Karel's Marketocracy Fund

[Karel]

No new top 3!

Updating the last three weeks.

BTW, I have relaxed my criteria to get back into the game earlier (for better or for worse): I am now looking for a 6 month performance of 25% or better on my blocked screen, instead of a 12 month performance of 50% or better.

For the week ending 11/28:

IWM: 16.53 (+16.5%; -37.7%)
SPY: 16.94 (+13.3%; -38.4%)
QQQQ: 16.65 (+9.2%; -43.1%)
QHF-: 15.21 (+12.4%; -49.7%)
QHF: 13.09 (+13.4%; -61.3%)

For the week ending 12/05:

IWM: 16.10 (-2.6%; -39.3%)
SPY: 16.53 (-2.4%; -39.9%)
QQQQ: 16.55 (-0.6%; -43.5%)
QHF-: 14.18 (-6.7%; -53.1%)
QHF: 11.68 (-10.8%; -65.5%)

For the week ending 12/12:

IWM: 16.38 (+1.7%; -38.2%)
SPY: 16.73 (+1.2%; -39.1%)
QQQQ: 16.97 (+2.5%; -42.0%)
QHF-: 14.98 (+5.6%; -50.5%)
QHF: 13.11 (+12.2%; -61.2%)

Volatile is the word. But we seem to be better than 3 weeks ago. Are we climbing the wall of worry again? Perhaps too early to tell.

Regards,

Karel

[Karel]

No new top 3!

Although there is no new pick in sight, this is no reason to stop updating my funds, although there is not much fun and even less profit here. I would like to explain about the "no picks" mantra you here from me. I use two sets of filters for my stocks, and especially one of them shows only a handful of stocks. That is not enough for a longlist, so I am taking this as a signal to sit things out. In hindsight, perhaps I could have used it as a signal to go cash, but that would seem to be too late now. And as I did not report, I cannot see what the result would have been, and if the decision would have made sense at the time, as opposed to in hindsight.

The results for the period since the last report are moderately awful. No green for best performer this time, just red for most awful:

SPY: 14.95 (-34.2%; -45.6%)
IWM: 14.19 (-42.5%; -46.5%)
QQQQ: 15.25 (-35.1%; -47.9%)
QHF-: 13.54 (-40.1%; -55.2%)
QHF: 11.54 (-50.6%; -65.9%)

BTW, and for what it is worth, the one stock consistently showing up is QCOR!

Regards,

Karel

[Karel]

No new top 3!

This week I have the same news as last week: when I ran the screens, they turned up only a handful of stocks. The weekly update shows the Russell 2000 on fire:

IWM: 26.19 (+3.8%; -1.2%)
SPY: 23.33 (-1.6%; -15.1%)
QQQQ: 24.53 (-1.2%; -16.2%)
QHF-: 24.49 (+1.8%; -19.0%)
QHF: 26.11 (+0.8%; -22.8%)

Hall of fame: LNN +19.2%, POT +8.1%, APA +7.8%
Hall of shame: EXM -6.4%, CLF -6.4%, AAPL -5.4%

We do need a new pick for our fund, but there is nothing to choose from, so this week is, again, a pass.

QHF Closed Trades (no changes)
Winners: 48, avg +71.1%
Losers: 28, avg -22.6%
Total: 76, avg +36.6%

Regards,

Karel

[Karel]

No new top 3!

When I ran the screens, they turned up only a handful of stocks. That should be indicative of something or other, I suppose... But I can still give the weekly update (numbers from the Friday close):

IWM: 25.23 (+0.8%; -4.9%)
SPY: 23.70 (+1.3%; -13.8%)
QQQQ: 24.83 (-0.0%; -15.2%)
QHF-: 24.05 (-1.4%; -20.5%)
QHF: 25.89 (-0.6%; -23.4%)

Nothing to be proud of here.

Hall of fame: MTL +7.8%, ATW 6.6%, RIO 3.1%
Hall of shame: BUCY -9.2%, AAPL -7.0%, EXM -7.0%

We do need a new pick for our fund, but there is nothing to choose from, so this week is a pass.

Last week RIG was sold for 124.34, a disappointing -9.8% loss in almost 8 months. URBN was bought at 38.16.

Last week the baseline fund, QHF-, sold HIL, APWR and WDC for an average loss of -13.8%, for a total average of +4.5% over the 140 reported sells. No stocks were over 15% positive, so we still have 37 stocks that reached 15% or more. This week we have no replacements.

QHF Closed Trades
Winners: 48, avg +71.1%
Losers: 28, avg -22.6%
Total: 76, avg +36.6%

Regards,

Karel

[Karel]

New Top 3: MANT, URBN and CRMT

After almost two months absence I return to clear the debris. Things look rather ugly. My funds dropped from the top to the bottom of the list. The percentages are for 8 weeks and YTD:

IWM: 25.02 (+6.5%; -5.7%)
SPY: 23.39 (+0.4%; -14.9%)
QQQQ: 24.84 (-2.5%; -15.2%)
QHF-: 24.41 (-17.8%; -19.3%)
QHF: 26.05 (-23.0%; -23.0%)

No halls of fame and shame for the week, but to give an indication of the past 8 weeks:

• All stocks (15) show a loss
• All but two stocks show double digit losses
• Ten stocks show a loss of worse than -20%
• Four stocks show a loss of worse than -30%, with MTL at -50%

The new Top 3 are MANT, URBN and CRMT. Do we need a new pick for our fund? Yes, rather. All stocks are up for selling. I am only going to replace one at a time however. It is not a good idea to restock the portfolio with stocks picked too close together. I sold RIG yesterday, and replaced it with URBN.

At July 14 the baseline fund, QHF-, sold DNR, RIG and KWK for an average loss of -3.3%, for a total average of +4.9% over the 137 reported sells. No stocks were positive, so we have still 37 stocks that reached 15% or more. This week HIL, APWR and WDC will be replaced by MANT, URBN and CRMT.

QHF Closed Trades (no change)
Winners: 48, avg +71.1%
Losers: 27, avg -23.1%
Total: 75, avg +37.2%

Regards,

Karel

[billb]

It's a loop inside the macro, change it to however many you want.

billb, thanks much for sharing your r^2 calculator.

How can I modify the spreadsheet to increase from 10 stocks to say 100?

Thanks.

[spikefader]

Thanks for clarifying the rules a bit. Obviously there is some subjectiveness here that I'll need to account for on my own. I'm sure I'll get the hang of it.

I've attached the spreadsheet. I put the "automatic" calcs on a separate page. The top 3 I came up with for this week were AXYS, ZEUS and CSIQ. I'd be curious to know if your manual process turns up the same results.

Also, I was able to save it in "compatibility" mode, so hopefully it will work with Excel 2003. Remember to enable macros.

billb, thanks much for sharing your r^2 calculator.

How can I modify the spreadsheet to increase from 10 stocks to say 100?

Thanks.

[Karel]

I am suddenly (almost) completely swamped in work (not a bad thing!), so no show here.

Sorry billb, I'll get back to you!

Regards,

Karel

[billb]

Thanks for clarifying the rules a bit. Obviously there is some subjectiveness here that I'll need to account for on my own. I'm sure I'll get the hang of it.

I've attached the spreadsheet. I put the "automatic" calcs on a separate page. The top 3 I came up with for this week were AXYS, ZEUS and CSIQ. I'd be curious to know if your manual process turns up the same results.

Also, I was able to save it in "compatibility" mode, so hopefully it will work with Excel 2003. Remember to enable macros.

[Karel]

Karel,
Thanks for all that you do here. I really like what I'm seeing and would like to try and mimic you a bit.

It wasn't real clear to me exactly what your sell rules are. From the profit side, are you looking at 15% to take a profit or something arbitrary? From the loss side, are you just reviewing it each week and after a stock crosses a certain loss threshold, you're dumping and replacing? What is this threshold or is it arbitrary as well?

My official sell rule is "stalling". I recorded the weekly close of a stock and if that close is at least 5% higher than the buy price or the last high weekly close, that price becomes the (new) last high weekly close. If there is no new LHWC in the course of three months, the stock is sold.

I also have a mental stop loss rule: when a stock drops more than 20% (from the buy price or LHWC), it is a candidate for selling anyway. But just a candidate; I might hold because of a good earnings report, or because the dip (or the stalling!) looks to be only temporary. I then mark the stock as being in a grace period; it can get absolution only once.

The logic behind the sell rules is that I don't have much idea of Due Diligence. I couldn't write a report like $$$Mr. Market$$$'s to save my life. I therefore decided to watch the momentum of the stock more strictly than he does. That is also why I decided not to sell at 15%, because these sell rules would almost certainly hurt my results when I sell at 15%, so I need some compensation on the upside.

I wanted to give a little back. I updated your original spreadsheet to automatically download 1 year's worth of pricing information from Yahoo and automatically calculate the R^2. Note: I saved it in Excel 2007 format, but if you or anyone else is interested, let me know.

I would like that! I am pretty fast with the manual procedure, but faster is better. I have Office 2003.

Regards,

Karel

[billb]

Sell rules

Karel,
Thanks for all that you do here. I really like what I'm seeing and would like to try and mimic you a bit.

It wasn't real clear to me exactly what your sell rules are. From the profit side, are you looking at 15% to take a profit or something arbitrary? From the loss side, are you just reviewing it each week and after a stock crosses a certain loss threshold, you're dumping and replacing? What is this threshold or is it arbitrary as well?

FWIW, I wanted to give a little back. I updated your original spreadsheet to automatically download 1 year's worth of pricing information from Yahoo and automatically calculate the R^2. Note: I saved it in Excel 2007 format, but if you or anyone else is interested, let me know.

[Karel]

New Top 3: POT, DAR, CMP

This week my funds showed some recovery, and guess what, my fund is positive again. IWM, the Russel 2000 small caps, also did well:

QHF: 33.84 (+1.7%; +0.1%) ***Positive for the year!***
QHF-: 29.68 (+3.0%; -1.9%)
IWM: 23.49 (+1.4%; -11.4%)
QQQQ: 25.48 (-0.2%; -13.0%)
SPY: 23.30 (-1.9%; -15.2%)

This weeks halls of fame and shame:
Hall of Fame: CLF +16.9%, EXM +5.5%, MTL +5.1%
Hall of Shame: APA -6.5%, PBR -6.1%, ATW -5.5%

The new Top 3 are POT, DAR and CMP. Do we need a new pick for our fund? No, we don't. My decision to keep LNN a bit longer isn't proving a very lucky one, but we'll wait it out a bit more. But next week three stocks come due, and among them LNN.

Two weeks ago the baseline fund, QHF-, sold MTL, LNN and JST for an average loss of -11.5%, for a total average of +5.1% over the 134 reported sells. No stocks were positive, so we have still 37 stocks that reached 15% or more. This week DNR, RIG and KWK will be replaced by GTE, PQ and ENS.

QHF Closed Trades (no change)
Winners: 48, avg +71.1%
Losers: 27, avg -23.1%
Total: 75, avg +37.2%

Regards,

Karel

[Karel]

Crisis? What crisis?

Well, if nobody answers my question, I'll answer it myself. But first I have to make an analysis of my stocks from, say, 11/2007 though now. The end of October 2007 looks like the most recent market high, not counting bumps. (Well, the really small caps of the Russell 2000 had it a bit earlier.) Any chartists with an opinion on this?

Anyway. From 10/29 through now, I sold 12 stocks that had been in my portfolio from before that time. If I had kept those stocks, they would have contributed a -3.8% loss on average. Also, From 10/29 through now I bought 16 stocks (and sold 4 of them) for an average result of +8.2%. Well, now! $$$Mr. Market$$$'s method of stock picking really shines in a bad market too!

Of course this doesn't mean that I am actually up over this period. I am some 4% down since the end of October. But my last all time high was from the end of May, only 6 weeks ago! The markets are down something around 20%:




What does this all mean? It is hard to draw a conclusion, because the evidence is very anecdotal: it is such a short period, it concerns so few stocks. But as my new stocks outperform my old stocks, I see no reason to stop picking stocks.

Crisis? What crisis? With $$$Mr. Market$$$'s stock picking method there is no crisis. Just potholes in the road.

Regards,

Karel

[Karel]

Karel..have no fear...the $$$MR. MARKET$$$ momentum model works, but there is no need to go fishing if they're not biting..yet.

Indeed, I have no fear. What you say about fishing is interesting though. In my implementation of your method, I replace "stalling" stocks to get better performance. But in a general market downturn, it might be better to sit things out. But then again, if the downturn is prolonged, perhaps some action should be taken. But the most important thing might be that your method, while resilient enough in bear markets, still shines in bull markets, so that sitting still might be the best option.

If that is true, what are the criteria for sitting still and starting to move again? Anyone an idea?

Regards,

Karel

[mrmarket]

Karel..have no fear...the $$$MR. MARKET$$$ momentum model works, but there is no need to go fishing if they're not biting..yet.