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reddingrunner (92.14)

September 2007



On further review...

September 26, 2007 – Comments (1)

I thought the fed's rate cut was too much; would have preferred .25.   A big part of the problem is easy credit, too easy.  If the Fed bails us out, no one learns the lesson and bad loans continue to be made and the eventual crash will be even worse.  Sure it helped my investments (real and caps) short-term, but I'm in for the long-term - that's what really matters.

On further review, I've changed my mind.  It isn't a case of putting a band-aid on a gaping wound, it's a case of "first, stop the bleeding and stabilize the patient".  If the patient is in extreme danger, you take some chances to buy yourself some time.  I think that's what the Fed did.  

Allowing us to suffer some consequences for our stupidity is good, and we are suffering from the fallout of easy credit.  But too many consequences can create a tailspin and i think the .5 was just right to stop the bleeding and allow time to take its healing course. This economy still has a lot of good "antibodies" that I think will lead to robust health once this illness passes. 

My first guess is that there won't be any more rate cuts anytime soon.  My second guess is that 2008 will be a whole lot better than the pessimists are predicting.  [more]



New light on an old problem.

September 21, 2007 – Comments (7)

I want to shed some new light on a tired old problem.  Many, including moi, have complained about the fact that because it is easy to ramp up one's CAPS score with underperforms it is hard to find out who the truly good stock pickers in CAPS are.

TMF stories highlight stocks favored by "all-stars" as if this means something. So I did a little computation.  As of this evening, four of the top five CAPS players (TMFBent excepted) have a combined accuracy rating on "outperform" calls of ...

(drum roll)...

52.5%.  If it wasn't for SpecBear they'd be below 50%.  These are the top players.  I wonder how many all-stars score over 50% on outperform calls?  Based on this sample from the best of the best I'd have to assume that I could do as well, probably better, picking stocks out of a hat than by relying on All-Star recommendations.

P.S.:  Kudos to TMFBent and SpecBear!  [more]



self-fulfilling prophecy?

September 20, 2007 – Comments (0)

I'm sitting on some cash, waiting for late October.  It's hard to do as I watch my CAPS portfolio (which is, in essence,  my watch list) climb and climb and some of my best picks are starting to become pricey. Am I missing my best chance to get in?

OTOH, I expect the next 30 days to be rough.  It isn't a big secret that this time of the year has a bit of nefarious stock market history.  As a result, everyone is watching for the rumor or catalyst that will send the market plunging.  As a result, it won't take much!

Come this time next month there will still be some great bargains here; perhaps they will even be a lot cheaper than they are today (I doubt if the S&P will be above 1500 on Oct 20).  I'll be ready.   [more]



A Real Hidden Gem!

September 18, 2007 – Comments (0)

I try to find CAPS players who can point me to great stocks I might otherwise miss, but it isn't easy.  Lots of all-stars jack up their points through methods that don't really relate to real life.  Finally today I found a player whose portfolio was chock-full of great ideas- I added a bunch of them to my own CAPS picks today.

The mystery player with the awkward name and no personal info or blogs nevertheless is ranked 130 in CAPS with an accuracy of over 70% and average pick up about 8 vs the S&P- all after less than one month in CAPS!

And he has done it without underperforms and with a highly diversified portfolio of fast growing stocks in what has obviously been a very challenging four week period.  

Can he keep it up?  Who knows?  But I found some great stocks to cherry-pick.  Maybe you will too:

(Note: "RDK" seems to have some other portfolios as well, maybe he's testing out different theories or screens.  You can find him by searching players for "RDK".  The above portfolio is the one I found most helpful).  [more]



In=depth mathematical analysis!

September 13, 2007 – Comments (3)

Many economists are now predicting a one in three chance of a recession next year.  Naturally, these predictions are being factored into stock prices and holding them down. Stocks will probably drop even further over the next month or so, it's the panicky time of the year.

Come mid to late October, stock prices will be depressed by fears of a recession; yet the odds are two-to-one that these fears will not be realized (two in three chance that there will NOT be a recession, you can check my math!).   When the recession fails to appear, stocks should soar.  I'm holding onto some cash now, but by November I plan to be fully invested.

I'd rather bet on 2:1 odds than on 1:2 odds.  But I'm just weird that way.  [more]



R U Smarter than Lynch & Bogle?

September 06, 2007 – Comments (2)

"Attempting to forecast whether the market is at a peak or in a valley- and whether to buy or unload stocks as a result- is a waste of time. I don't know anyone who has been right more than once in a row."  Peter Lynch

"After nearly 50 years in the business, I do not know of anybody who has done (market timing) successfully and consistently. I do not even know anybody who knows anybody who has done it successfully and consistently."   John Bogle  [more]



Buy Apple NOW!!!!

September 05, 2007 – Comments (0)

It was my favorite stock before and today it's dipping after the news conference.  Wall Street just doesn't get it.  I wasn't interested in the iPhone personally- wrong carrier and looked complicated (cell phones challenge me!).  But the new iPod Touch- I want this baby, now!  I'll be buying one in the next week.  And once I've mastered that, moving up to the iPhone in a couple years will be child's play.  

And the rest of the conference was full of great news too.  Apple is going to take over the world; do you want to spend the rest of your life wishing you had bought in when it was still dirt cheap?  [more]




September 05, 2007 – Comments (0)

In real life my portfolio is moderately concentrated.  My CAPS portfolio, currently closing in on the maximum number of picks, doesn't look that way.  But it is more concentrated, sector-wise, than it looks.  One problem with CAPS is that you have to equal weight all of your picks. If you have 100 picks, each one is exactly 1% of your portfolio and your results.

So if you are really bullish on copper, for example; in real life you might dedicate 5% of your portfolio to PCU.  But in CAPS you would have to add five copper stocks (if you had 100 total) to get a 5% weighting.

Today I added 5 health ETF's to my CAPS list.  In real life I have 10% of my portfolio in just one (Vanguard Health) but in CAPS I have to add a bunch of picks to get my weighting up.  (And in real life if I lose confidence in a stock and it's down 2% since I bought it, I'd dump it; in CAPS I hold on, hoping it's score will go above zero so it doesn't decrease my accuracy rating!).

I love CAPS, but any tweaks that would make it more like real life would be greatly appreciated!  [more]



CAPS wish list

September 04, 2007 – Comments (1)

Attention, ye lords of MF Caps!

As a CAPS player, I really would like to learn more from other CAPS players: from those who really have something to teach me.  So I wish it was easier to find them!  The "advanced search" option is nice but still doesn't quite cut it.  In addition to the current information there are two more screens I want to run before I consider another player as a guru:  

What is their % of outperform to underperform picks:  If they are jacking up their score with a high proportion of underperforms, as so many "all stars" do; they really don't interest me.  I want to know who's doing well with a portfolio that is 90% or more "outperform."  Like, er, umm, real life, you know?  

And how diversified are they?  If they have jacked up their score by concentrating their picks in one sector, I wouldn't learn anything from looking at their portfolio; I already KNOW that that sector has been doing well lately. 

 If I had ready access to those two missing pieces of information, plus the current "advanced search" choices; I could figure out who my "favorite players" really are. 

You'll have this fixed by tomorrow, right?  :-)

(non-lords: if you agree, please hit the "rec this" button).  [more]



September blues

September 03, 2007 – Comments (0)

September, historically, is, by far, the worst month for stocks. No other month comes close.  The best months?  November- January plus April.

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