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Hiya all...

I would like to start by saying that I am not a participant in mechanical investing although I am quite impressed by alot of the research put into and the returns generated by your RS13 and RS26 models.

Personally, I am a long term investor that uses fundamental analysis and potential for future growth...my portfolio comprises about 44 companies...mostly in the tech hardware, biotech, wireless hardware, and B2B sectors...I am quite pleased with my returns thus far and have had no intention of changing my approach. I have beaten all your running portfolios AND the NASDAQ for 4 years now...without hardly trading at all. My YTD return this year so far is close to 40%...without a single trade.

Enough bragging.

I've recently started a portfolio thats been simmering in my mind for a while:

I started (on paper at least) a portfolio of the top 5 RS13 stocks and will be rebalancing them every week. I have eliminated broker fees by opening an account with a broker that offers free trades (the very reason you cite that keeps you from trading any more than monthly). This will be in the hope of always remaining in the top tier of companies undergoing rapid stock appreciation.

I'll keep everyone posted if you like...i also would appreciate some feedback regarding this idea...I just may convert to mechanical investing.


Thank You

Mike

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I am quite pleased with my returns thus far and have had no intention of changing my approach. I have
beaten all your running portfolios AND the NASDAQ for 4 years now...without hardly trading at all.


Congratulations on your excellent results.


I just may convert to mechanical investing.

Are you worried about having more money than you can spend? Of perhaps you want to reduce your tax bill by reducing your profits? Or are you just crazy? Why would you even consider switching to something dramatically inferior to what you already have?
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I would like to have some fun man :-)...I like the challenge. So humor me.

Mike
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I started (on paper at least) a portfolio of the top 5 RS13 stocks and will be rebalancing them every week. I have eliminated broker fees by opening an account with a broker that offers free trades (the very reason you cite that keeps you from trading any more than monthly). This will be in the hope of always remaining in the top tier of companies undergoing rapid stock appreciation.

Don't forget to add in a minumum 0.25% loss to bid/ask spread for your paper trades. Loss to this friction on a monthly basis is bad enough, weekly is going to get downright ugly.

OTOH, I agree with the earlier post - why bother if you are beating the pants off us with almost no trading?

Buckaroo
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Guys it really isnt that hard if you devote a little time to fundamental and market analysis and always consider future market potential. Then stick to your choices. I manage investing for a few relatives and family friends and have gained tremendous experience thru this.

Mechanical investing is great for those who don't want to devote that kind of time in investing..the return is also not bad for the amount of homework.

But I think the RS13 or RS26 models traded on a weekly or biweekly schedule has alot of potential, especially if no commissions are involved.


Mike

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Mechanical investing is great for those who don't want to devote that kind of time in investing
==============================

Couldn't disagree more. I think you underestimate how much time it takes to do it correctly and within your personal tolerances for pain, emotional stress, g-forces, etc.

-bdfinney
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I have eliminated broker fees by opening an account with a broker that offers free trades (the very reason you cite that keeps you from trading any more than monthly).

What broker charges nada to trade??

Thx

Jeremy
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I started (on paper at least) a portfolio of the top 5 RS13 stocks and will be rebalancing them every week. I have eliminated broker fees by opening an account with a broker that offers free trades (the very reason you cite that keeps you from trading any more than monthly). This will be in the hope of always remaining in the top tier of companies undergoing rapid stock appreciation.

I'll keep everyone posted if you like...i also would appreciate some feedback regarding this idea...I just may convert to mechanical investing.


I, like everyone else, believe you'll get killed by the spreads...but I dunno it might work. One thing to keep in mind is that the improvement between RS13 quarterly and RS13 monthly is small, perhaps statistically insignicant. I'm not sure that decreasing the holding period to a week would provide enough extra juice to covercome the friction.

AFAIK, the historic weekly RS13 data are not available in any one location. However, you may be able to root through Jack Cade's posts and construct a short backtest that way. That would at least give you an idea if the weekly hold gives you a worthwhile improvement.

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You have to admit that fundamental analysis is a little more laborious and time consuming???

Anyway...the broker that i use is called freetrade.com. If you can handle having no customer support...it beats paying commissions.
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I manage investing for a few relatives and family friends and have gained tremendous experience thru this.

Now why didn't I think of using others' money to learn?
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JackCade is doing this every week already.

Ledger YTD 8/11/00, Pt. 2 - 77676

RS13wk 5 1 -19.4


regards,
chi
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Guys it really isnt that hard if you devote a little time to fundamental and market analysis and always consider future market potential. Then stick to your choices.

One reason we like MI is that anyone can implement an MI portfolio without spending years acquiring the "golden touch". The same monkey that throws darts at the WSJ stock pages could also be trained to manage an MI portfolio, and with better results no doubt.

In addition, we know exactly how our screens arrive at their picks, and that the picks were arrived at by the application of numerical formulae with no human judgement involved. For the latter reason we know that MI screens are not subject to bias, errors in judgement, emotions, etc. But hey, if you've developed a hot hand at picking stocks, more power to you and do take good care of that monkey, won't you? ;-)
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Hey guys,

Thanks for all the warm responses...I'm flattered. I wish I could get my hands on some good insight into my ideas...maybe I will keep u guys updated.

Thanks
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Don't feed the trolls!

Check their profiles and put them back into their box. To do so, click on the little sad face beneath their name. It is difficult enough to follow the important threads on this board.

Volker
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Thanks for all the warm responses...I'm flattered. I wish I could get my hands on some good insight into my ideas...maybe I will keep u guys updated.

You have been give insight, but you have chosen to ignore it. Now generally my response to posts such as yours is "you're on the wrong board". You apparently haven't bothered with the Foolish Workshop board, which is where questions like yours belong.

But I'm bored this morning, and maybe some people interested in learning might benefit. As others have stated, I don't know why you would be interested in wasting your time with our methods. You clearly state that your buy-and-hold portfolio (which has obvious tax benefits) has crushed screens like RS13, which only had a CAGR of 116% from 1996-1999. If you can beat that kind of return without paying short-term gains taxes, why mess with it?

But for the benefit of others who are less skillful than yourself, the friction others have mentioned is a major drag on performance if you are buying and selling on a weekly basis. The difference between the bid and asked prices on the current RS13 picks is 6.5%, 1.5% 1.1%, .4%, and 1.0%, for an average of 2.1%. So the average loss per trade from friction, even if there are no commissions, is about 1%. If the stocks you buy and sell do not change price for the entire year, you will have a compounded loss of 41% just because of spreads. It would take quite a performance to overcome that, and we're not even touching on the added cost of short-term gains taxes, which could eat up more than a third of your profits (if any). All of these factors are explained thoroughly in the Foolish Workshop FAQ and its links.

So why waste your time on a strategy which clearly has major hurdles to overcome and is not backtested? Stick with what you are obviously brilliant at, and take $1000 to Las Vegas once a year for fun.

--Terry
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I now have price data in my screen browser, so I'm able to quickly conduct short backtests, using rankings published by Jack Cade since 5/28/99, on any of the screens.

With a weekly rebalance on RS13 I get a 316% return for the past 12 months. Accounting only for changes in stocks held (not for rebalancing dollar amounts among positions) there would be 44 roundtrip trades.

Rebalancing every 4 weeks returned 227% TTM, with 24
trades.

-eremon
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But I'm bored this morning, and maybe some people interested in learning might benefit.

Oh, thank you, thank you. Please come down from the mountain more often.
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Eremon:
Re your post 78127--Which ranks/picks of RS13 did you test?(1-4,1-5,etc?)TIA/Wayne
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Re your post 78127--Which ranks/picks of RS13 did you test?

Sorry for not being more explicit. I tested 1-5.

-eremon
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hey there,

i couldnt help noticing those incredible gains (316% in 12 months)you posted on the weekly RS13 eremon (78127). Even if you miss out on some of the profit due to friction and taxes...doesnt it still seem impressive? Maybe that guy is onto something...

peace...
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One more thing...

What if you used this technique for your tax deferred accounts?

peace
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> > Mechanical investing is great for those who don't want to devote that kind of time in investing

> Couldn't disagree more. I think you underestimate how much time it takes to do it correctly and within your personal tolerances for pain, emotional stress, g-forces, etc.

No and yes. Fundamental Analysis adds intuitive business rules to one's existing knowledge, but requires constant maintenance of the portfolio in evaluating new and present stocks: medium initial cost, medium maintenance. MI requires mathematical / analytical study quite different from and much more demanding than the more familiar Fundamental Analysis, yet the amount of work afterwards is minimal (though with the option for further refinement of one's technique): high initial cost, low maintenance.


Washu! ^O^
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