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reddingrunner (92.73)

Report: Portfolio beats index better than 3:1



February 28, 2013 – Comments (0) | RELATED TICKERS: FFCH.DL , CCUR , NTWK

I've been listing my daily picks here since the first of the year.

In that time I have bought 34 stocks (just under one per day) and sold 7 of them.

The 27 that I now hold have gained 3.1% since purchase.

Comparing that, CAPS style, to the indexes (VTI for US, VT for foreign purchases), logging one share of the appropriate index at its opening price for each of the days those 27 stocks were purchased, you would be showing a gain of 1.2% (remember, about half of this year's gains occurred in the first couple days of the year).

This is a little unfair to me since the market has been trending up this year and much of that gain each day has been recorded (as usual) in the first hour or two of trading.  My purchases usually come a little later but I haven't recorded the index valuation at the exact moment of trading so this will have to do.

The seven stocks that I bought and sold (CTB, CNO, PRCP, NTWK, SIMO, KED and ZAGG) recorded between them a net gain of 4% (biggest gainers, PRCP and NTWK, biggest loser: SIMO).  I don't feel like working the numbers for what the index would have done for the periods I held each of those stocks (avg 3-4 weeks) but it obviously was a lot less than 4%.  (BTW: my biggest mistake, obviously, was selling NTWK which is up 56% in the three weeks since I sold it.  I sold prematurely to increase my cash holdings in expectation of a February correction.  Had I stuck to my principles my gain for the portfolio would be, all trades included, close to 6%.  Sometimes education is expensive!).

I am moving JSHLY out of this portfolio (which represents about half of my overall equity portfolio, most of the rest in large caps and etf's), leaving me with 26 positions.  The number will fluctuate somewhere between 24 and 30 in the future.  I anticipate making about 2 trades a week on average, for an average holding time around 3 months and average trading costs of about $100/month.  We'll see how that goes, I'll probably tweak things as we go along.

So, in essence, now that I finally have filled out the portfolio, this is where we really see how it does.  Obviously a good start, measured over 2 months, is nice, but doesn't mean anything.

My system looks for stocks that will do well over the near term (I usually check Zack's ratings for this), then I run a LOT of numbers to look for those that should also do well over a 6-12 month period.  After my screens produce about 100 stocks a week to look at, I quickly hone that down to about 20-30.  With those, I then look, not for positive indicators, but for a lack of negative indicators (sell signals).  I would rather have a stock with minimal negatives than one with a couple of really great markers.

11 of my stocks are over 1B market cap, 9 are 320m or less.  10 are in the financial sector including 4 regional banks and 2 insurance companies.  5 are foreign-based stocks.  My best stock has been FFCH (up 47%) and my worst has been CCUR (down 13%).  

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