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I have 31 consecutive profitable trades of 15% or better. How is this possible? Every day there are hundreds of stocks setting new highs, no matter what happens in the overall market. Many of these stocks are still at very reasonable valuations. Afraid of buying stocks at their highs? Think of it this way: a new high is really a future floor for companies with solid financial underpinnings. Quantitative momentum modeling makes it easy to identify stocks that can continue this upward momentum trend. Why does this happen? It's really very simple..ask me about what investors and cows have in common. I am $$$ MR. MARKET $$$. I AM HUGE!!! Bring me your finest meats and cheeses. You can join in on the fun. Register for free and you'll be able to post messages on this forum and also receive emails when $$$ MR. MARKET $$$ makes his own trades. ($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
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  1. #1
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    Default Following $$$MrMarket$$$

    I think I started a thread with this title some time ago, but now I'll start for real. A paper port; following $$$MrMarket$$$. Disclaimer: follow this port with real money at your own risk, not mine!

    How good is $$$MrMarket$$$ really? He boasts being the best stock picker in the world and beating the SP500 again and again. Now it is hard to disagree with a man with biceps like $$$MrMarket$$$'s. We'll leave that for other, more foolhardy persons. No, we're just going to follow His Hugeness. We do not strive to emulate him perfectly; we know our limits. So when we are going to invest in his picks, we are going to keep a healthy cash reserve of about 1/3 of the total portfolio. So for a full $$$MrMarket$$$ portfolio of 13 - 14 stocks, each position starting with $1,000, we start with $20,000 cash. This cash reserve also serves to rebalance. We start with 20 slots. Suppose 10 slots are full with $$$MrMarket$$$ picks. The 11th pick then gets 1/10 of the cash reserve, The 12th 1/9th of what remains, etc. You get the picture. BTW, $$$MrMarket$$$ doesn't rebalance, as far as I know. Why should he? He's $$$MrMarket$$$.

    Isn't $1,000 a bit puny? Well, it is a paper port, so who cares. Besides, at this position size our $10 commission per trade is going to eat a sizeable chunk of our profits. Will $$$MrMarket$$$ be able to beat that disadvantage? You bet. And we are following $$$MrMarket$$$, so we won't buy at the price $$$MrMarket$$$ buys, but at the close of the day.

    OK, so where does that get us? Our port starts 9/29/2003, when the first $$$MrMarket$$$ pick hit this board. In the meantime, $$$MrMarket$$$ scored 15 winners. Currently, there are 9 stocks in the Following $$$MrMarket$$$ portfolio: CBK, BEL, GGI, HAR, SSNC, SAFM, AACE, OFG and SPF.

    The port stands at 21,288.72 from the initial 20,000, or a 6.44% gain. How well did the S&P500 and the Nasdaq100 in that time? They scored gains of 13.15% and 11.47% respectively. Is that better? No, worse! Remember, we started with an empty port, and that port has been slow to fill. We are now at about 50%, and still dragging along more cash than we planned. On average, the port held 6.3 stocks; about half of the planned total and about one third of the total number of slots (cash reserve included). The returns for SPY and QQQ are for a fully invested portfolio. Divide those returns by 3 and you get 4.4% and 3.8% respectively. Order has been restored.

    Not that I don't expect this port to outpace both SPY and QQQ! But in this starting phase the Following $$$MrMarket$$$ port is even more handicapped than in full swing, so it is good to see things in perspective.

    Go $$$MrMarket$$$ !!!
    My Investopedia portfolio
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  2. #2
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    Default

    On 5-3 $$$MrMarket$$$ bought DECK. De port bought at the close for the day for 26.76, 1.5% under $$$MrMarket$$$'s price. Perhaps we can view this as a sign that the market is going down generally.

    The port stands at 20467 (+2.33%), SPY at 21789 (+8.95%) and QQQ at 21104 (+5.52%), so the anchor of cash didn't stop the port losing more (percentagewise) than the market. This isn't really surprising: $$$MrMarket$$$ stocks have shown good momentum, and as soon as the momentum drops off, pure momentum investors get (stopped) out. $$$MrMarket$$$ expects these stocks to come back, as long as they continue to grow revenue and earnings.

    I have added the open positions to the spreadsheet. Apart from the 15 winners (average 14% by the rules of this portfolio), we have 10 (temporary) losers, for an average gain per position of 1.6%.

    Go $$$MrMarket$$$ !!!
    My Investopedia portfolio
    (You need to have a (free) Investopedia or Facebook login, sorry!)

  3. #3
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    Default

    No changes, but I will update the value of the port each week. The close of the portfolio (and SPY and QQQ) on 5-14:

    MM: 20059 - 0.30%
    SPY: 21805 - 9.03%
    QQQ: 20972 - 4.86%

    Currently the Following MrMarket Portfolio is in a dip. It lost 2%, While SPY gained a little and QQQ lost under a percent. The market was rocky, and that might be a reason. We'll wait for some better weather. Hmm, reminds me of the Heavy Weather Port, gone under with MrMarket's Yahoo board.

    Regards,

    Karel
    My Investopedia portfolio
    (You need to have a (free) Investopedia or Facebook login, sorry!)

  4. #4
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    Default

    The close of the portfolio (and SPY and QQQ) on 5-21 (FMM: Following $$$Mr.Market$$$$):[code:1:b5031637f6]FMM 20,024
    SPY 21,760
    QQQ 21,134[/code:1:b5031637f6]QQQ made a move up, the Following $$$Mr.Market$$$ port and SPY remained flat.

    And it wasn't the Heavy Weather Port, but the Heavy Weather Report, in case anyone cares.

    Regards,

    Karel
    My Investopedia portfolio
    (You need to have a (free) Investopedia or Facebook login, sorry!)

  5. #5
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    Default

    This week MrMarket sold SAFM and bought NUTR. So did the FMM portfolio. SAFM went for 44.17, the target (MM sold for 44.43) and NUTR was bought at the close of yesterday for 24.05 (MM bought for 24.21).

    The totals:[code:1:aeca643ec4]FMM 20,550 (+2.75%)
    SPY 22,364 (+11.82%)
    QQQ 22,058 (+10.29%)[/code:1:aeca643ec4]Still only 50% percent invested, the port did really well, with a 1% gain for the week. SPY gained a bit less, and QQQ did a bit better. Virtually every stock gained (the exception was SSNC), so the winners/losers statistic is looking up. There are 17 winners now (I count from the start of this board), one of which is an open position, and 9 losers, all open positions.

    Regards,

    Karel
    My Investopedia portfolio
    (You need to have a (free) Investopedia or Facebook login, sorry!)

  6. #6
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    Default

    NUTR is the champion this week with a 7.5% gain (for the portfolio) in its first week. This good news was offset a bit by CBK (-10% on dropping same store sales and lower Q1 earnings forecast) and SSNC (-13% on news of a stock offering). The latter is bothersome for existing stockholders, but not as bad as CBK's news. When revenue is rising and earnings are dropping, that is not a good sign. A real MrMarket stock should continue to grow its earnings. But it is a bit early to give up on CBK after the first disappointing quarter. (OK, Q2 is supposed to be down too.) GGI and AACE made nice weekly gains of 3% and 4.5%, respectively.

    The FMM port stands at 20,477 (-.36%), SPY was essentially flat and QQQ dropped 1%.

    Regards,

    Karel
    My Investopedia portfolio
    (You need to have a (free) Investopedia or Facebook login, sorry!)

  7. #7
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    Default

    Just keeping score: the Following MM portfolio now stands at 20,401 (-.4%)

    Regards,

    Karel
    My Investopedia portfolio
    (You need to have a (free) Investopedia or Facebook login, sorry!)

  8. #8
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    Default

    Well, what happened in the two weeks since the last post?

    18/6, MrMarket sold HAR for 89.31, exactly the target price, so we book exactly the same for this portfolio.
    22/6, MrMarket bought DW for 38.37. The port buys at the close of the day, this time for 38.40. OK.
    25/6, MrMarket sold CHKE, but that was an older holding, from before this board. This means that the new pick will bring the number of filled slots to 11 (from 14 stock slots).

    Something else happened too. I have been reporting SPY and QQQ to compare with the Following MrMarket portfolio. I compared against fully invested SPY and QQQ portfolios, and this made the Following MrMarket portfolio look bad. After all, the Following MrMarket port is still in a build-up stage. So I redid the SPY and QQQ portfolios and added one slot whenever the next slot got filled for the FMM port. Great, so now the FMM port is on top? What else do I cook the numbers for? No, the FMM port is not on top. It now stands at 20,566, while SPY stands at 20,897 and QQQ stands at 20,857. But now the numbers are more comparable. Of course, when all stocks slots are full, the SPY and QQQ ports are fully invested and the FMM port only 70% or so. But I have modelled the FMM as a timid investor.

    OK, so what does this mean, seeing that The Huge One himself claims to beat the indexes handily every year, and now again with CHKE over the period of holding it? Well, that occasionally the portfolio may drop behind. This is one of those times. That's all.
    My Investopedia portfolio
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  9. #9
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    Default

    CHKE hasn't been replaced yet, but the news from the portfolio isn't bad. It remained essentially flat, at 20,572, at a time when our benchmark ports with SPY and QQQ dropped to 20,770 and 20,650, respectively. When we realize that the Following MM port is designed to drag more cash around, that looks really, really good.

    Perhaps more illuminating is to see what influence the stocks in the red have on the FMM portfolio. If we take CBK, a company that is struggling a bit the last few quarters, we see that it stands at about a $400 loss (in the FMM portfolio). All stocks in the red draw the portfolio down for more than $2000. And yet the FMM portfo is in the black! For me, this is the true lesson of this period: it shows the wisdom of $$$Mr. Market's$$$ choice for a 14 stock portfolio. Diversification is necessary! If only to make the difference between looking at a 40% loss in the one stock you bought, and a modest gain over your whole portfolio.

    Some have said on this forum that two stocks might be optimal, but that just isn't true. It might work in a bull market; but then, in a bull market anything works. There has also been a question: which stock currently in the red to buy. Well, the portfolio has them all (from CBK onward). Their losses are already in the portfolio value. So if just any one of them turns around, the FMM port will look, well,
    Huge
    My Investopedia portfolio
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  10. #10
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    Default

    i dont think doing worse than the market is something to cheer about. I still think mr. market is a good stock picker but this year is just isnt his year.

    damn it would have been nice if we have mr. market's previous year returns as compared to the s & p


    he had a lot of winners last year so im sure he was way ahead but it would have been nice




    personally i believe its better to compare mr. market to the russell 2000 since most of mr. market's picks seem to be small cap

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