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chk999longonly (97.42)

Five Year Anniversary Slipped Right Past Me



January 20, 2013 – Comments (3)

It's been a little more than five years since I started this profile. I think the basic idea is very strong: Buy companies when they are making a string of new 52 week lows and then sell as they make a string of new 52 week highs.

But, the original idea had two flaws. Originally there was not enough research to differentiate between companies that deserve the 52 week low (and will go lower and stay there!) and companies that do not. The second flaw was that a company starting to make a new string of 52 week highs will probably continue to do so and selling it too soon can leave a lot of money on the table.  Plus, this is in some ways a market pricing strategy and the low to high to low cycle is measured in years. So there are only really good opportunites to buy or sell every year or so. Plus, some companies that seem like they should outperform like Markel just kinda sit there. 

I haven't really figured out a way to automate the research part. Most of the simple screening methods don't seem to have a lot of insight into the business itself. Maybe looking at return on total assets and return on equity or return on invested capital can help separate the good companies from the bad ones. On the sell side,a latch of the "no new 52 week high in n weeks" probably works pretty well, but I haven't had the time to try to backtest it. 

But, research continues and there is always another recession on the way to provide a bunch of candiate stocks. 

3 Comments – Post Your Own

#1) On January 20, 2013 at 11:05 AM, portefeuille (98.42) wrote:

Well, at least you did not end too many calls when they were at slightly above 5 score points. And refreshingly some really good "outperform" calls.

Don't feel too bad for not having found a way to automatically buy at multiyear lows and sell at multiyear highs almost every time. You are certainly not the first to fail at that task ;)

And now that you found out that you are not an utter failure at making outperform calls quit the silly "accuracy" chasing with your main player :)

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#2) On January 21, 2013 at 11:08 AM, chk999 (99.96) wrote:

You are such a ray of sunshine, Porte.

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#3) On January 22, 2013 at 5:38 AM, portefeuille (98.42) wrote:

"not an utter failure" is one of the highest ranking compliments over here.

"refreshingly some really good ..." borders on enthusiams ...

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