The most excellent way to pick great stocks

[trend_guy]

Why not just trade the IBD CANSLIM method? O'Neil's results are proven and two of his students have won top prizes in US investment challenges.

IMO, the "M" in his method is what will yield superior returns. The current "M" environment is very difficult to achieve 100% plus annual rates of return. Patience!

 

[Girlpower]

Quote from mrmarket:




How can there be a sales pitch is there is nothing for sale?? Please tell me what I am selling.

Then why does it continuously go back to sounding like one? (having the effect of obscuring the conversation about method...)

Every so often a post pops out and I think to myself "oh-oh - here comes the sell again. What's this guy selling?" Certainly you are promoting your list and very strongly...

Natalie

 

[Phantom Trader]

Quote from mrmarket:

If you checked the site, you would see that I had posted a link to Elite Trader so that people were aware of this site.

The best part is when you click on the link to your Yahoo site from this thread, and find this link which sends you back to this thread, from which you can again click the Yahoo link, ad infinitum.

Now I know the fun that dogs who chase their own tails have!

 

[Qarel]

I guess that's why they called it the World Wide Web and not the World Wide One Way Street



Karel

 

[man]

"I've been using my model for 12 years now and have beaten the market averages in each of those 12 years. I have not read about a money manager, or hedge fund manager with this track record."

It is not about beating the market, it is about making return constantly. I know a fund that made 18% on average over the last twelve years who never experienced a draw down bigger than 3%.

I do not care about any index. My task is to make money. Constantly. This is the game of sophisticated investment. What you are refering to is the mutual fund industry and, yes, in that arena you might be king. It is very different in the alternative investment scene.

And even if you were king - why yell into the face of everybody around that you are better than them? In fact I do not want to judge your attractivity but you look like a sympathetic person, so why don't you come down from that big horse, be decent and talk to us not as god speaking to his children but from trader to trader?


peace

 

[Phantom Trader]

Quote from man:

And it is better to be humble in the beginning and huge in the end, not the other way round.

Honestly - being aware he will not care - if I read the word "huge" again in any of his posts, I will not post again in any of his threads.


peace

I do get the impression that his "huge" routine is basically a self-mockery that he uses just to have fun with the whole game (which others have pointed out in other threads can, even when it is profitable, become a fairly dull business). Along with his "bring me your meats and cheeses" shtick. Think of it as him parodying shameless self-promoters.

The fact that he repeats the word "huge" in most of his posts is no more significant than nitro repeating "nitro" in his posts or you repeating "peace" in yours.

 

[man]

My team is currently very busy testing other stuff, but I would like to test the whole thing. I have complete fundamental data on SP1500 stocks since 1998. I will have to organize historic earnings forecasts. Then we can test this strategy and variations.

Maybe we can gather some ideas on such a thing. Maybe we start a thread dedicated to such a project. As I said in earlier posts I would be very much interested in a market neutral approach, thus we need to cover the short side. I would prefer using single stocks to using futures.

Would anybody be interested in such a venture?


peace

 

[Phantom Trader]

Quote from Qarel:

I guess that's why they called it the World Wide Web and not the World Wide One Way Street

Yes, but this is the first time I recall finding an endless "rotary" on the information superhighway.

 

[Qarel]

Quote from man:

[...] Would anybody be interested in such a venture?

Yup. I just love backtests. Wish I had a dataset like yours! First idea: just ignore the earnings forecasts for now, if they are not included.

[edit]SP1500 might be a bit smallish though, I pick my stocks from the 8000+ Moneycentral universe. Still, I like the idea very much![/edit]

Regards,

Karel

 

[OPTIONAL777]

Quote from mrmarket:

I developed a stock-picking model when I was in graduate school to take advantage of the bullishness the market was exhibiting at the time. The premise was to invest in high beta stocks while trying to limit my downside exposure in the event of a stall or downturn. By using the quantitative steps in the model, stocks are selected that are experiencing sustainable price momentum. The model is a multistep screening and high-grade process that goes something like this:

First, create a universe of about 200 stocks that have demonstrated strong price appreciation and earnings growth in the last 12 months. You can find some pretty good easy to use screening tools on the Internet such as Stockpoint.com. I use the following screening criteria to build my universe of stocks:
Screen #1: Stocks making new highs with IBD EPS rating of 90 or higher

Screen #2: Stocks within 2% of their 52 week high with a 52 week price appreciation > 300%

Screen #3: Stocks within 5% of their 52 week high with a 52 week price appreciation > 150% and EPS growth of 25%

Screen #4: Stocks within 5% of their 52 week high with a 52 week price appreciation > 125% and P/E < 50

Screen #5: Stocks within 5% of their 52 week high with a 52 week price appreciation > 50% and P/E < 15

Screen #6: Stocks within 10% of their 52 week high with a 52 week price appreciation >100% and P/E < 100 and 3 year earnings growth of 50% and 5 year sales growth of 25%

Screen #7: Stocks with Investors Business Daily Ratings greater than 95 EPS and 95 RS.

Screen #8: Stocks with Investors Business Daily Ratings greater than 90 RS and PE less than 20.



Each screen will yield about 20 – 25 stocks. Rank these stocks on the following criteria: Price Appreciation, Price Appreciation divided by trailing 12 month P/E, Price Appreciation divided by forward 12 month P/E. Weight each criterion equally and rerank the database. This process favors stocks with more reasonable valuations and weeds out those with no earnings.
Take the top 20 stocks and rank by 12-month revenue growth.
Take the top 10 stocks and run a time series regression analysis on the daily prices for the last 12 months and rank by the highest r-squared correlation coefficient.
Take the top three stocks in order and perform due diligence to determine if there were any one time non – operating factors that affected the data just analyzed (asset sales, lawsuits, financing, etc.) or if there is any pending news of significance that could upset the applecart. Select the highest ranked stock that clears this hurdle.
Buy this stock. In a typical bull market, the stock will, on average, achieve a 15% gain within 4 to 6 weeks. Sell the stock and repeat the process. Why sell so soon? Well there are ever changing phenomena going on in the market that could make your selection criteria quite different a month after the signals told you to buy this stock. The theory here is that you are selling a potentially "tired" stock and trading it for a "fresh" one.
What this process is trying to do is to select a hot growth stock that has a little more juice left in it to get you that last 15% without being so hideously overvalued that it could drop like a rock. I don’t think I need to buy stocks with extended valuations to make a quick profit. There are stocks out there with good momentum that aren’t bad to hold if I make a wrong decision. I think my model finds them. My model has been successful in protecting me from real lemons. Preservation of capital is always important. Buying companies with real earnings protects me in the down markets. We all work hard for our money. It makes no sense to give it away. That’s why I believe it’s important to buy stock in companies with real earnings.

Tell me what you think of my model. I’d be happy to answer any questions about this process if you send me an E-mail.

http://hometown.aol.com/ebarsamian