Q1/2014 watchlist and index results

5 Apr

watchlist

Green shading indicates the winner at least by our measures from 12/28/13 (when we started the 2014 weekly models) to COB last Friday.  Remember, there is NO money management involved in these models.  The results are based on weekly compounding of each watchlist’s results.

Our (in)famous financial newspaper’s Top10 from its weekly 50-stock list has cratered badly YTD, but, the full “50” list, admirably demonstrating the benefits of diversification has done much better.  Our proprietary IntersectionX II watchlist,  halved the losses of the 50 Top-10 list and, it should be noted has a lower standard deviation.  It should be lost on no-one that Vanguard’s Total Stock Market ETF, ticker VTI, is the leading performer YTD, however, any difference between it and the S&P500 is academic at best.  Also, interestingly, while the NASDAQ composite has lost YTD, the Russell 2000 has gained, although in both cases the gain or loss is nothing the become upset or pleased about.

All is not bad, however.  If you had only invested in the newcomers to the IntersectionX II watchlist each week, when there were any, which is most but not every week, you would be sitting on a nearly 15% gain YTD.

We continue to update the IntersectionX II watchlist every weekend on its separate page in this blog.

 

Last year’s value screen results.

4 Jan

Last year we discussed a value screen that was PE<= 10, Price to NBV <= 1 and Zacks Rank = 1.  We actually picked out nut company JBSS as our pick of the litter, as it were.  This is how the whole list did:

value

Both the list average and our pick JBSS beat the S&P nicely, however if we had only picked Blackstone…..

I have run the screen today.  It has a preponderance of Chinese companies.  I will do some more research and report shortly.

Watchlist and index review – 2013

4 Jan

This year has yielded exciting results for sure.  The power of the 2013 bull market has looked like a steamroller on occasion.  The list of top-10 stocks that we follow, gleaned from a major financial newspaper’s watchlist of fifty stocks had a weekly compounded total return of 65% through the end of last week — so our results are not exactly a year as we go from Friday close to Friday close.  The “year” for our reporting purposes began on December 29th 2012.

It’s probably worth recapping what our data sources are.  As noted above, prices and returns are calculated Friday close to Friday close.  The newspaper’s numbers come from the Saturday edition.  The S&P, NASDAQ and Russell 2000 numbers are calculated weekly by a Quick Test in VectorVest.  The VTI numbers used for risk adjustment in this post came from Yahoo! Finance via YLoader.  Market movements and returns are calculated in a Google Drive spreadsheet which has proven to be accurate when I check it periodically.  I accept the numbers as presented and offer no guarantees of accuracy.  But, I strive to be cautious and careful and try to spot errant numbers.

There is no money management employed in these models.  It is likely that the use of stops or other money management techniques could materially change the relative results obtained.

We used to derive part of the data for our “old” IntersectionX watchlist from the StockTwits50.  When that list went for-pay this year I adopted an alternative methodology for the IntersectionX II watchlist.  I have still not found a consistent replacement for the old Superpicks but believe I am getting close and will report in due course.  Our new IntersectionX II watchlist went live on June 29th 2013.  We calculated comparatives to other watchlists and indices from that date, which is a twenty-seven week period.

Please don’t take any of the results or comparisons as absolute, rather as idea generators or a starting point for your own research.

results

As you can see the newspaper handily spanked the broader market indices for the year and it is certainly a testament to their selection methodology.  They did this with greater volatility though, as measured by standard deviation.  In those last twenty-seven weeks though, the IntersectionX II watchlist actually did best.  How it did this is interesting.  Whether the characteristic identified continues in 2014 we will see.

In the twenty-seven week period the INXII was the better watchlist in only six weeks. The newspaper was ahead in fourteen weeks.  In the remaining seven weeks, when the newspaper list was down the INX II was down much less.  In fact, based on a scan of the numbers, the INX advantage came not from beating to the upside, but from not having the downside excursions:

RARG

Long story short, any of these watchlists will perform well.  I suspect it will take a new Superpicks watchlist to consistently beat the newspaper over time, however the INX II does have less volatility, so, in a real world situation, depending entirely on your tolerance to volatility and what, if any money management techniques you use, it may be a good choice for you.  The take home has to be though, that for the price of a weekly newspaper it was possible to generate tremendous returns in 2013.

And speaking of volatility (risk) tolerance, timing, as they say, is everything.  On page 20 of the latest AAII Computerized Investing (Vol XXXIII #1) a risk adjusted return methodology using standard deviation to create a risk index using Vanguard’s total stock market ETF ticker VTI as a baseline is listed.  I use, and am actually long VTI, it is an interesting and useful vehicle, so I duplicated the methodology on the watchlist and index results for the last twenty-seven weeks.  This is the result, and it is not what I expected:

RAR

In this calculation the IntersectionX II is the clear winner, with the NASDAQ composite taking second place.  The full newspaper watchlist beats out its Top-10 subset.  Now, be careful.  Remember this uses raw results with no money management (which could make big differences) and, volatility, or more especially, standard deviation is used as a proxy for risk.  But, since it is my observation that many people are more sensitive to volatility than they let on, this is an interesting point to ponder.  It will be educational to follow the data in 2014 and see if these characteristics continue, or if they were peculiar to Q3 and Q4 of 2013.

IBD model portfolio update

1 Jan

Our IBD portfolio update through 12/31 is in.  We have a gain of over 55% on the year with no money management. Amazing!

All this for the cost of a few newspapers a year.

You’re invited to test this.

10 Aug

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Whither LQDT? $25?

16 Mar

On July 4th last year, I wrote a fairly lengthy piece about Liquidity Services Inc (LQDT).  That piece is still worth reading as background, as most of my comments still apply.  In that piece I wrote:

Pricing on LQDT?  Clearly if I had the definitive answer to that I would not make my closing disclosure.  The current Fibonacci retracement it is sitting on is quite a strong one that is roughly at an area that offered previous resistance.  We may see the stock hold around this ~$40 level for a while.  While some analysts continue to shamelessly pimp $60 and $70 targets I would be surprised to see the stock overcome its recent sellfest to that extent.  If it does recover, I would expect significant resistance at around $45.  To the downside, if $40 doesn’t hold then next stop looks like $33-$35 with a 52-week low of about $20 as an absolute worst-case (I would be amazed to see that price but who knows?).

This quote from a former employee on Glassdoor.com in 2011 still  rings loud: ” Company is a one trick pony, and that one trick can easily be made obsolete.”  Actually, not so much since the GoIndustry acquisition, but the integration of that isn’t done yet.

Well, I guess the pricing comments were fairly prescient:

lqdt

I have followed LQDT from its IPO.  I have found it to follow Fibonacci retracements and projections very reliably, and its price has an affinity for round $5 numbers.  It is currently ranked #4 at Zacks, underperform, sell.  Marketclub has it at three red triangles, -90.  It closed at $30.19 on Friday off its low for the day.  The shape of Friday’s candle shows that maybe it will put up a struggle at the $30 mark.  I don’t think things look good though.  Money flow hasn’t hit prior lows, it’s running away from its 10day-SMA and MACD looks to be rolling over to the negative again.  I am not calling this a short but $25 looks like a distinct possibility.  Historically, LQDT’s options have been expensive, but just now the June contract in-the-money $40 and $35 or close-to-the-money $30 could reward those with a speculative bent, if the fight at $30 fails — which I think it has a good chance of doing.  I believe the real support was at $33 with next at $25.

What I said last July is still true: I do not presently hold any long or short stock or options positions in LQDT nor do I currently plan to make any.  I have not held any long or short stock or option position in LQDT since early May 2012.


Tech ETFs: VGT, RYT, IYW, XLK. The Apple question.

10 Mar

I subscribe to several for-pay services.  Some I like more than others.  Ones that consistently rank high with me are Marketclub/INO,  Zacks and Bespoke Investment Group (“BIG”).  BIG is rather different to the other two.  If you like data-driven analysis, you’ll like BIG.  BIG is invariable professional.  You may see them frequently quoted in the financial press.  They recently reported the results of their first voluntary members’ survey, which is what piqued the impetus for this article.  The survey covered both individual and institutional investors.  Self-serving it may be, but I happen to think the paying customers of BIG are smarter than the average bear.  Key point for this article is that both the individual and institutional investors liked Technology as the best sector for the next six months.

As an investor with my own money, I tend to using ETFs, although I will take individual equity positions.  It depends on the term and portfolio I’m investing in.  I considered four broad-based technology ETFs to play a possible positive ride in the technology sector (click on the chart to enlarge):

techs

tech etfs

The Rydex equal-weight ETF has romped away from the others, due largely, one supposes, because it has way less exposure to that laggard du jour, AAPL.  The AAPL percentages, BTW, are at 3/8/13 for RYT and 12/31/12 for the other ETFs.  The latter percentages may have changed some since 12/31 due to AAPL’s sell off and and increase in other portfolio stocks.  Be that as it may, some folk might think that with AAPL changing hands at a P/E of about 9, that as it hovers at a price somewhat above $400 it may be worth considering.  In which case, depending on your loving or loathing for all things AAPL, you may wish to consider which tech ETF best suits your purpose.  If you think AAPL will continue to be a loser then RYT is the way to go despite a healthy expense ratio of 0.5%.  Were I to want some AAPL exposure I would probably lean to VGT.  An alternative approach, trading costs be damned, might be to blend the two ETFs depending on how you love or loathe AAPL.  Your intended holding period would impact your decision, too.

The BIG members offered pretty mixed insight.  AAPL was the biggest long position in the portfolio of by far the most respondents.  On the other hand, it was also the stock that by far the most respondents were most bearish on.  Go figure. But, that probably sums up market sentiment on AAPL too.  You can check out free stuff (and there’s a lot of it) from BIG HERE.


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