Nov 27, 2006, How every investor can benefit from mechanical stock picking ?

Don't like the idea of computers selecting stocks for you ?

Here is a strategy using mechanical investing that can improve any stock picking technique.

Oct 17, 2006, Best 6 Months MACD Buy signal

We're approaching a period where the market historically performs better: the 6 months from november to april.

Sy Harding enhanced the entry signal by checking for a MACD buy signal starting from october 16.

After a steep correction in may-june, the market rallied powerfully and is now at its year to date high (all time high for the Dow) with MACDs for both S&P500 and Dow Jones in Buy mode.

If you follow the Best 6 months timing system - which works well with Mecanical Stock Picking as highlighted in Stock Picking and Market Timing - you can either jump back now or just wait the standard entry signal in 2 weeks time on november 1.

If you don't follow this timing system, then good for you: from april 15 to october 15, the S&P500 gained 5.9 percent while the Dogs of the Dow jumped 17 percent.

Jul 21, 2006, Cornerstone Growth

James O'Shaughnessy's most performing growth stock picking strategy actually includes both Growth, Value and Momentum all in one.

Can be used with Blue Chips (The Market Leaders) to reduce volatility.

Jul 21, 2006, Reasonable Runaways

Reasonable Runaways was the most profitable strategies in "What Works on Wall Street" (and "How to retire rich") until O'Shaughnessy improved Cornerstone Growth in 2005.

The strategy can be used with large or Small Caps and even micro-caps (Tiny Titans).

Jul 21, 2006, Dogs of the Dow

The most famous mechanical stock picking strategy.

Include links to historical backtests.

Jul 21, 2006, MAGNET Investing - CANSLIM At Reasonable Price

MAGNET is an interesting mechanical stock picking strategy. The acronym stands for:

M: Management / Momentum

A: Acceleration in Revenues/Earnings

G: Growth At Reasonable Price

N: New Products/Management

E: Emerging Product/Industry

T: Timing

As you can see, it is similar to CANSLIM but with the addition of Value through Growth At Reasonable Price.

The strategy was created by Jordan Kimmel in his book "MAGNET Investing - Build a portfolio and pick winning stocks with your home computer".

Check the following link for more info on how to pick MAGNET stocks.

Jun 23, 2006, Best 3 months in a Year 2 of the Election cycle

Many of you are probably wondering what to do with the current market.

At the begining of the year, I mentioned that 2006 - being a year 2 of the presidential cyle - sets to be a challenging year for the stock market and to watch out for a buying opportunity around october-november timeframe. Those predictions were exclusively based on historical stock market patterns without trying to make any judgement.

This article (click the Permalink) - motivated by a reader - gives you further insight as to the timing of a possible bottom.

In a nutshell, around october 1st, 2006 should be a good entry point to the market. Another 3 months to wait.

May 6, 2006, Magic Formula Investing

Build your own Magic Formula Investing with our stock screening process. Use the PE/ROC (Price to Earning to Return On Capital ratio) to rank stocks like Joel Greenblatt.

May 6, 2006, The Little Book that Beats the Market - Joel Greenblatt

Review of Joel Greenblatt's Little Book that Beats the Market.

May 2, 2006, "Sell in May and Go Away" in a Year 2 of the Election cycle

Check this interesting article from Bloomberg on the "Best 6 Months strategy" or "Sell in May and Go away" in a year 2 of the US presidential election cycle.

The average performance of the S&P500 in years 2 of the election cyle is 5.9% (from 1950-2004, dividends excluded).
The YTD performance for the S&P500 is 4.6% (dividends excluded) so based on history the market has not much room on the upside. Since we're now entering the worst period, it looks very prudent to take some profits.

May 1, 2006, Tailored Stock Investing strategies with the Investor Profiler Tool

Find out what type of investor you are and what are the best Stock Investing strategies for you using this personality and risk analysis tool.

Apr 15, 2006, Prepare for a Market Exit - MACD Sell Signal

We are approaching the time of the year where the stock market typically makes lower gain: the 6 months from may to october. This is widely known as "Sell in May and Go Away".

Sy Harding enhanced the exit of the market (usually around 30th of April) with the addition of the MACD indicator. He uses the 20th of April as starting date to check if the Market exhibits a MACD Sell signal while Stocktradersalmanac uses the 1st of April.
I will simplify and just use mid-April !

We are now mid-April and both the MACD of the S&P500 and the Dow Jones are in Sell Mode. So it might be a good idea to exit the market - or at least reduce exposure to shares - and come back in 6 months time. Alternatively, you may just wait the normal exit signal without MACD timing which will be in 2 weeks time.

The Dow is up 3.9% YTD while the S&P500 is up 3.3%. The recommended strategy at the beginning of the year, the Dogs of the Dow, is up only 2.4% (Dividends excluded) but the Dogs have higher dividends so performances are essentially similar to the Market.

Mar 5, 2006, Growth at Reasonable Price Stock Screening with the Zacks Rank

Zacks has a weekly column called "Screen of the week". Usually, the screens highlight just a few stocks and are not really adapted to mechanical investing. However last week's "Best of Both Worlds" screen is extremely well suited to mechanical investors.

It is a Growth at Reasonable Price strategy using Zacks Rank <= 2 as Investing Universe and then filtering companies with Historical Earning Growth in the Top 20% of all companies and PE in the Bottom 20% of all companies.

The screen uses monthly rebalancing and shows pretty good results in the last 5 years.

Jan 28, 2006, Successful Investing - Avoiding Implementation Shortfalls

Successful Investing requires avoiding few shortfalls. Oftentimes, when you try to implement some investment strategies, they fail to deliver the superior returns...

Jan 8, 2006, Market Timing with the Fed Fund Rates

An error was made in the description of the Simple Monetary Market Timing system.

The model actually uses a 12 month delayed signal by looking at the direction of the Fed Fund rates 12 months ago: the delayed signal is due to the fact that it takes 6-12 months for interest rates to take effect.

The performances provided are however correct, including the performances for the combined Monetary+Presidential cycle Timing system.

My apologies for any inconveniance.

The model does not change for 2006 since interest rates 12 months ago were already rising.

2006 is still a combination of Year 2 of the Presidential Election cycle + increasing interest rates: the suggestions to favor Large Cap Value for 2006 is still valid.

Jan 3, 2006, Stock Screening

Step by Step Stock Screening process to help you build succesful investment strategies

Dec 29, 2005, Stock Ratings

Use Stock Ratings from various Investment firms to build portfolios with superior returns.