Discussion of Karel's MrMarket approximation

[Kraut55]

Hi Karel,
thank you for all the work you have done. Great job!
I am running into a problem however and I hope you might be able to help me, being from the Netherlands where you might also use the "," instead of the "."
When I import the csv-file from yahoo into my spreadsheet, all values between .01 and .12 are converted to months. 18.50 will be 18.50 but 18.09 will change to 18. September.
I can't even user-define the cells (00.00) because all I get instead of
18. September is then 37.882.
Any help you can offer?
Thanks.
Hans

edit: I just realized that also values like 9.20 are changed to Sep 20.

another edit: I think I found a solution. I temporarily change the country settings from the comma to a dot before I open Excel and enter all the data. However I found another problem. The top twenty ranks only go to stocks in the upper part of the alphabet (like A to C). That could be a coincidence, but highly doubtful.
What info would you need (screenshots etc.) to check where I make a mistake?

[Kraut55]

Problem solved. It was an Excel input error.

Regards,
Hans

[Karel]

Sorry! I missed your question. Nice to see you have found the solution yourself. What kind of input error was it? Should it be mentioned in the guidelines text?

Regards,

Karel

[Jason Monette]

in order of RSM

ASFI
RSTI
GMR
USNA
CCRT
CRDN
DECK
CMTL
TASR
SCHN

any one else get these same results?

[mrmarket]

in order of RSM

ASFI
RSTI
GMR
USNA
CCRT
CRDN
DECK
CMTL
TASR
SCHN

any one else get these same results?


They all look very familiar...you must be on the right track!

[Jason Monette]

SWEET!

Now from here I take the top 3 and check out earnings, news, reports, etc? Then make a judgement call on which one I think is the best company?

[mrmarket]

SWEET!

Now from here I take the top 3 and check out earnings, news, reports, etc? Then make a judgement call on which one I think is the best company?

whatever works for you....

[Jason Monette]

I am trying to follow your model, after you get your top three stocks, what do you do next?

[Jason Monette]

Ok, I made one change to Screen 3, 7, 8.

In screen 3 I changed the EPS to the Annual rate instead of the Qrt to Qrt rate. I asked MM and this is the rate he uses.

In screen 7 I added Technicle Rank >= A

In Screen 8 I added Fund Rank >= A

I think should be very close to the model MM uses on his web site, I am also working on a spread sheet that automates most of this process for you. When I get it done I will post it here.

These are the top 10 stocks I got with the screens and Spread sheet in order of RSQ from highest to lowest. Let me know if i am getting close:

ASFI
RSTI
GMR
USNA
CRDN
MTLG
CMTL
TASR
SCHN
NTE

[mrmarket]

Ok, I made one change to Screen 3, 7, 8.

In screen 3 I changed the EPS to the Annual rate instead of the Qrt to Qrt rate. I asked MM and this is the rate he uses.

In screen 7 I added Technicle Rank >= A

In Screen 8 I added Fund Rank >= A

I think should be very close to the model MM uses on his web site, I am also working on a spread sheet that automates most of this process for you. When I get it done I will post it here.

These are the top 10 stocks I got with the screens and Spread sheet in order of RSQ from highest to lowest. Let me know if i am getting close:

ASFI
RSTI
GMR
USNA
CRDN
MTLG
CMTL
TASR
SCHN
NTE

I didn't run my model today but I believe most of those stocks were in my database, so it looks like you are close enough for horseshoes and hand grenades.

[Jason Monette]

Ok that is great, Now I just need to figure out which one is the best.

[JrInvestor]

Karel,

Thank you for taking the time to put together these screens. I am using Excel. When I run a screen, I do a 'save as' and change it from a CSV format to an Excel format. I save each individual screening and then import into the mimic spreadsheet. I am having a difficult time determing exactly which columns to delete. The column headings I get for each screen I save are:

Symbol, Company Name, Rank, Fundamental Grade, Last Price, 52-Week High, Rating, % Price Change Last Year, P/E Ratio: Current, Forward Year P/E, Rev Growth Year vs Year

Which of these columns do I need to import into the mimic spreadsheet?

Thanks

JR.

[Karel]

Which of these columns do I need to import into the mimic spreadsheet?
Actually, the columns you get vary with each screen. You keep the ticker column and the last four: % Price Change Last Year, P/E Ratio: Current, Forward Year P/E, and Rev Growth Year vs Year.

Regards,

Karel

[Max Kern]

Karel,
First, thanks for the great job of setting up the screens and the explanation of use, great job!

Will you discuss your logic for how screens 1,7 & 8 are approximations of Mr Market's screens. They involve IBD's ratings for EPS & RS. Rest assured my motive is learning not diubting.

Thanks,
Max Kern

[Karel]

Hello Max,

I used Moneycentral's Stockscouter Fundamental Grade (earnings growth) as a proxy for IBD's EPS grade, and the Stockscouter Technical grade for IBD RS. I also used a filter on the Stockscouter rating, because I wasn't too sure about the validity of the proxies and I wanted to pick stocks that had a bit more going for them. You are free to change the screens to your liking, of course! They seem to be doing reasonably well as they stand, but you will always have to make your own decisions.

Regards,

Karel

[siliconhippy]

"I think should be very close to the model MM uses on his web site, I am also working on a spread sheet that automates most of this process for you. When I get it done I will post it here."

Jason,

When do you think you can come up with automating the method proposed by Karel? This would be really HUGE :twisted:

Is there a way to direct queries to one website only (e.g. MSN), as opposed to both MSN (screen) and Yahoo (hist quotes) ?

Regards,

SiliconHippy

[Jason Monette]

I actually redid the screens, made a spread sheet, and I am testing it right now. If you want I can send you everything I have so you can help out with the testing. So far so good, Drop me an Email and I will send you everything.

Jason

[siliconhippy]

Jason,

Great !

BTW, I trolled both MSN and Yahoo Finance again, and I found out that while MSN still does not have hist quotes, www.finance.yahoo.com now does have its own Java stock screener.

There are 150 criteria like www.moneycentral.com (under stocks>screener) but there seem to be slight differences, e.g. <%Price exceed 52 week high> (under Growth criteria.) It is a bit slow in booting up, but can presumably be fast enough on repetitions. Maybe you can check to see if this can simplify the task.

I just wish MSN would have hist quotes, since their site is better organized than Yahoo's. But then, nobody is perfect (except Mr. HUGE ? :roll: )

My e-mail is below. Feel free to send me the files.

Cheers,

siliconhippy@hotmail.com

[Jason Monette]

email sent

[Jason Monette]

Siliconhippy,

Hey I am trying to email what I am working on, but it says that the delivery has failed, are you getting my emails?

Jason

Jason,

Great !

BTW, I trolled both MSN and Yahoo Finance again, and I found out that while MSN still does not have hist quotes, www.finance.yahoo.com now does have its own Java stock screener.

There are 150 criteria like www.moneycentral.com (under stocks>screener) but there seem to be slight differences, e.g. <%Price exceed 52 week high> (under Growth criteria.) It is a bit slow in booting up, but can presumably be fast enough on repetitions. Maybe you can check to see if this can simplify the task.

I just wish MSN would have hist quotes, since their site is better organized than Yahoo's. But then, nobody is perfect (except Mr. HUGE ? :roll: )

My e-mail is below. Feel free to send me the files.

Cheers,

siliconhippy@hotmail.com

[JerzeyGuy]

Hi Karel,

Thanks for setting up Mr. Market's model. It is great. My run produced these stocks (in order) last night. Does this sound right? Thanks

FPIC
RSTI
GI
CCRT
CRDN
NFI
TSO
PTRY
TASR
SCHN
NCEN

[Karel]

Does this sound right?
Sorry, I didn't have time to run the model. I'll probably give it a swing after Tuesday close; tomorrow morning for me. (I have 4 open positions :D )

Regards,

Karel

[scottieahmed]

Karel,

Hello. I am new to the site. I must say, I am impressed with the success that has been displaed on this site, and how this people really seem to be willing to talk to people. While I am new to investing, I thought that as I learned more about this world, i would go ahead and run your screens, just to see if they all returned results. My question is that it does not seem likely that a screen would turn up nothing, but when I ran screen 2, no results were returned. Is that possible, or am I doing something wrong? Thank you very much for your time. I look forward to learning more about investing and making good decisions in investing in the future.

[Karel]

Hi scottieahmed,

it's perfectly possible that a screen returns no stocks; especially screen 2. This doesn't really matter, as long the total number of stocks returned by all the screens is great enough. Good luck with the screens, and a (again) some warning: they are not as well tested by far as Ernie's original screens.

Regards, Karel

[scottieahmed]

Karel,

Thanks a lot! I am going to test the screens for a while and see how the stocks that i pick do. I am hoping to have a portfolio of about 6-10 positions, but i do have a question. Theoretically, i could run the screen every day for 6-10 days and use the "winner" that I pick. My question is if it is "ok" to run the model that often? I guess that you could just keep running the model and picking a stock as often as you want, but is there some sort of time that is prudent to wait between each time that you run the model and pick a stock? Should i run the model, wait a week, run the model again, wait a week, etc... Do you have any thoughts or feelings about this? I am going to create a fake portfolio to track the stocks for a while and see how your screens and my "human" touch work. Again, thanks for answering my questions.

Scottie

[Karel]

Hello Scottie,

testing the screens like you plan to do is an excellent idea. About running the screens: you could run them as often as you like, and when a previous pick is also the next winner, you just go one (or if necessary more) down. MrMarket himself never buys a stock he has sold recently, nor does he double up. But I don't think it is a bad idea to wait at least a week between 'runs'. This might help a bit in diversification (not otherwise in the system).

Success!

Karel

[scottieahmed]

Thanks Karel...I was thinking about 1 week between each screen would be good. Gives me time on the weekend to do the human research as well. Do you use these screens to make investment decisions? Have you been happy with the picks that you have been seeing with these approximations?


Scottie

[Karel]

Yes, and yes! :) I hope your tests bear it out!

Regards,

Karel

[Karel]

I moved the discussion of the Mimicking MrMarket approximation over here, to keep the reference section as uncluttered as possible.

Regards,

Karel

[Dave]

Karel has done GREAT work here. I use those screens, slightly modified to get a few more tickers in there, coupled with the slightly modified Excel setup and it has done VERY well so far. I currently hold 2 stocks at once, one I pick, and one $$$MR MARKET$$$ pick.

Three cheers for Ernie and Karel!

-Dave

[Jaws57]

Appreciate all the work you have done. I followed your MMM picks on yahoo. I downloaded the excel files to my computer to my Microsoft spreadsheet except the formulas wont convert (I dont have Excel). This is not a major problem because the screens you use I saved on the stock screener. Those work fine. Basically I have two questions:

1. How do you weight the 3 columns (12mo sales,hist PE, fwd, PE)?
I used multipliers to equal them out.

2. R-squared ? This one I cant figure. I assume it is based on a tight line from start point to end. Is the formula easy to set up?

Thanks Jaws57

[Karel]

Hi Jaws, it would really be much easier to get Excel or a compatible spreadsheet program. In MrMarket's description of his method, he says he uses several columns for ranking purposes, so the program has to support the ranking function.

I know for certain that StarOffice 5.2 supports this function and opens the spreadsheet without problems. You'll find a free (and newer) version on http://download.openoffice.org/1.1.0/
This a 60 MB download. If you don't have broadband, ask someone to download it for you andburn a CD, or find a CD distributor (see CD link on the page mentioned)

An alternative could be 602PC Suite http://www.software602.com/products/pcs/trial.html
The free trial is unlimited, and the 'limited' spreadsheet might very well work. This is a 20 MB download. I have no experience with this program.

Regards,

Karel

[Jaws57]

Karel,

You are HUGE!!!. I went for the 20mb download 602PC Suite. I get it free for 30days and then I can register free. I works great. The r2 works too except I had to trnasfer to my old worksheet before I got to the mimic one. I ran it tonight and got CCBI ECPG PMTI CMTL GGB CMT TSO DHB GI FPIC. This was the rank before r-squared. I havent had time yet. I did test it on WHC and it calculated .949.

Thanks,
Jaws57

[Karel]

Hi Jaws, you're on your way! I just ran the screens and got

CCBI ECPG PMTI CMTL TASR GGB CMT TSO GI FPIC

as the last ten. The difference is immaterial; Moneycentral probably has done some update or other. I also get .949 as r^2 for WHC (a very nice value BTW).

When you do your DD, it may be good to now that MrMarket likes positive earnings, and solid earnings and revenue growth. Good luck!

Regards,

Karel

[scottieahmed]

Hey Carl,

I emailed you in December to talk about your model. I have started testing it now. So far I have three picks going:

FPIC
PMTI
ECPG

It looks like waiting a week between each pick might not be long enough to get seperation and/or new stocks with the highest R-squared value. Anyway, i just thought that I would let you know that i am enjoying this exercise. I am tracking each stock and looking for 13-15 percent growth as a target. I will keep you posted on the testing, if you are interested. Have you run your screen at all this year? Do my stocks look like familiar finalists to you?

Good luck with your investing@

[scottieahmed]

I ran the Rsquared formula from the mimic spread sheet on HAR, the MLK winner. While Ernie got a value around .91 or .92, i got 0.504894846. I got a years worth of historical prices from yahoo, and then pasted them into column B of the R-Squared section three times and got the same value. Am i doing something wrong? I scrolled through the data on yahoo and noticed that a couple of times a dividend was paid and that there was a 2:1 stock split on Dec 5, 2003. Was i suppossed to do something different with the data if there was a stock split? Anyway, thanks for any help that you might have.

Scottie

[mrmarket]

I ran the Rsquared formula from the mimic spread sheet on HAR, the MLK winner. While Ernie got a value around .91 or .92, i got 0.504894846. I got a years worth of historical prices from yahoo, and then pasted them into column B of the R-Squared section three times and got the same value. Am i doing something wrong? I scrolled through the data on yahoo and noticed that a couple of times a dividend was paid and that there was a 2:1 stock split on Dec 5, 2003. Was i suppossed to do something different with the data if there was a stock split? Anyway, thanks for any help that you might have.

Scottie

Scottie,

Use the "Adjusted Quote" column that Yahoo has...when the stock splits, you have to make sure the historical prices are adjusted, otherwise the download will thing that the stock suddenly dropped 50% in price, which would be very unhealthy for its r^2 value.

[scottieahmed]

The values match now. I am having a lot of fun testing this and learning from your site. It is a great place to read what people have to say, and then go out and learn on your own. I am very impressed with your model and your results. I hope to start investing in about 6 months, when I can save up the money to open an account. Hopefully, I will also be able to pay for an IBD subscription, so that I can run your 1st, 2nd, and 8th screens as well, as I want to be able to test both. It is fun to see which stocks your screens turn up vs the "approximation" screens. I noticed that one of your top five was not in my dump, and that none of my final 10, ranked by highest R-squared value, were on your top five.

Anyway, this has been very educational and a lot of fun. I truly appreciate your site.

All the best! Keep rocking your portfolio!

Scottie

[hawley]

Hi Jaws, you're on your way! I just ran the screens and got

CCBI ECPG PMTI CMTL TASR GGB CMT TSO GI FPIC
[...stuff deleted...]

Karel

I run your spreadsheet model about once every 3 months or so, get frustrated on one particular issue, and file it away until next time. Now is the time to address what I have always thought was something I was doing wrong.

Last night, I ran the screens and used the spreadsheet and basically got the same list of 10 you got a few days ago. I recognize that some of the screens are MM approximations from lack of IBD data on money central.

The part I don't understand is why none of our top 10 or the MM top 5 from a few days ago seem to match. His 5 are on our spreadsheet with a much lower rank. Ours are on his data dump but must obviously be lower ranked since they don't make his top 5.

If we are all doing the ranking based on the following criteria: Price Appreciation, Price Appreciation divided by trailing 12 month P/E, Price Appreciation divided by forward 12 month P/E... shouldn't they be more closely matched if not exactly the same?

The approximations on a few screens seems to be the only difference. So I can only see how this affects our "universe of about 200 stocks" but I can't figure out the discrepancy with the rankings.

[mrmarket]

once I find the high r^2 stocks, I throw out the ones with fuindamentals that I'm not crazy about.

[scottieahmed]

Karel,

When you sort on column K, to find the stocks that you will get R-squared values for, what is the header for that column? Is it xxx4 or !!!!!!! ?


Thanks, Karel

Scottie

[hawley]

once I find the high r^2 stocks, I throw out the ones with fuindamentals that I'm not crazy about.

E,
Was this intended to be a reponse to my post regarding the discrepencies between Top 5 posts and Karel's spreadsheet model?

If so, this does not make a lot of sense to me unless you have some automated way to grab a bunch of R^2 values. Some of your last top 5's ranked in 30s and many much lower in the spreadsheet. You can't tell me that you calculate dozens of R^2s to get down to these lower ranking picks. Also, I'm pretty sure that I have seen you use different lengths of time for R^2 calcs (i.e. not always 1 year).

I think your picks are bubbling up higher in your process than they are in Karel's spreadsheet. I was trying to point this out and see if we can determine what might be missing so the spreadsheet would become a bit more true to your model.

[mrmarket]

once I find the high r^2 stocks, I throw out the ones with fuindamentals that I'm not crazy about.

E,
Was this intended to be a reponse to my post regarding the discrepencies between Top 5 posts and Karel's spreadsheet model?

If so, this does not make a lot of sense to me unless you have some automated way to grab a bunch of R^2 values. Some of your last top 5's ranked in 30s and many much lower in the spreadsheet. You can't tell me that you calculate dozens of R^2s to get down to these lower ranking picks. Also, I'm pretty sure that I have seen you use different lengths of time for R^2 calcs (i.e. not always 1 year).

I think your picks are bubbling up higher in your process than they are in Karel's spreadsheet. I was trying to point this out and see if we can determine what might be missing so the spreadsheet would become a bit more true to your model.

Well...I guess it's not an exact science...I'm sure the stocks you are generating will do fine. Have you backtested your picks?

[Karel]

Karel,

When you sort on column K, to find the stocks that you will get R-squared values for, what is the header for that column? Is it xxx4 or !!!!!!!
It is xxx4. The !!!!!! column shows the rankings, but should never be used for sorting.

Regards,

Karel

[Karel]

... If we are all doing the ranking based on the following criteria: Price Appreciation, Price Appreciation divided by trailing 12 month P/E, Price Appreciation divided by forward 12 month P/E... shouldn't they be more closely matched if not exactly the same?

The approximations on a few screens seems to be the only difference. So I can only see how this affects our "universe of about 200 stocks" but I can't figure out the discrepancy with the rankings.
Well, the fact that the universe is slightly (or more than slightly) different may pick up other stocks that bubble higher. Currently there are two big differences in the universe selection filters: the use of approximations, but also the use of same-quarter growth figures. I picked that option from the screener, because I didn't know how often the yearly figures get updated. If those get updated every quarter, it would be best to use that, but I have been too lazy to find out.

Regards,

Karel

[jjst34]

just found this post.. pretty interesting.. wondering, i saw that most of the screens from back in january came up w/ tasr,, anybody lucky enough to invest in that sucker back in Jan???

anyways,, i just attempted this for the first time.. here's what I came up w/.. let me konw what you think of the results.. ranked in order

NFI
GMR
GGB
LEND
TASR
BXG
AUO
AHH
GI
NIHD

[scifos]

looks similar to what I got about a week ago when I ran the approx. just out of curiousity

[Karel]

Hi jjst34,

those are the same I get now, and virtually in the same order, but with one glaring exception: I have NIHD first, you have it last. Its chart looks no worse than NFI's (your first), so perhaps you just didn't pick the adjusted close for NIHD. The recent 3:1 split would upset the R^2 calculation. So you are on the right track!

In case you want to invest money in these stocks: that is your very own decision, do your own due diligence, and diversify. Don't pick just one, but take your time and build a basket of these stocks. A pick just might backfire, or take an unconscionable long time to reacht +15%. Then you would need the action from the other stocks.

Regards,

Karel

[Dave]

just found this post.. pretty interesting.. wondering, i saw that most of the screens from back in january came up w/ tasr,, anybody lucky enough to invest in that sucker back in Jan???

anyways,, i just attempted this for the first time.. here's what I came up w/.. let me konw what you think of the results.. ranked in order

NFI
GMR
GGB
LEND
TASR
BXG
AUO
AHH
GI
NIHD

Out of those I have actually bought and sold 3 based on Karel's screens. NFI (bought 5/29/2003 and sold 6/5/2003), GI (bought 12/11/2003 and sold 1/8/2004), and LEND (back in early 2003). TASR was in my top 10 in early December, but I did not like its valuation and bought GI instead. So far I have had 7 solid winners using Karel's screens, with the longest hold being 4 months, and shortest being 6 days.

I am currently in GGI (courtesy of the HUGE one), and UTSI (an old HUGE pick that I just happen to like the current valuation on). I simply run the screens after I sell a stock, then I compare what I come up with to Ernie's latest pick, and see which I like more. So far it has worked amazingly well!

-Dave

[mike0050]

I am very new to Mr Market. Where is the spreadsheet that is repeatably referrred to? Where do I start in putting the model together? Is there a forum where it was explained?

Thank you
Mike Smith

[muffin]

I jason can you post the spread sheet that automates most of this process

[Karel]

I jason can you post the spread sheet that automates most of this process
Unfortunately, Jason is no longer a member. His spreadsheet broke when Yahoo Finance decided to do things slightly different. But doing things with my spreadsheet more or less by hand isn't so much trouble either.

Regards,

Karel