. I dont think you are a player yet and you should rethink your plan and strategy.

+1

in addendum: Even if it was a stale market, you can still make money selling covered calls on index ETFs.

[TraderPlayerPerson]

Update 7

skiracer: I think I've been in the process of switching from trading almost purely on charts, to trading more on fundamentals. Lately I've been reading alot about value investing and hopefully learning some things. The past few weeks I started my update with a detailed history of what brought me to this point as an investor, but I feel it's too tiresome for everyone to read. So just know I'm in the process of going from trading shorter timeframes with technical analysis, to trading longer timeframes with fundamental analysis and some common sense "chart reading." Everyone finds their own path in life, and I think it's the same in their choice of investing style.

peanuts: I'm not saying there isn't a way to make money everyday or anytime this year, rather I don't think it's a great opportunity for me to be buying stocks in terms of reward to the upside compared to possible disaster on the downside. I think we can agree this "bull market" has had a good run and there are big problems in the real world that should take their toll on market prices. Like I mentioned to skiracer, I'm thinking on a longer timeframe now, and besides I'm not a fulltime trader.

MrMarket/Karel Fund: I've been trying to find a reasonable way to make the decisions for this fund. I had to ask myself: why should I choose 6 weeks? why 15%? what time frame do I use for relative strength? and how in depth should I go into each pick? I think a full quarter makes more sense than 6 weeks, because the the fundamentals might change during the reported quarter. MrMarket says he doesn't try to time the market, but rather stops making picks when the momentum has left. With this idea in mind, I'm thinking to pick 14 stocks from a screen and update them every quarter or every once in a while. I'll want their earnings to be at least stable or possibly growing over the years. For the relative strength, I think 3 months minimum is a must. I'll look at a chart of the market over the past year and determine key highs and lows, and judge if a stock outperformed at these times.

*4 hours later...*

I've done some decent work by hand today to come up with 19 possible candidates to start this next experiment. They've been chosen on the stability of their earnings, valuation, relative strength, liquidity, and other criteria using my head(like darling status, company size, sector/industry etc). I'd appreciate any feedback on these(praise, critisicm, alternative picks, help with selecting, anything!) I'm not trying to get people more involved just to have a popular thread and feed my ego, but rather to improve the selection of picks going forward. Now then. Behold! The first 19 candidates for this strategy:

AVT,ENS,CW,MOH,JEC,CVS,INT,WOOF,BECN,AIT,
SXT,UGP,CBE,ALB,NEU,CSCO,MSFT,GRMN,CMN

Zweig Fund: After some thinking, I'll just run one fund. 9 was a bit ambitious, and I've been very busy lately. This gives me the chance to focus more attention and go into more detail on my picks.

Real Money: I've been travelling a bit through central and south america, possibly looking for some farmland. The weather here is very hot during the day and very cold at night. There are many things to do and I've been having a wonderful time. I can speak spanish and have some connections here, so there are better sources to help me find a good deal than in the U.S. Next week, I might be taking a four hour drive to investigate volunteer work at one of the family owned farms there. I've also taken a very small and practically meaningless position in GLD and SLV, literally on the day of the low(!), after reading many positive things online at the time. And because every technician was saying gold is in a bear market now. I was hoping they would go down much more to buy at lower prices, so I'm just waiting for now. I still refuse to buy any stocks for a while, and am determined not to get in at higher prices because of momentum and fear of being left behind. Things might hold up for the elections but I am stubborn in my beliefs right now. I would rather wait for the next big bear to start picking up shares. A little patience never hurt, right?

Thanks for the feedback everyone! I don't get many responses in my thread, and I want to gladly accept any comments or criticism. I'm not claiming to be an expert on anything financial yet. In fact, I feel I'm very new to the game(2010). I'm excited to be part of this community, and learning (not copying!) from many here. Thanks MrMarket for this great environment. You are Huge! http://www.youtube.com/watch?v=DXRaboSo70A

[Deaddog]

What fundamental criteria are you using?

[TraderPlayerPerson]

RM Update

Hello gang. I just wanted to let you know I'm shorting financials and emerging markets today. I'm shorting the XLF and EEM. To me it looks like a logical time to start shorting these areas after their rally from the lows last year. For those of you interested in individual stock shorts, I would recommend to look into some of these:

major us financial banks(JPM BAC WFC C MS etc), residential construction stocks(LEN DHI etc. some of the others have already fallen back down), cloud stocks (CRM VMW FFIV). I think these are some good areas to short at these levels. zoom out to monthly charts and look into their numbers. Use your head and good luck!