|
| |
STOCK CAP'S PERFORMANCE -
WHO'S TOP GUN?
(Posted: 11/28/07)When we
are buying a stock, do we consider the stock's capitalization as a factor in our
buy or no buy decision? If we do, do we have a basis why we prefer one cap over
another? Is there a relationship between a stock's capitalization and its performance?
Let's find out.
From 2000 to 2004, ACE'S have picked micro-, small-, mid- and
large-cap stocks. Starting in 2005, ACE'S have confined its picks
to small-, mid- and large cap stocks. We have often heard or read the
conventional wisdom that "small-caps have higher gains but are riskier"; whereas
"large caps have lower gains but are less risky". How does the latter
conventional wisdom stack up against ACE'S historical figures?
Let's check it out.
We tabulated the 12-month gain (loss) of our micro-, small-, mid- and large cap
stocks from 2000-2006, and compared those gains (losses) versus the
corresponding S&P 500 gains (losses). SEE: Table A below.
RECAP
1. Capitalization do matter for ACE'S stocks. Table A and the
ranking below shows that
ACE'S mid-caps are the dominant cap with a 12-mo. average gain of
70.76% (vs. the S&P's 3.17% gain). The mid-caps gain of 70.76% is
practically double the corresponding gains of micro-, small- and large-cap
stocks (of about 34.14%). Also, the performance of ACE'S mid-caps from
year-to-year is high and consistent.
|
Rank |
Capitalization |
(2000-2006)
12-Month
Pick Gain (Loss) |
(2000-2006)
12-Month
S&P 500 Gain (Loss) |
|
|
|
|
|
|
1 |
Mid |
70.76% |
3.17% |
|
2 |
Micro |
37.51% |
0.61% |
|
3 |
Small |
32.82% |
(2.62%) |
|
4 |
Large |
32.10% |
(2.64%) |
|
5 |
(Unknown) |
22.68% |
(4.34%) |
2.
There is a
degree of relationship between ACE'S stocks' capitalization
and their performances: Mid-caps' performance is tops (at 70.76% gain) and far
superior to the performances of Micro-. Small- and Large-caps.
ACE'S Micro-caps came in second place with (12-mo.) gain of 37.51%
(vs. the S&P's 0.61% gain); and small- and large-caps are in a virtual tie for third
place with (12-mo.) gain of about 32.46% (vs. the S&P's gain of about -2.63%).
3. Table 1 shows -- in reference to the earlier described "conventional wisdom"
-- that for ACE'S picks, small-caps do not necessarily have higher
gains and that large-caps do not necessarily have lower gains. In actuality, for
ACE'S picks, small- and large-caps had essentially the same gains;
and the top gainer is neither of the latter two.
4. On the matter of
"a basis for preferring
one cap over another":
The above findings could serve as the investor's basis in preferring one (of
ACE'S) cap over another (but not totally excluding -- for a
portfolio's cap
diversification purposes -- other caps).
TABLE A
12-MONTH PERFORMANCE ~
ACE'S PICKS BY STOCK CAPITALIZATION |
|
Year |
Stock Cap. |
Count |
%% of Total Count |
Pick
Gain
(Loss)
|
S&P 500
Gain
(Loss)
|
|
2000 |
Micro- |
1 |
17.69% |
97.16% |
(16.75%) |
|
|
Small- |
3 |
23.08% |
30.92% |
(17.28%) |
|
|
Mid- |
7 |
53.85% |
32.07% |
(18.00%) |
|
|
Large- |
2 |
15.38% |
(21.43%) |
(14.86%) |
|
|
TOTAL |
13 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
34.68% |
(16.72%) |
|
2001 |
Unknown |
2 |
6.25% |
48.84% |
(11.72%) |
|
|
Micro- |
7 |
21.88% |
22.45% |
(16.02%) |
|
|
Small- |
16 |
50.00% |
56.70% |
(18.41%) |
|
|
Mid- |
5 |
15.63% |
90.87% |
(11.84%) |
|
|
Large- |
2 |
6.25% |
(0.90%) |
(11.64%) |
|
|
TOTAL |
32 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
42.28% |
(13.93%) |
|
2002 |
Micro- |
5 |
16.67% |
(5.45%) |
2.03% |
|
|
Small- |
17 |
56.67% |
21.91% |
(14.00%) |
|
|
Mid- |
5 |
16.67% |
52.80% |
2.71% |
|
|
Large- |
3 |
10.00% |
14.39% |
(22.63%) |
|
|
TOTAL |
30 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
20.90% |
(7.97%) |
|
2003 |
Unknown |
1 |
5.00% |
(29.65%) |
10.41% |
|
|
Micro- |
4 |
20.00% |
70.84% |
21.40% |
|
|
Small- |
8 |
40.00% |
57.70% |
19.20% |
|
|
Mid- |
5 |
25.00% |
52.35% |
14.31%) |
|
|
Large- |
2 |
10.00% |
106.72% |
11.20% |
|
|
TOTAL |
20 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
51.59% |
15.30% |
|
2004 |
Micro- |
2 |
9.09% |
58.76% |
6.64% |
|
|
Small- |
5 |
22.73% |
38.18% |
7.23% |
|
|
Mid- |
10 |
45.45% |
63.92% |
6.96% |
|
|
Large- |
5 |
22.73% |
38.23% |
5.78% |
|
|
TOTAL |
22 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
49.77% |
6.65% |
|
2005 |
Micro- |
0 |
- |
- |
- |
|
|
Small- |
13 |
59.09% |
40.42% |
12.43% |
|
|
Mid- |
8 |
36.36% |
148.76% |
8.04% |
|
|
Large- |
1 |
4.55% |
48.59% |
7.59% |
|
|
TOTAL |
22 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
79.25% |
9.35% |
|
2006 |
Micro- |
0 |
- |
- |
- |
|
|
Small- |
13 |
59.09% |
(2.16%) |
12.09% |
|
|
Mid- |
8 |
36.36% |
28.39% |
12.14% |
|
|
Large- |
1 |
4.55% |
14.34% |
4.06% |
|
|
TOTAL |
22 |
100.00% |
- |
- |
|
|
AVERAGES |
- |
- |
13.52% |
9.43% |
|
|
|
|
|
|
|
|
2000 to 2006 |
Unknown |
3 |
1.84% |
22.68% |
(4.34%) |
|
|
Micro- |
23 |
14.11% |
37.51% |
(16.02% |
|
|
Small- |
6 |
50.00% |
56.70% |
0.61% |
|
|
Mid- |
53 |
32.52% |
70.76% |
3.17% |
|
|
Large- |
17 |
10.43% |
32.10% |
(2.64%) |
|
|
GRAND
TOTAL |
163 |
100.00% |
- |
- |
|
|
GRAND AVERAGES |
- |
- |
39.17% |
(1.16%) |
^Top page
DOES IT MATTER BUYING A STOCK BELOW OR ABOVE ITS EMA
PRICE? (Posted: 11/08/07)
A big challenge in profitable stock investing is timing your buys (i.e., knowing at what
price it is advantageous to buy a stock). Simply identifying and knowing that a
stock is good and buying the stock outright -- without consideration of the
stock's "relative price level" -- could subject the investor to higher degrees
of downward price movement. It is a most difficult (if not an impossible) task to
perfectly time a stock buy. At best, we can devise a method (a set of criteria)
to gauge or anticipate an advantageous buy point;
apply that method systematically;
and hope that the method works at high enough success rate. A method that ACE'S
have adopted to tackle this timing problem is the stock's "exponential moving
average" ("EMA" for short).
On February 16, 2007, ACE'S started using a stock's EMA in the pick's table of core strengths. ACE'S
thinking was that the EMA provides the investor with an objective indication of the
market's current "base" valuation of a particular stock.
Knowing the stock's (market) base price then, the investor has an indicator on how much a
stock's actual price is over or under a particular referential EMA (e.g., its
EMA-13, the 13-day exponential moving average or its
EMA-50, the 50-day
exponential moving average ), and could thus use the
particular EMA as the basis for setting the buy point for a particular stock.
(SEE: How the EMAs are put to actual
use by ACE'S).
How has ACE'S use of EMA's done so far? Does it matter whether an investor buys
below or above a stock's EMA price?
As of October 31, 2007 (and since the February 2007 EMA inception), there were
11 picks whose (pick date) closing prices were below their then respective
EMA-13s; and there were 21 picks whose closing prices were above their then
respective EMA-13s. If we assume, strictly for this study, that we could (and do indeed) buy the subject
ACE'S stocks at their then pick date closing prices, we could thus compare the
performance of the two groups of stocks' (i.e., the ones bought below and the
ones bought above their then respective EMA-13s). How the stocks have performed
are shown in Tables A & B below.
FINDINGS:
Table A shows ACE'S picks that were bought at their then closing prices (which
were below their then EMA-13 prices). These group of stocks have an average gain
of 19.52% for the averaged 4.09 month invested period (or, roughly, a gain of
4.77% per month). Table B shows ACE'S picks that were bought at their then
closing prices (which were above their then EMA-13 prices). These group of
stocks have an average gain of 8.35% for the averaged 4.29 month invested period
(or, roughly, a gain of 1.95% per month).
The tabulations thus suggests that ACE'S picks bought at prices that were lower
than their corresponding EMA-13 prices, roughly, have 2.82% point gain/month
(i.e., 4.77%/mo. - 1.95%/mo.) better than ACE'S picks bought at prices that were
higher than their corresponding EMA-13 prices. The 2.82% point gain/month
advantage, for a 12-month period, would be equivalent to 33.84% point gain advantage.
Based on the above findings, there is a relative advantage when an investor buys below a
stock's EMA price (as opposed to buying above a stock's EMA price).
A. PERFORMANCE - ACE'S STOCKS W/ PICK PRICES BELOW THEIR EMA-13
PRICES
TABLE A
PERFORMANCE ~
ACE'S STOCKS W/ PICK PRICES BELOW THEIR EMA-13 PRICES |
Stock Name,
(Business sector) |
SYM |
Pick Dt |
Pick Dt
Prce |
EMA-13
Price
|
Eval. Dt |
Cum. Div. |
Eval. Dt
Price |
Months |
%
Gain (Loss) |
|
Spartan Motors Inc.
(NASD\Auto
& Truck Mnufacturers)
|
SPAR |
03/05/07 |
$20.08
$13.35* |
$21.40 |
10/05/07 |
-- |
$17.63 |
07 |
32.06% |
NBTY Inc
(NYSE\Biotechnology
& Drugs)
|
NTY |
03/09/07 |
$47.92 |
$48.25 |
10/09/07 |
-- |
$39.78 |
07 |
(16.99%) |
|
Siliconware Precision Industries
(NASD\Semiconductors)
|
SPIL |
04/20/07 |
$9.86
$9.38* |
$10.21 |
10/20/07 |
-- |
$11.59 |
06 |
23.56% |
|
Companhia Vale do Rio
(NYSE\Metal
Mining)
|
RIO |
05/25/07 |
$43.38
$21.59* |
$43.70 |
10/25/07 |
-- |
$33.49 |
05 |
55.12% |
Terex Corp.
(NYSE \ Miscellaneous
Capital Goods) |
TEX |
06/06/07 |
$82.17 |
$82.94 |
10/08/07 |
-- |
$87.76 |
04 |
6.08% |
CAE Inc
(NYSE\Electronic Instruments & Controls)
|
CGT |
06/29/07 |
$13.34 |
$13.36 |
10/29/07 |
-- |
$13.29 |
04 |
(0.30%) |
|
Novo Nordisk A/S ADR
(NYSE\Biotechnology
& Drugs)
|
NVO |
09/20/07 |
$109.93 |
$109.94 |
10/20/07 |
-- |
$115.64 |
03 |
5.19% |
|
Vimpel Communications
(NASD\Semiconductors)
|
VIP |
07/27/07 |
$101.29
$20.26* |
$107.73 |
10/27/07 |
-- |
$3299 |
03 |
62.83% |
|
CommScope Inc. (NYSE\Communication
Equipment)
|
CTV |
08/03/07 |
$53.23 |
$57.29 |
10/03/07 |
-- |
$51.10 |
02 |
(3.83%) |
|
Johnson Controls Inc.
(NYSE\Business
Services)
|
JCI |
08/10/07 |
$114.95
$38.20* |
$115.58 |
10/10/07 |
-- |
$40.19 |
02 |
5.20% |
|
FMC Technologies Inc.
(NYSE\Oil
Well Services & Equipment)
|
FTI |
08/17/07 |
$86.94
$43.32* |
$89.06 |
10/17/07 |
-- |
$63.00 |
02 |
55.09% |
|
A V E R A
G E S |
4.09 |
19.52% (or
4.77%/mo.) |
Note: * - indicates that the original pick price was adjusted (to
reflect splits and/or dividends).
The prices above shown where extracted
from Yahoo's Finance\Historical Price tables.
^Top page
B.
PERFORMANCE - ACE'S STOCKS W/ PICK PRICES ABOVE THEIR EMA-13 PRICES
Note: * - indicates that the original pick price was adjusted (to
reflect splits and/or dividends).
The prices above shown where extracted
from Yahoo's Finance\Historical Price tables.
^Top page
WHAT THE NYSE'S MOST EXPENSIVE STOCK, BRK.A, CAN TELL US
(Posted: 10/30/06)
That's Berkshire Hathaway Inc. (Exch:
NYSE; Ticker: BRK.A; Industry: Property & Casualty Insurance), not an ACE'S
pick. The stock hit
a new high of $100,00.00 a share October 23, 2006 and closed at $103,300.00
October 27, 2006. Berkshire is a holding company which owns subsidiaries engaged
in a number of diverse business activities, the most important of which is in
the insurance business. CNN reported that Berkshire owns about 50 companies in a
variety of industries (e.g., the auto insurer Geico, the underwear maker Fruit
of the Loom and the ice cream chain Dairy Queen); and also has significant
investments in nationally known companies such as American Express, H&R Block,
Anheuser-Busch, Coca-Cola, and The Washington Post. Berkshire's 52-week price
range is $84,800 - $104,700 per share. Berkshire's chairman is the billionaire
Warren Buffet.
A recent bold move of Berskhire, as reported by CNN October 20, 2006, was a
landmark deal to take on Equitas's (a UK reinsurer) staff, operations and all its
liabilities as well as providing up to a $7 billion in reinsurance cover.
Projected benefits to Berkshire: Receipt of GBP 358 million (or about US$ 680
million) and getting control of Equitas's $8.7 billion reserves which Buffett
and his companies can then invest. In effect, Berkshire believes that Equitas'
reserves and future returns from their investments would cover the liabilities
from Equitas' insured claims. A bold move indeed. Could this move be the trigger
for the stock's price jump on October 23 - 27, 2006?
Berkshire is a special type of stock in that it invest in other companies'
stocks and also owns subsidiary companies. Thus, Berkshire's performance depends
on the performance of the stocks in its portfolio and the companies it owns.
Simple enough. Let's look then in the stock portfolio of Berkshire and see if we
can glean some secret from the portfolio.
Morningstar lists the following
38 stocks that are owned by Berkshire, as of June 2006.
STOCK NAME (SYMBOL; INDUSTRY; ASG): 12-MO. % PRICE CHANGE
-------------------------------------------------------------- ------------
American Express (AXP; Consumer Financial Srvcs; 34.30 ASG): 15.60%
American Standard (ASD; Misc. Capital Goods; 30.20 ASG): 17.80%
Ameriprise Financial (AMP; Investment Services; 30.00 ASG): 37.50%
Anheuser-Busch (BUD; Beverages (Alcoholic):; 25.05 ASG): 17.60%
Coca-Cola (KO; Beverages (Non-Alcoholic):; 28.65 ASG): 9.40%
Comcast (CMCSA; Broadcasting & Cable TV; 34.45 ASG): 48.20%
Comdisco Holdings (CDCO; Business Services; (Insuf. data, no ASG)): -2.00%
ConocoPhillips (COP; Oil & Gas - Integrated; 40.75 ASG): -3.3%
Costco (COST; Retail (Specialty):; 30.60 ASG): 15.40%
First Data (FDC; Computer Services; 24.95 ASG): -39.90%
Gannett (GCI; Printing & Publishing; 24.35 ASG): -3.50%
Gap (GPS; Retail (Apparel); 18.50 ASG): 3.20%
General Electric (GE; Conglomerates; 31.25 ASG): 3.40%
-Home Depot (HD; Retail (Home Improvement); 41.00 ASG): -8.50%
H&R Block (HRB; Personal Services; 43.65 ASG): -12.70%
Iron Mountain (IRM; Business Services; 27.65 ASG): 9.10%
Kingfisher (KGFHY; Home Improvement Stores; (Insuf. data, no ASG)):
Lexmark International (LXK; Computer Peripherals; 23.80 ASG): 49.30%
Lowe's Companies (LOW; Retail (Home Improvement); 37.05 ASG): 1.40%
Moody's (MCO; Business Services; 29.35 ASG): 24.60%
M&T Bank (MTB; Regional Banks; 36.05 ASG): 13.60%
Nike (NKE; Footwear; 32.45 ASG): 10.90%
Outback Steakhouse (OSI; Restaurants; 20.70 ASG): -11.40%
PetroChina (PTR; Oil & Gas - Integrated; (Insuf. data, no ASG)): 46.80%
Pier Imports (PIR; Retail (Specialty); 9.60 ASG): -30.3%
Procter & Gamble (PG; Personal & Household Prods.; 33.50 ASG): 13.70%
Sealed Air (SEE; Containers & Packaging; 25.25 ASG): 19.40%
ServiceMaster (SVM; Business Services; 25.50 ASG): -10.90%
SunTrust Banks (STI; Regional Banks; 37.00 ASG): 8.00%
Tesco PLC (TESOF; Oil Well Services & Equipment; 45.05 ASG): 16.00%
Torchmark (TMK; Insurance (Accident & Health):; 36.90 ASG): 18.40%
Tyco International (TYC; Conglomerates; 24.90 ASG): 9.10%
United Parcel Service (UPS; Trucking; 30.40 ASG): 2.80%
USG Corporation (USG; Construction - Raw Materials; 32.65 ASG): -15.10%
Wal-Mart (WMT; Retail (Department & Discount):; 36.20 ASG): 11.50%
Washington Post (WPO; Printing & Publishing; 27.90 ASG): 1.0%
Wells Fargo (WFC; Money Center Banks; 39.40 ASG): 19.80%
Wesco Financial (WSC; Conglomerates; 29.70 ASG): 37.90%
Based on the above, here's some interesting findings. Berkshire's stocks are in
basic industries such as restaurants & beverages, home improvement, clothing
retail, entertainment, energy, banking, insurance, publishing ... No stocks in
new industries like internet portals, search engines, exotic drugs and farout
technologies. Berkshire's stock portfolio's best 12-month performer was Lexmark
International (49.30% gain); while the bottom performer was First Data (-39.30%
loss). The portfolio's average ASG was 30.82 (which is Average); and its average
gain was 9.28%. Note though that the latter gain's time frame was 12-months,
whereas Berkshire usually holds its stocks for decades. Berkshire's (the stock)
12-month
price gain was 21.2% (not in the triple-digit league of recent super stocks
such as Hansen Natural and Titanium Metals).
Berkshire had made its longtime shareholders millionaires and Mr. Buffett a
billionaire. The company must be doing something right.
^Top page
ACE'S
"TIMELY" & "UNTIMELY" STOCKS
- HOW TO USE & HOW THEY PERFORM
(Posted: 05/14/08)"Timely" stocks are ACE'S stocks whose pick date
prices are below their EMA-13 price. "Untimely" stocks are
ACE'S
stocks whose
pick date prices are above their EMA-13 price.
ACE'S
suggests --
when a stock's pick price is below its EMA-13 price -- that the pick price IS
presently timely AND advantageous buy price for the stock. Conversely,
ACE'S
suggests -- when a stock's pick price is above its EMA-13 price -- that
the pick price IS presently NOT timely NOR advantageous buy price for the stock.
ACE'S
have used EMAs as a timing tool since
February 2007.
In realistic investment scenarios,
ACE'S
will simulate how the EMAs can be
used to time a buy, and show how the "timely" stocks fared vis-a-vis the "untimely" stocks. To
start, we first need to group
the "timely" stocks in one group (i.e., Group A) and the "untimely" stocks in
another (i.e., Group B). Our investment rule are simple: (1) Buy the picked
stock the "next day" (immediately following its pick date) at its Opening price;
and (2) evaluate the stocks three months after their respective buy dates, using
the stocks' closing price on those evaluation dates.
Note that in some instances (for "timely" stocks), at their pick date, the
EMA-13 price is higher than the pick price, but when the stock is bought the
"next day", the stock's price could rise higher than its (pick date) EMA-13
price. For example: Companhia Vale do Rio Doce's (NYSE \ RIO) EMA-13 price when
picked on 5/25/07 was $21.59 sh. (which was higher than its pick price of $
21.43, thus making RIO a "timely" stock when picked). When bought the following business
day, on 5/29/07 at its opening day price, RIO's price had risen to $21.83 (which
was $0.24 higher than its EMA-13 pick date price).
ACE'S
investment rule is to
buy the "timely" stock the "next day", at its opening day price (irrespective of
the "next day" opening price being higher or lower than the EMA-13 price). Note
though that in other instances, the "next day" opening buy price could
drop further (relative to the stock's pick price and pick date EMA-13 price.
SEE: Terex Corp. in Table A below).
Table A ("TIMELY" STOCKS - 3-MONTH PERFORMANCE
(STOCKS BOUGHT "NEXT DAY")" shows the pick date, EMA-13, "next
day", "next day" buy and post 3-month
prices
of the "timely" stocks; and their
respective 3-month gains (or losses). Similarly, Table B
("UNTIMELY" STOCKS - 3-MONTH PERFORMANCE (STOCKS BOUGHT "NEXT DAY")"
shows the pick date, EMA-13, "next day", "next day" buy and post 3-month
prices
of the "untimely" stocks; and their respective 3-month gains (or losses).
Table
A shows that the 3-month performance of "timely" stocks are,
generally speaking, superior to
those of "untimely" stocks by about 5.5% points. Table A suggests that
buying
ACE'S
"timely" stocks is
the most advantageous strategy.
Table B suggests that buying "untimely" stocks is,
generally speaking,
neither the most or the least
advantageous strategy - it is the next best thing to being the most
advantageous.
Now that we have shown that the performance of
ACE'S
"timely stocks" are
superior to those of the "untimely stocks", what if an investor likes an
"untimely stock"? Could the investor wait for the next instance when the
particular stock becomes "timely" again (i.e., its price drops blow its EMA-13)?
To answer that question, we need to create a third table; i.e.,
TABLE C -
"UNTIMELY STOCKS - 3-MONTH PERFORMANCE (STOCKS BOUGHT WHEN IT BECOMES "TIMELY"
AGAIN)". The main difference between Table B and C is this: Table B stocks are
bought the "next day" after its pick date. Table C stocks
are NOT bought the "next day" after its pick date (because it is not
"timely"). Rather, the investor waits for the day when a stock becomes "timely"
again (i.e., when the stock's price drops below its EMA-13 price at that future
"timely" date). For example: The first stock in
Table C, Eastern Co (AMEX\EML),
was picked 3/26/07 when its price was $27.26 sh. and its EMA-13 price was
$26.52. It was not bought the "next day" (i.e., 3/27/07) because it was not
"timely" (since its pick price of $27.26 was higher than its then EMA-13 of
$26.52). The next date that EML became "timely" was 4/25/07 (when its price then
of $25.22 sh. was lower than its EMA-13 on that date). EML was thus bought the
"next day" (i.e., 4/26/07) at its opening price of $26.25 sh.
Table C shows an averaged 3-month gain of 0.69%. This suggests that waiting
for an "untimely stock" to be "timely" is, generally
speaking, the least advantageous strategy. Note the "generally speaking"
qualifier in the last statement. There are individual "untimely" stocks in Table
B & C that defies the performance norm of "untimely" stocks. For example: Potash
Corp. Saskatchewan (NASD / POT), Nokia Corp. (NYSE / NOK) and Southern Copper
Corp. (NYSE / PCU) are "untimely" stocks. Yet these stocks had an
average of 23.65% gain
in Table B and 39.83% gain in Table C. Potash Corp. is also one of
ACE'S Alpha stocks.
SUMMARY
Type of ACE'S stock
3-Month Avg. Gain
"Timely" stocks (bought "next
day") 6.62%
"Untimely" stocks
(bought "next day") 1.19%
"Untimely"
stocks (bought next time they become "timely") 0.69%
What all the above suggests are the following;
1. that Table A's and Table B's timing and buying strategies are viable
strategies;
2. that the "timely" stocks 3-month performance is, generally
speaking, superior to those of "untimely" stocks;
3. there are "golden nuggets"
among the "untimely" stocks;
4. giving weight to Item 3's observation,
"untimely" stocks should not be completely excluded from an investor's buying
considerations; and
5. if an "untimely" stock is to be bought, it is more
advantageous, generally speaking, to buy the stock at an earlier rather than a
later date.
^Top page
SPIRITEDLY PROMISING! A 48-MONTH OUTLOOK FOR ACE'S
STOCKS
ACE'S discovered something interesting when we were researching the
historical performance of a recent pick, Southwestern Energy Co. (SWN). SWN was
an
ACE'S pick, for the first time, on April 2004,
re-picked on June 2005 and, recently,
re-picked a third time on May 2008. The
12-month gain of SWN picked in 2004 was 149.83%; and the 2005 SWN's
12-month gain was 61.80%. A question then pops up: How has the stock done to
date?
This is what we found: The SWN picked in
2004 gained a whopping 1,033.32% in 48 months! That is an average
of 258.33% annually. Now, that is really interesting! Was SWN's 1,000% plus gain
a "flash in the pan" or are there others? After some data mining (ACE'S have to
go thru a mound of data stretching from October 2000 to June 2004), we have the
answer: There is another 1,000% 48-month gainer -
Novastar Financial, Inc. (NFI;
NYSE delisted 1/17/2008 and now OTC listed with the ticker NOVS.PK).
Novastar was a July 2001 pick and its
48-month gain was 1,951.32% (or an average
gain of 487.83% annually).
One question naturally leads to another: How about
ACE'S other 4-year olds, how
did they do (in 48-month gains, that is)? Not too bad. On the average, the 4-year
olds had averaged a 48-month gain of 218.06% (compare with the S&P 500's average
gain, for the same period, of 18.78%). On an annual basis, the 4-year olds'
218.06% gain is equivalent to about 54.52% (compare to S&P 500's annual of
4.70%).
We have grouped below
ACE'S 4-year olds by the level of their 48-month gain (in
descending order). What this performance of
ACE'S 4-year olds suggests is primarily this: There is a
promising future for ACE'S stocks beyond 12 months.
NOTE: Above stock prices extracted from
Yahoo! Finance's historical price table. In the later table, the S&P 500
Index' symbol is "^GSPC".
24 DELISTED STOCKS Oct. 2000 - June 2008 (Stocks delisted prior to their 48-month pick anniversary)
below.
Format: Stock Name (Symbol: Pick Date)
International Specialty Products (ISP: 3/23/01);
KCS Energy (KCS: 5/04/01);
American Financial Holdings (AMFH: 6/08/01);
Port Financial Corp. (PORT:
7/13/01); Covest Bancshares (COVB: 8/10/01);
Standard Commercial Corp. (STW:
8/24/01); Racing Champions (RACN: 10/19/01);
Bay State Bancorp (BYS: 11/02/01);
Warwick Commercial (WSBI: 11/09/01);
Garan Inc. (GAN: 11/23/01);
Associated
Material (SIDE: 12/21/01); Berkshire Hills (BHL: 2/01/02);
Decoma International
(DECA: 5/17/02); Pelican Financial (PFI: 5/07/02);
Wilshire State Bank (WSBK:
6/04/02); Classic Bancshares (CLAS: 7/15/02);
New Century Financial (NCEN:
7/03/02); American Home Mortgage (AHM: 7/01/03);
Maxcor Financial (10/06/03);
Fremont General (11/20/03);
New Centruy Financial (NEW: 11/10/03);
Capital
Crossing (CAPX: 1/02/04); Wm. Lyon Homes (WLS: 2/02/04);
UICI Co. (UCI:
5/05/04).
^Top page
7 OF THE LAST DECADE'S TOP 10 STOCKS WERE ACE'S PICKSAs
published by TIME magazine December 22, 2009, the
Top Stocks of the Decade are
shown in the table below.
|
No. |
Stock
Name |
Symbol |
Stock's
10-Yr. Gain
(01/01/2000
- 12/15/2009) |
S&P 500
10-Yr. Gain
(01/01/2000
- 12/15/2009) |
|
1 |
Green Mountain Coffee Roasters Inc. |
GMCR |
7,434% |
-24.59% |
|
2 |
Hansen
Natural Corp. |
HANS |
6,455% |
-24.59% |
|
3 |
Terra
Nitrogen Co. |
TNH |
6,156% |
-24.59% |
|
4 |
Bally
Technologies Inc. |
BYI |
5,965% |
-24.59% |
|
5 |
Southwestern Energy Co. |
SWN |
5,411% |
-24.59% |
|
6 |
Clean
Harbors, Inc.. |
CLH |
4,564% |
-24.59% |
|
7 |
Amedisys,
Inc. |
AMED |
4,452% |
-24.59% |
|
8 |
Quality
Systems Inc.. |
QSII |
3, 592% |
-24.59% |
|
9 |
Deckers
Outdoor Corp. |
DECK |
3,549% |
-24.59% |
|
10 |
XTO
Energy Inc. |
XTO |
3, 533% |
-24.59% |
|
|
|
|
|
|
(Table below shows the Top 10 Stocks of the
Decade that were picked by ACE'S)
SEVEN (7) OF THE "TOP 10 STOCKS OF THE DECADE"
WERE ACE'S PICKS
(SEE: BELOW)
ACE'S Top 3
"Decade" Gainers were: (1) Southwestern Energy, gained 1,517% in 5.67 yrs.; (2) Quality
Systems Inc., gained 1,169% in 6.83 yrs., and (3) Terra Nitrogen Co., gained
904% in 5.25 yrs..
^Top page
THE S&P500'S WORST PERFORMING STOCKS OF THE
DECADE - NONE WERE ACE'S PICKS
The S&P 500's
Worst Performing Stocks of the Decade (USA Today, January 7, 2010) are
shown in the table below.
|
No. |
Stock
Name |
Symbol |
Stock's
10-Yr. Gain
(01/01/2000
- 12/15/2009) |
S&P 500
10-Yr. Gain
(01/01/2000
- 12/15/2009) |
|
1 |
JDS
Uniphase Corp. |
JDSU |
-99% |
-24.59% |
|
2 |
American
International Group, Inc. |
AIG |
-98% |
-24.59% |
|
3 |
Ciena
Corp. |
CIEN |
-95% |
-24.59% |
|
4 |
Sun
Microsystems Inc. |
JAVA |
-94% |
-24.59% |
|
5 |
Eastman Kodak Co. |
EK |
-94% |
-24.59% |
|
6 |
E-Trade
Financial Corp. |
ETFC |
-94% |
-24.59% |
|
7 |
Akamai
Technologies Inc. |
AKAM |
-92% |
-24.59% |
|
8 |
Citigroup
Inc. |
C |
-92% |
-24.59% |
|
9 |
Tellabs
Inc. |
TLAB |
-91% |
-24.59% |
|
10 |
MBIA Inc. |
MBI |
-90% |
-24.59% |
None of the above
stocks were picked by ACE'S.
^Top page
JOS. A. BANK - ANOTHER "DECADE STAR PERFORMER"
- WAS AN ACE'S PICK
Jos. A. Banks (Symb: JOSB; Exch: NASD) is in the Retail - Apparel
industry (Sector: Services). The company was the recent subject of a half-page
Washington Post article "Economy
suits Jos. A. Bank just fine". The Post sings praises on the company, the
top one being that the company's "... shares have skyrocketed 3,000 percent over
the past decade". (ACE'S Note: Actually, the company's 1-decade gain,
from 4/23/2000 (when the share's price was $1.97) to 4/23/2010
(when the share's price was $64.13), is 3,155%. During
the same period, the S&P 500 lost 16.68%).
Jos. A. Banks was an ACE'S pick
for March 12, 2002. The stock's pick price on 03/12/02 was originally
$10.40/share (in current terms, was adjusted to $4.44 share to reflect
splits and dividend payouts. SEE:
The stock's historical prices at Yahoo Finance). The stock's share price on
April 23, 2010 was $64.13. The stock had gained 1,344% from the date it was picked by
ACE'S on March 12, 2002 to April 23, 2010. Investment duration: About 8
years and 1month.
During the same period, the S&P 500 gained 4.44%.
During the same period, the stock's average annual gain was about 168%.
^Top page
AN ACE'S LOOK AT THE DICTUM "BUY LOW, SELL HIGH"
"BUY LOW, SELL HIGH". Plain enough ... but let us look at the dictum deeper.
Let us presume that we know that one special stock that we want to buy at a
low price. For example (and for realism), let us say that that stock is
ACE'S stock pick for 01/07/11: Autozone Inc.
Autozone was found to be a ACE'S
"NEWSMAKER" stock (with an ASG value of
46.67) way back on November 6, 2010. So we have identified the stock that we
like. The BIG question before us then is: How do we buy Autozone low? Simple.
We wait for its price to go down. But where is Autozone's "down" price point?
Autozone describes a continuity and infinitude of price points in any trade
day. Watching the stock's second-by-second or hourly price movement - to
pinpoint its "down" price point - would not only be a dizzying chore but
require prescience. Since we do not have the latter attribute, how does
ACE'S finds Autozone's "down" price point?
Here's how: ACE'S does not attempt to pinpoint Autozone's
specific "down" price point. Rather, ACE'S looks for a down price
"zone". To find that zone, ACE'S use a "price floor" (details on this
below). When Autozone's closing price goes below that floor, that is the
signal to ACE'S that the stock has reached a down price zone; and thus
the stock could be bought at that zone. On January 7, 2011, Autozone's price
"broke the price floor" - its closing
price ($250.67) was -4.42% lower than its then price floor of $262.27.
Definitely, for ACE'S, the stock has entered a price zone when the
stock could be bought "low".
At the stock's low price zone, it is possible for the stock's price to
further go down. Thus the reason for the investor to have that degree of
confidence - on the merits of his selected stock and the system of buying at the
stock's low price zone - that the stock would bounce back out and over the
stock's price floor.
The
"price floor" is a numerical floor. It is the "rolling" average of a stock's
closing price for the previous 13 days. Thus, if you tally a stock's 13-day
average price from day-to-day, you will have its "13-day
exponential moving average" (or "EMA-13" for short).
AutozonHumanae's current EMA-13 is shown in this
chart.
The EMA-13 (the price floor) is the chart's light blue line. As shown
in the chart, Autozone's closing price dropped below its then EMA-13 at the
start of 2011.
The floor is not a
constant number. As its source stock's closing price changes, the EMA-13's
value changes correspondingly. EMA-13 has a sibling, EMA-50 (which is the
stock's EMA for the previous 50 days). Autozone's current EMA-50
is shown in this
chart.
^Top page
2011'S TOP PERFORMINGSTOCKS - EIGHT (8) WERE
ACE'S PICKS
The year's top performing S&P 500 stocks
(MSN Money October 7 2011)
to date
are;
|
STOCK NAME |
SYMBOL |
GAIN |
|
Watson Pharmaceuticals |
WPI |
32.1% |
|
Humana |
HUM |
32.9% |
|
Goodrich |
GR |
37.0% |
|
Biogen Idec |
BIIB |
38.9% |
|
VF Corp |
VFC |
41.0% |
|
Intuitive
Surgical |
ISRG |
41.3% |
|
Master Card |
MA |
41.5% |
|
Chipotle
Mexican Grill |
CMG |
42.4% |
|
Cerner |
CERN |
44.6% |
|
Cabot Oil & Gas |
COG |
63.6% |
Eight (8) of the above stocks were ACE'S picks (SEE: Below).
^Top page
|
