Quote from gms:
You know, that was something I was waiting on to see if mm would ever touch on, beyond mentioning price targets. My thinking was that if the selection was based on FA, ordinarily you're seeking much bigger gains long term. In other words, that FA could only give mm a selection viable for just one week's (or a few weeks') worth of holding, wouldn't seem to construe much of an analysis at all.
What was there to this FA? Turns out it simply boiled down to the criteria being finding those stocks that have seen great relative strength performance, and riding the position for a hoped for few more points. That's why we had seen mm posts describing 'why he liked' XYZ with criteria such as, 'has gained 150% in the last 12 months'. Think about that. Where's the FA 13 months ago that would have pointed to XYZ back then in order to capitalize on that 150% movement?
And 'hoping' is perhaps why mm holds losing positions. Obviously, his "screens", which scan for performance and strength, have long ago omitted positions whose performance has now been now down 29% and losing for some time. But he doesn't get rid of those positions. What does that sound like but the typical investor's hope that an issue will turn around? When asked about this, mm claimed that losing positions from his methodology indeed had a history of turning around and even gaining on top of the recoup. All questions of 'capital opportunities lost' aside, which were avoided by mm, the unspoken question that lingered was, how do mm screens, that make selections based on strength and performance as of a year+ ago, translate to now current meaningful FA of losing positions, when they're not even on the screens anymore?
You would think that someone with an advanced degree from Wharton, as a contributor to this forum, would have offered up insight, nuances, stats and methods that correlate with that degree... but after many questions and so-called answers, nothing more than a Motley Fool poster type mindset was given. What a shame.
