Hi rudy. I'm glad that you've found the information on Mechanical Investing (MI) useful, and hope others have as well. Thanks also to Jasmansr (Bob) for his pointed questions to elicit information. I think I can speak for the whole MI community in saying that we're always willing to share information to anyone who wants to learn. Also, our feelings won't be hurt if you choose not to incorporate MI methods in your portfolios. Now then

rudyprins asked:
Would one of you MI folks be willing to put down a step-wise primer on starting a MI portfolio, from beginning to end as if you were sitting down now to start one today. This may help us see how you put all this strategy to work and bring all this discussion to a close with a workable example, hands on if you will.

For example, say I wanted to start a Spark5 portfolio:
1, Go to MI page, click on "current ratings" and select the 5 picks. Or, go to the Spark5 screen (url?). Am I good to go now? How about screening screens accross time, other things??, etc. first?

I'll give it a shot. This post may get a little long, but we'll try and stick to basics, and offer links to "flesh out" some details. Please note also that I am only one of many contributors on MI and others may approach things slightly differently as no two investors will think exactly alike.

Also, I would suggest that anyone who is still interested in MI after this post please come over to the Foolish Workshop Board: http://boards.fool.com/Messages.asp?id=1030063000000000

to ask more questions. I fear we've already taken up way too much of your time on this board.

Here's the short answer. If you've decided that you want to use a screen, you would go to http://www.fool.com/Workshop/WorkshopRankings.htm

look for your screen, take the top 5 (or however many you choose) stocks, and purchase equal dollar amounts of each stock. Hold those stocks for the desired holding period (monthly, quarterly, annually, whatever) For example, if you've decided to use a Spark5 annual screen (Spark is the screen name, 5 is the number of stocks, and annual is the hold period). you would look at the rankings for Spark and buy the top 5 ($2000 each of #1, #2, etc.) You would then hold these stocks for a year (year and a day in a taxable account to get long-term cap gains treatment). At the end of that year you would sell your stocks, take your money, and buy the new 5 top-ranked stocks.

Now, nobody on MI would recommend doing this until you understand WHY to invest in certain screens. So here's an attempted overview. It'll probably get pretty long, sorry.

OK, now then:
The first part of investing (using any method) is defining your goals and risk tolerance. In general, ANY stock investment should be money that you don't plan on needing for at least 3 years. In addition to the Fool's "13 steps", here's an article on general portfolio allocation: http://www.fool.com/workshop/1999/workshop991109.htm

and here's an addition by MoeChernick, which further clarifies "Bucket B" income.
http://www.fool.com/workshop/1999/workshop991123.htm
IMHO, Moe does a great job of clarifying the difference between things that you "want" in the near future, and things that you "need".

Once you've decided to allocate some of your portfolio to stocks, you should choose "which stocks". For standard "fundamental" investing, you would use some method(s) to pick individual stocks. If you don't feel up to stock-picking, you might simply keep your "Bucket C" money in an index fund. (sounds familiar so far, right?)

At the MI board, we invest in certain mechanical stock screens. As described in prior posts, these screens start with a "universe" of stocks (the 30 stocks in the DJIA, or all stocks ranked 1 or 2 for "Timeliness" by Value Line), and then various screening "factors" are applied to these stocks. The final screening factor is a ranking factor, and we take the top 5 (or 10, or whatever) stocks for that screen.

What are these screens? We've developed many of them, and you can read the explanations at TMFElan's Foolish Workshop FAQ: http://boards.fool.com/Message.asp?id=1030063000770000

Also, Moe Chernick has written several workshop articles describing some of the screens in more detail.

http://www.fool.com/Workshop/1999/Workshop990722.htm
http://www.fool.com/Workshop/1999/Workshop990810.htm
http://www.fool.com/Workshop/1999/Workshop990817.htm

Many of these articles are referenced in the FAQ.

One of the advantages of looking at screens is that you can review the historical record of that screen, both in terms of the return (CAGR), and volatility (standard deviation). Return information on some of the screens since 1986 is available at:

http://www.fool.com/Workshop/WorkshopScreenExplanations.htm

This site also has explanations of some of the screens.

More return information is available at gritton's and bdfinney's websites, which are referenced in the FAQ.

As for "which screen to use". In general, you should look at return data over at least a 10+ year period. Any stock picking method can get "lucky" over a short time period. The longer the back history of the screen, the more likely those returns are not just "luck". Much more discussion on this is available in these five articles from the Workshop:
http://www.fool.com/workshop/1999/workshop990923.htm
http://www.fool.com/workshop/1999/workshop990928.htm
http://www.fool.com/workshop/1999/workshop990930.htm
http://www.fool.com/workshop/1999/workshop991005.htm
http://www.fool.com/workshop/1999/workshop991007.htm

Another issue in choosing screens is the cost of those screens. In general, we recommend keeping transaction costs under 2% of your portfolio (hopefully even lower). The more often you trade, the higher your transaction costs. Also, in a taxable account you will pay higher taxes if you hold a security less than one year. Here's a series of articles which deal with costs and taxes in more detail:
http://www.fool.com/workshop/1999/workshop991012.htm
http://www.fool.com/workshop/1999/workshop991014.htm
http://www.fool.com/workshop/1999/workshop991019.htm
http://www.fool.com/workshop/1999/workshop991021.htm

Finally, be aware that no investment is guaranteed to go up every year. Screens can have bad weeks/months/years just like any other investment strategy (and just like the market as a whole). In general, you should make an informed decision as to which screens to use based on your risk tolerance, personal preference, and "fit" into your overall investment plan, and stick to it. Don't jump from one "hot" screen to another, and don't drop a screen just because it's had a bad year. Here's another article by Moe on this topic:
http://www.fool.com/workshop/1999/workshop990601.htm

I hope that this was helpful, and would encourage anyone who is still interested in "mechanical" investment methods to come over to the Foolish Workshop board. For those of you are sick and tired of this topic, we'll leave this board to its original purpose. Good luck to all,

-synchronicity