I can be Huge too

[antioch6]

This is the thread for my Mr. Market inspired stock picking method. It's the second weapon in my stock trading arsenal, after my longer term trades thread. These picks won't try to rely on general market timing, but more on outperforming markets through a mostly quantitative model. Here is the first "dump":

PKBK,AMIC,EIG,SMFG,AWH,CVLY,SLM,MNRK,DIT,NWLI,VSEC ,CWBC,NNI,XLS,NICK,TRW,WDC,SMBC,UVE,AFL,DNBF,MTU,E VBN,FITB,HBNC,PFBI,ESLT,TSH,SAI,LLL,COP,VSR,PNC,AT K,ACU,NOC,DLX,SKM,TCAP,RTN,NRIM,SPAN,MBVT,SFG,OLBK ,PL,AER,GLW,LMT,AFSI

[mrmarket]

Antioch..looks great. What are the key screen ingredients?

[mrmarket]

I like SPAN

[antioch6]

I use a basic FINVIZ.com screen for relative strength and valuation vs the market as a whole.

First I enter DIA SPY QQQ IWM in the screener to check the chart and performance.Then I use multpl.com to get an idea what the market P/E is.
I screen again filtering for stocks only, ttm P/E of under 50, 6 months and/or 12 months performance at least as good as the market. I also may or may not (depending how many stocks I get and where the market is) use 200 day moving average and 50 day moving average, new highs or 0-10% below 52 week highs.
I list them from lowest P/E to highest in the screener, then put them on a monthly Chart view. If I like the chart, I enter the stock symbol into Morningstar.com and check their annual restated earnings history for the past few years.
If I consider their earnings stable/growing/improving in a somewhat predictable manner, I judge what they should reasonably and conservatively earn over the next 12 months. I use this estimate to come up with my own current P/E for the company. If this P/E is attractive or reasonable considering the annual earnings trend, I include that stock into the dump you see above. After I have a decent number of stocks to work with (30-90, remember I look at each one by hand), I take a closer look at each one and consider what industry they are in, why they're stock might be more likely to go up than another on my list, etc. Basically what Mr. Market means when he says "Use your noodle."
Finally, I pick one or a few of the stocks from my list and go earn my profits. I don't have a goal where to sell my stocks using this method. I prefer to simply give my stocks time and a regular checkup a few times a year. Then I might replace them or sell them if something changes with the company or their P/E gets too high. I haven't picked what to buy for tomorrow, but seeing the large number of regional banks and aerospace/defense stocks in my screen, I will pick at least one stock from each group.

[antioch6]

I'm waiting a few days before making my decision to buy. My candidates so far are LMT, ATK, RTN, FITB, NRIM, MBVT.

[mrmarket]

I use a basic FINVIZ.com screen for relative strength and valuation vs the market as a whole.

First I enter DIA SPY QQQ IWM in the screener to check the chart and performance.Then I use multpl.com to get an idea what the market P/E is.
I screen again filtering for stocks only, ttm P/E of under 50, 6 months and/or 12 months performance at least as good as the market. I also may or may not (depending how many stocks I get and where the market is) use 200 day moving average and 50 day moving average, new highs or 0-10% below 52 week highs.
I list them from lowest P/E to highest in the screener, then put them on a monthly Chart view. If I like the chart, I enter the stock symbol into Morningstar.com and check their annual restated earnings history for the past few years.
If I consider their earnings stable/growing/improving in a somewhat predictable manner, I judge what they should reasonably and conservatively earn over the next 12 months. I use this estimate to come up with my own current P/E for the company. If this P/E is attractive or reasonable considering the annual earnings trend, I include that stock into the dump you see above. After I have a decent number of stocks to work with (30-90, remember I look at each one by hand), I take a closer look at each one and consider what industry they are in, why they're stock might be more likely to go up than another on my list, etc. Basically what Mr. Market means when he says "Use your noodle."
Finally, I pick one or a few of the stocks from my list and go earn my profits. I don't have a goal where to sell my stocks using this method. I prefer to simply give my stocks time and a regular checkup a few times a year. Then I might replace them or sell them if something changes with the company or their P/E gets too high. I haven't picked what to buy for tomorrow, but seeing the large number of regional banks and aerospace/defense stocks in my screen, I will pick at least one stock from each group.

Looks like a great system..please share your winners with us on this thread!

[antioch6]

Today I bought KRE at 36.84, and LMT at 123.65

[Deaddog]

A couple questions if I may;
Do you have targets?
Do you have risk control?
How long will you hold a non performing stock?

[antioch6]

Woah! I typed out a long reply then hit "Replay to Thread". This deleted my message and made me start over hahaha.

Do you have targets?
When the P/E gets too high after gains, or there is a better stock to replace it.

Do you have risk control?
I add more money to my accounts every year, buy companies with a reasonable valuation, and diversify among several. Also I have other strategies in case the market crashes or there is a downturn like in 2008.

How long will you hold a non performing stock?
That depends why it isn't performing. If something has changed because of regulations or the industry trend or new management I might consider selling at a loss. If the stock price is down and the company keeps making money with nothing else changed, the stock is a better value and I will consider buying more.

[Deaddog]

Do you have risk control?
Also I have other strategies in case the market crashes or there is a downturn like in 2008.

Can you give a little more detail on these strategies? I’m always looking for a better way to protect my capital in a bear market.

[antioch6]

A little more detail on these strategies? It's nothing too complicated. One part of my portfolio is dedicated to finding cheap companies and buying them when they're out of favor. this reduces the downside in a bear market because these stocks have already gone through most of their selling, so any further market related selling would be limited compared to most stocks. The simplest way I protect my capital in a bear market is keeping plenty of cash with the sole purpose to buy stocks during a market crash. Since I'm only 23, I can afford to wait patiently with 50-75% cash for another great opportunity to buy stocks at a real discount. According to value investing, this should happen around the time the s&p trades at 6-7 P/E ratio, and according to market history that should end the long term bear market started in 2000.

[Deaddog]

A little more detail on these strategies? It's nothing too complicated. One part of my portfolio is dedicated to finding cheap companies and buying them when they're out of favor. this reduces the downside in a bear market because these stocks have already gone through most of their selling, so any further market related selling would be limited compared to most stocks. The simplest way I protect my capital in a bear market is keeping plenty of cash with the sole purpose to buy stocks during a market crash. Since I'm only 23, I can afford to wait patiently with 50-75% cash for another great opportunity to buy stocks at a real discount. According to value investing, this should happen around the time the s&p trades at 6-7 P/E ratio, and according to market history that should end the long term bear market started in 2000.

I got a few years on you; I’m in the distribution stage of my investing career and that’s why I’m looking to preserve capital.

Your strategy is an excellent strategy!! Value investing is what Buffet does.

However that’s not what you are doing with your 2 recent picks.
S&P P/E is about 16 (that’s what yahoo says for SPY) and the 2 stocks are near their 52-week highs after a bull run that is over 4 years old.

Your thinking is right that you should wait for the inevitable downturn then get fully invested.

Having spent some of my misspent youth on a farm I know enough not to chase a tired Bull, he’ll eventually turn on you and you could be in for a world of hurt if you don’t have somewhere safe to hide.

Do you have an exit strategy for the two stocks you just bought?

[antioch6]

I bought LMT and KRE through my Mr. Market type strategy. If the overall market stays afloat these should outperform. Together they make up 5% of my money. Not too much since I'm expecting the market to pullback the next few weeks. My long term stocks thread is my value investing/large upside strategy thread. This one is for a quantitative mechanical strategy that finds outperforming stocks. The market does look high with a P/E around 18-24. I'm trying to get 20-25% invested with this strategy because eking out a few percent a year is better than losing a few percent in cash or bonds to inflation. When the market does finally crash, even if all my stocks go down 80-90% and I'm 25% invested, I still have 78% of my original money to start buying stocks dirt cheap with huge upside. I'm posting every single trade I do and why I do it. Maybe now I'll include how big my positions are. It would be different if I had 50% of my money in LMT and KRE instead of 5%.

[Deaddog]

So you don't have an exit strategy. Just a little advice from an old fart who's been thru bear and bull markets; you should have a plan on how you will handle the stock going up or down. You can't control the markets but you can control how you react to what the market does.

As for posting your positions I encourage you to do that. Not in dollar amounts, but as a percentage of your capital. I tried to get Mr Market to do that but he was very reluctant to reveal how he managed his accounts.

When I posted my trades I posted the amount I had at risk as a percentage of my capital. This amount wasn't the percentage of capital I had invested but the % of capital I was willing to lose before I sold and realized my loss. I also posted realized gain or loss as a percentage of capital.

Good luck with your journal.

[tiedyed1]

I tried to get Mr Market to do that but he was very reluctant to reveal how he managed his accounts.

I have been enjoying this stimulating ride, along with sharing the finest meats and cheeses, dating back to the IBD bulletin board days; and while not looking to speak out of place here, did want to stress my opinion concerning this statement.

As clearly stated, the Mr. Market picks should not be misconstrued as representing individual buy or sell recommendations and should not be viewed as such.

He shares his system, clearly defined, for a very focused goal and thoroughly enjoys the track record of his results.
None of this reflects factors such as diversification, management of individual portfolio or overall accounts, etc, etc.

Personally speaking, I read the opinions of Mr. Market and other excellent members on here and will take that reading, conduct my own due diligence, and then, when I feel appropriate, choose to adjust my investment portfolio
accordingly.

-Adam
tiedyed1