Stock Picking (Beat Boho) Contest - V2.0

[Boho]

EOM

 

[ERD50]

EOM

Thanks.

I thought you figured you'd outperform in a down market? The total market B&H (nunnun) is down -3.69% in FEB, you were down more, -3.90%.

You went from about 15% behind the market a few months back, to 18% behind the market currently. Are you learning anything?

I'm still somewhat surprised that we continue to see about 70% of the pickers behind the Total Market. Blindfolded, dart throwing monkeys would be expected to do better on average.

-ERD50

 

[Boho]

Thanks.

I thought you figured you'd outperform in a down market? The total market B&H (nunnun) is down -3.69% in FEB, you were down more, -3.90%.

You went from about 15% behind the market a few months back, to 18% behind the market currently. Are you learning anything?

I'm still somewhat surprised that we continue to see about 70% of the pickers behind the Total Market. Blindfolded, dart throwing monkeys would be expected to do better on average.

-ERD50

I don't think I've been this fully invested before, as of a couple of days ago. One benefit of how I traded was that in a down market I had a lot of cash. That wasn't the case in the end of February when the market took a hit. And I stopped trading since buying NLSN. Too much invested, too crazy a market. I hope to get back to frequent trading again before too long.

 

[Boho]

what is in the rest of your portfolio at this point?

drad: $27,180...osis: $444.080...anfi: $87.334...rnn: $20,800...sypr: $9,435...nlsn: $457,240

 

[ERD50]

I don't think I've been this fully invested before, as of a couple of days ago. One benefit of how I traded was that in a down market I had a lot of cash. That wasn't the case in the end of February when the market took a hit. And I stopped trading since buying NLSN. Too much invested, too crazy a market. I hope to get back to frequent trading again before too long.

I still fail to see anything in what you say or have said that could be thought of as any sort of a cohesive strategy/plan.

Are you really serious about this? It just seems like a random bunch of "throw stuff against a wall and see what (if anything) sticks". And it shows in the results.

"One benefit of how I traded..."? What? There is no benefit - your trading objectively stinks!

-ERD50

 

[Boho]

I still fail to see anything in what you say or have said that could be thought of as any sort of a cohesive strategy/plan.

Are you really serious about this? It just seems like a random bunch of "throw stuff against a wall and see what (if anything) sticks". And it shows in the results.

"One benefit of how I traded..."? What? There is no benefit - your trading objectively stinks!

-ERD50

89% success rate with hundreds of trades in a bull market. I'll leave it to you to decide whether being down is a fluke or preventable in the future. I've decided yes.

 

[Boho]

It just seems like a random bunch of "throw stuff against a wall and see what (if anything) sticks".

A common tip to traders is to define a system and stick with it. I may be able to define my system but it's kind of complicated and I know it may appear random. The first few steps of what I do to find stocks to consider stays pretty much the same. After a somewhat arbitrary failure to find good stocks with that method I have a plan B. What I consider when looking at those stocks would be slightly complicated if I tried explaining it in exact terms.

 

[braumeister]

What I consider when looking at those stocks would be slightly complicated if I tried explaining it in exact terms.

No need. Results will speak for themselves.

 

[easysurfer]

No need. Results will speak for themselves.

 

[ERD50]

89% success rate with hundreds of trades in a bull market. I'll leave it to you to decide whether being down is a fluke or preventable in the future. I've decided yes.

Regardless what you 'decided', it's not working. You have lost money in a bull market! You can't argue with results.

An 89% success rate on trades means nothing if you keep losing on average weighting. You can play roulette and cover all even/odd or all red/black and you will have a 94.7% success rate... and lose money on average.

Trying to redefine "success" is a sure sign of failure!

... What I consider when looking at those stocks would be slightly complicated if I tried explaining it in exact terms.

Don't bother. Why would I want the details of a losing system? I only ask in the hopes a light might come on for you.

With almost all your money in just two stocks - everything is a "fluke". It just is not a prudent way to invest. And at least you are serving as a lesson to others.

See you next month. Good Luck!

-ERD50

 

[easysurfer]

Maybe we should make the next contest more challenging and call it "Try End Up Below Boho in the Ranking" .

 

[exnavynuke]

It was way low for the year ( http://stockcharts.com/freecharts/perf.php?$SPX,$INDU,nlsn ) and I read Nielsen Announces Data And Technology Deal With IPG Mediabrandsâ (which I took as good news). It had dropped a lot recently (in addition to throughout the year) and I normally try to research why but I don't remember if I did. Turns out it's undervalued but I don't remember if I cared (about analyst opinions - I formed my own).

It also got a neutral "Equity Summary Score" which I usually look at. It probably doesn't reflect news from within the hour so I consider the score lower than it should be when I read good company news.

You're a huge fan of grabbing at falling knives, aren't you?

 

[Boho]

An 89% success rate on trades means nothing if you keep losing on average weighting. You can play roulette and cover all even/odd or all red/black and you will have a 94.7% success rate... and lose money on average.

They say value investors do better than broad index investors over a period of decades. They just have to have the stomach for it. And you're not even giving me a decent portion of the three years we had (which I thought was too long all along).

I'm not betting odd/even or red/black. You've mentioned several times that I could win with some wild buy on a fluke. No I can't because I don't buy and sell that way. You don't even understand what I'm doing or why I lost big on a few stocks despite my explanations. If you did you may see some potential for a successful strategy.

 

[sengsational]

Maybe we should make the next contest more challenging and call it "Try End Up Below Boho in the Ranking" .

Fermion is winning that contest with BOTH of those players.

My data pull makes an adjustment for Fermion1's missing cover of the short sale of KITE. It's no small potatoes...the transaction is $-719K. Unfortunately, the simulator shows an incorrect account value. I just happened to notice that fault with the simulator...I don't know if there are others. This fault happened because of a buyout, so probably not that common. But I had "TIME" and I sold it before it got de-listed, just to keep out of trouble with the simulator.

 

[ERD50]

They say value investors do better than broad index investors over a period of decades. ...

Got a link to a credible study on that? "They say" isn't very compelling.

... You don't even understand what I'm doing or why I lost big on a few stocks despite my explanations. If you did you may see some potential for a successful strategy.

Your 'explanations' look like excuses to me (and I don't think I'm alone).

The contest isn't about "potential" (after screwing up), it's about demonstrating you can win. So far, you have not delivered, you haven't even done better than we would expect from dart-throwing, blindfolded monkeys.

So we will be watching your 'potential' for the next 2 years, but for all your talk, your recent trend has you further and further behind. That's not very compelling either.

-ERD50

 

[Boho]

Got a link to a credible study on that? "They say" isn't very compelling.

Value Investing Under Siege For More Than A Decade

"For the last 10 years, growth has significantly outperformed value. Yet long-term data show that value eventually outperforms. For example, in Rethinking Conventional Wisdom: Why Not a Value Bias?, Research Affiliates looks at data from 1962 to 2015 and shows that a "value" portfolio outperformed the S&P 500 by 1.8% annualized over that full period...value-investing works - it outperforms, but it comes at a cost: years of underperformance relative to an index (e.g. the S&P 500) and other styles (e.g. growth). Value investing requires a long (sometimes very long) time horizon."

 

[sengsational]

Back in 1982 I was "sold" on the idea of value investing. There were these things they were calling "shadow stocks". But wasn't nearly patient enough.

 

[SecondCor521]

Trying to redefine "success" is a sure sign of failure!

...

Don't bother. Why would I want the details of a losing system? I only ask in the hopes a light might come on for you.

I admire your tenacity, ERD50, I really do.

But isn't the hope fading yet?

(Plonk!)

 

[ERD50]

Value Investing Under Siege For More Than A Decade

"For the last 10 years, growth has significantly outperformed value. Yet long-term data show that value eventually outperforms. For example, in Rethinking Conventional Wisdom: Why Not a Value Bias?, Research Affiliates looks at data from 1962 to 2015 and shows that a "value" portfolio outperformed the S&P 500 by 1.8% annualized over that full period...value-investing works - it outperforms, but it comes at a cost: years of underperformance relative to an index (e.g. the S&P 500) and other styles (e.g. growth). Value investing requires a long (sometimes very long) time horizon."

Interesting, but somehow I just don't think your stock picks would in any way match up to the criteria put forth by Fundamental Index—introduced by Arnott, Hsu, and Moore (2005). Hmmm, let's see...

Fundamental Indexing

Arnott, Hsu, and Moore suggest an innovative fix. Rather than decapitate the cap-weighted universe, they "shape it up" by including the 1,000 largest companies, then weight them according to their "economic footprint," as measured by parameters such as aggregate earnings, sales, book value, dividends, and employees.

You have ~ 80% in 2 stocks - no comparison at all.

Now, is there an index fund/ETF that follows the strategy (I'm sure there is)? Maybe give that a try?

I admire your tenacity, ERD50, I really do.

But isn't the hope fading yet?

(Plonk!)

What can I say? Like a moth to a porch light?

You are assuming "hope" is involved? Probably more like just entertainment at this point. Maybe a little educational value to new-comers?

-ERD50

 

[ERD50]

Value Investing Under Siege For More Than A Decade

"For the last 10 years, growth has significantly outperformed value. Yet long-term data show that value eventually outperforms. For example, in Rethinking Conventional Wisdom: Why Not a Value Bias?, Research Affiliates looks at data from 1962 to 2015 and shows that a "value" portfolio outperformed the S&P 500 by 1.8% annualized over that full period...value-investing works - it outperforms, but it comes at a cost: years of underperformance relative to an index (e.g. the S&P 500) and other styles (e.g. growth). Value investing requires a long (sometimes very long) time horizon."

So here's 2 funds that follow the principle. They haven't been around long, but about as long as this contest is set to go. Not very impressive, they both seem to lag SPY (in RED).

But by a lot less than you are!

http://stockcharts.com/freecharts/perf.php?spy,fndb,prf



-ERD50

 

[Boho]

I didn't mean that I'm a value investor. Just that it's a known strategy and it takes a long time to pay off so needing over a year doesn't indicate failure. I try to buy low, "on dips," which I define as...well, I don't define it because it's hard and it's a bit of a secret that you people don't care about anyway, but value ratings are sometimes one consideration.

 

[ERD50]

I didn't mean that I'm a value investor. Just that it's a known strategy and it takes a long time to pay off so needing over a year doesn't indicate failure. I try to buy low, "on dips," which I define as...well, I don't define it because it's hard and it's a bit of a secret that you people don't care about anyway, but value ratings are sometimes one consideration.

I think you are confused about the whole "takes a long time to pay off" issue (excuse?).

Any sector/style approach is very likely to sometimes do better than the Total Market, and sometimes worse. It's cyclic. But how can it "take a long time to pay off"? I suppose if you start out buying down and outers, with the idea that they will take time and then recover faster than the overall market over that time,.... maybe.

But why aren't those funds I posted doing OK? They've had time, and it seems they could have "wound back the clock" when they started, and bought the stocks that went down 6 month to a year previously. If that move typically happens at the start, it wouldn't hurt them not to own them in that time, they have newer ones that will pay off more/sooner. If the move is weighted towards the back, they'd be even better off buying 'late'. They've had time.

But you aren't holding stocks for long, right? You try to identify a drop, and turn for a quick run up after the drop, right?

That's fine, and it absolutely can work - after a fashion. The problem is that a bunch of small gains are wiped out by the occasional dog. This is exactly what you have experienced, from what I've gathered. From sengsational's table...biggest gain was ANW $25K 4%, biggest loss was RAD $-163K -26%. One loser wipes out almost 7 of your best winners.

I think you are very mistaken in thinking that you can identify enough of the down-and-outers that will recover, versus the plain old down and outers. Or the ones that recover after you give up on them.

It might be possible on occasion, with boots on the ground, observing details of a company that the average investor/analyst doesn't see. Real industrial espionage type work, camping out at suppliers, distribution centers and such, surveying customers and potential customers, getting a picture that others don't have. That's a lot of work, and you can still be wrong. Stuff happens. And it only helps if your research shows something out of line with expectations. That might be pretty rare.

If your method worked, it should be working. It's not.

-ERD50

 

[SecondCor521]

If your method worked, it should be working. It's not.

-ERD50

Oh c'mon. After almost a year, a couple hundred trades, several dozen posts, and a handful of explanations and rationalizations, he's down less than $20K compared to doing literally nothing!

Let's see how this plays out.

(Here's a few extra if you run out, just cut and paste as needed: )

 

[Boho]

But you aren't holding stocks for long, right? You try to identify a drop, and turn for a quick run up after the drop, right?

That's fine, and it absolutely can work - after a fashion. The problem is that a bunch of small gains are wiped out by the occasional dog. This is exactly what you have experienced, from what I've gathered. From sengsational's table...biggest gain was ANW $25K 4%, biggest loss was RAD $-163K -26%. One loser wipes out almost 7 of your best winners.

There's nothing about my current strategy that would tend to make my few losses larger than my 89% gains. That's what happened but it's less likely to happen now. There was a time when I had more serious liquidation issues from doubling down but I don't do that any more. At least not as often.

I'm Currently holding a big loser that I bought because I wasn't being careful. IRL, I'd be somewhat more careful. I don't want to make excuses so I won't say I'm certain I wouldn't have bought it IRL but I immediately had second thoughts and did more research (I think I tried Yahoo news instead of just Google and Fidelity) and I quickly found what I was afraid if. The cause of the drop was more serious than I had previously read. The order wasn't yet filled, I thought I could cancel, but I couldn't.

The above is different from something like a betting on red scenario.

 

[Boho]

I just tried to sell SYPR and it failed. Then I clicked "Show max" and saw "A maximum of 0 shares can be bought due to the game's minimum share price setting."