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  • 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

      6/15/07t>
    TABLE A
    PERFORMANCE ~ ACE'S STOCKS W/ PICK PRICES ABOVE 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)
    Markwest Hydrocarbons, Inc. (AMEX\Oil & Gas Operations)
    MWP 02/16/07 $56.56
    $55.85*
    $52.42 10/16/07 -- $58.91 08 5.48%
    Bon-Ton Stores, Inc. (NASD\Investment Services) BONT 03/16/07 $55.15
    $54.90*
    $51.77 10/16/07 -- $20.89 07 (61.95%)
    Eastern Co.
    (AMEX\Auto & Truck Parts)
    EML 03/26/07 $27.72
    $27.51*
     
    $26.52 10/26/07 -- $19.80 07 (28.03%)
    Volvo ADR
    (NASD\Auto & Truck Manufacturers)
    VOLV 04/01/07 $84.07
    $15.51*
    $82.60 10/01/07 -- $17.74 06 14.38%
    Brush Engineered Materials, Inc. (NYSE \ Industrial Metals & Minerals) BW 04/06/07 $51.78 $49.36 10/06/07 -- $52.32 06 1.04%
    Millicom International Cellular Co. (NASD\Communication Services) MICC 04/13//07 $83.73 $81.35 10/13/07 -- $92.13 06 10.03%
    Southern Copper Corp.
    (NYSE\Mining)
    PCU 04/27/07 $82.27
    $79.62*
    $80.38 10/27/07 -- $136.57 06 71.53%
    Partner Communication Co. (NASD\Communication Services) PTNR 05/07/07 $16.45
    $16.08*
    $16.33 10/07/07 -- $17.17 05 6.78%
    Precision Castparts Corp. (NYSE\Construction Supplies & Fixtures) PCP 05/11/07 $110.91
    $110.86*
    $107.89 10/11/07 -- $145.45 05 31.20%
    Constellation Energy Group (NYSE\Electric Utilities) CEG 05/18/07 $94.97
    $94.01*
    $93.46 10/1807 -- $89.79 05 (4.49%)
    LAN Chile ADS (NYSE\Airlines) LFL 06/01/07 $81.27
    $15.96*
    $79.91 10/01/07 -- $16.04 04 0.50%
    Potash Corp. Saskatchewan
    (NYSE\Non-metallic Mining)
    POT 06/15/07 $77.62
    $77.46*
    $73.49 10/15/07 -- $109.32 04 41.13%
    Deckers Outdoors Inc.
    (NASD
    \Footwear)
    DECK 06/22/07 $93.91 $93.00 10/22/07 -- $118.47 04 26.14%
    Nokia Corp. (NYSE\Communication Equipment) NOK 07/06/07 $28.92 $28.35 10/06/07 -- $36.53 03 26.31%
    Loews Corp. (NYSE\Insurance)/font> LTR 07/13/07 $51.86
    $51.79*
    $51.64 10/13/07 -- $50.12 03 (3.22%)
    Trimble Navigation Ltd. (NASD\Scientific & Technical Instruments) TRMB 08/24/07 $36.99 $36.29 10/24/07 -- $42.29 02 14.33%
    Cummins Inc.
    (NYSE\Misc. Capital Goods)
    CMI 08/31/07 $118.42 $113.34 10/31/07 -- $119.96 02 1.30%
    Gamestop Corp.
    (NYSE \ Retail - Technology)
    GME 09/07/07 $48.21 $47.74 10/07/07 -- $56.72 01 17.65%
    Garmin Ltd.
    (NASD\Scientific & Technical Instruments)
    GRMN 09/14/07 $106.66
    $106.36*
    $104.61 10/14/07 -- $113.99 01 7.17%
    Apple Inc.
    (NASD \ Computer Hardware)
    AAPL 09/21/07 $144.15 $138.55 10/21/07 -- $170.42 01 18.22%
    Varian Semiconductors Equipment Inc.
    (NASD\Semiconductors)
    VSEA 09/28/07 $53.52 $53.48 10/28/07 -- $43.07 01 (19.53%)
    A   V   E   R   A   G   E   S 4.29 8.35% (or 1.95%/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




  • 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.

     
    Stock Name  Symbol Pick Date Stock Picks
    48-Mo. Gain
     
    S&P 500
    48-Mo. Gain
     
    Novastar Financial
     
    NFI
     
    7/20/01
     
    1,712.10%

    2.01%
    Southwestern Energy SWN 4/01/04 1,033.22%   21.02%
             
    Hovnanian Enterprises HOV 2/16/01 896.97% -7.01%
    Jos. A Banks JOSB 3/12/02 892.79% 9.94%
             
    American Vanguard AVD 10/26/01 653.57% 7.86%
    Quality Systems QSII 2/10/03 649.13% 72.02%
    Vimpel Communications VIP 9/10/03 624.05% 43.60%
             
    NVR Inc. NVR 10/20/00 579.73% -20.99%
    Novastar Financial NFI  4/02/02 565.74% 13.91%
    Immucor Inc. BLUD 10/01/02 563.02% 57.55%
    Doral Financial DRL 11/17/00 535.22% -13.58%
    Holly Corp. HOC 4/12/01 443.48% 0.36%
    Ryland Corp. Inc. RYL 1/12/01 405.68% -9.92%
             
    Olympic Steel ZEUS 6/01/04 353.45% 24.90%
    Sanderson Farms SAFM 9/21/01 337.91% 25.32%
    Asta Funding ASFI 12/14/01 336.73% 11.79%
    Beazer Homes Farms BZH 11/24/00 310.18% -11.93%
    Barnwell Industries BRN 1/01/01 307.40% -8.82%
    World Fuel Srvcs. INT 12/07/01 305.16% 7.94%
    MDC Holdings MDC 12/22/00 298.31% -7.38%
    Mobile Telesystems MBT 9/10/03 277.77% 43.60%
    Twin Disc Inc. TWIN 6/01/04 270.37% 24.90%
    Frontier Oil FTO 4/27/01 267.00% -7.71)
    Sasol Ltd. SSL 4/12/02 256.11% 15.94%
    Lennar Corp. LEN 12/15/00 253.63% -8.09%
    Centex Corp. CTX 1/26/01 253.17% -13.35%
    Iberia Bank Corp. IBKC 10/20/00 239.37% -20.99%_
    Carmax Grp. KMX 4/20/01 235.95% -8.49%
    Independent Bank IBCP 2/09/01 204.65% -9.34%
    Standard Pacific Corp. SPF 12/15/00 200.75% -8.09%
             
    Old Dominion Freight ODFL 4/08/03 198.55% 64.38%
    NVR Inc. NVR 2/11/02 192.92% 13.94%
    Village Supermarket VLGEA 6/22/01 190.66% -0.94%
    Sierra Health Srvcs. SIE 2/02/04 188.07% 22.92%
    Pulaski Financial PULB 2/25/02 170.51% 16.22%
    Toll Bros. TOL 12/01/00 168.76% -9.42%
    Air Methods AIRM 9/28/01 164.64% 16.90%
    Wellpoint Health WLP 2/08/02 164.40% 15.46%
    Headwaters Inc. HW 5/25/01 159.32% -6.88%
    Tractor Supply TSCO 11/11/02 156.98% 57.60%
    Kinder Morgan Energy KMP 10/27/00 153.77% -18.42%
    Courier Corp. CRRC 4/15/02 149.30% 16.92%
    Riverview Bancorp RVSB 3/05/02 143.87% 12.31%
    Northrim Bank NRIM 2/23/01 133.49% -4.42%
    Orleans Homebuilders OHB 3/01/02 128.88% 14.09%
    Newfield Exploration NFX 4/01/04 125.59% 21.02%
    Tesoro Petroleum TSO 6/14/04 117.65% 20.86%
    Coventry Health CVH 12/10/03 93.44% 43.14%
    Education Development EDUC 10/12/01 90.47% 7.88%
    A.O. Tatneft TNT 4/05/02 83.90% 16.82%
    Hovnanian Enterprises HOV 9/03/02 78.02% 49.31%
    TCF Financial. TCB 11/10/00 72.16% -14.87%
    Nutraceutical Corp. NUTR 12/09/02 65.98% 58.05%
    Centex Corp. CTX 1/26/01 60.64% -13.35%
    Heritage Financial HFWA 12/02/02 60.15% 49.46%
    EOG Resources EOG 12/08/00 57.43% -13.66%
    Ryland Corp. Inc. RYL 6/02/03 42.13% 58.88%
    Enterprise Products EPD 9/07/01 37.90% 13.87%
    Broadway Financial BYFC 11/19/02 33.29% 56.25%
    Loews Corp. LTR 3/09//01 31.78% -2.14%
    Beazer Homes BZH 6/02/03 28.81% 58.88%
    Barnwell Industries BRN 3/17/04 22.82% 13.60%
    Hovnanian Enterprises HOV 5/01/03 21.98% 62.21%
    Gulfmark Offshore GLF 5/01/02 21.93% 20.13%
    Coca-Cola Femsa KOF 3/21/02 21.85% 12.45%
    Escalade Inc. ESCA 1/18/02 17.67% 13.33%
    Sanderson Farms SAFM 6/01/04 13.68% 24.90%
             
    Annaly Mortgage NLY 6/07/02 -2.17% 22.25%
    CPI Aerostructures CVU 7/07/03 -8.51% 52.37%
    John B. San Filippo JBSS 4/01/03 -8.70% 65.51%
    American Woodmark AMWD 1/11/02 -8.92% 12.97%
    Royale Energy ROYL 5/11/01 -16.32% -5.99%
    D.R. Horton DHI 10/01/03 -18.43% 51.94%
    Emerson Radio MSN 12/09/02 -29.12% 58.05%
    Pilgrims Pride PPC 6/14/04 -30.84% 20.86%
    CIGNA Corp. CI 11/24/00 -39.20% -11.93%
    Orleans Homebuilders OHB 10/06/03 -50.77% 50.59%
    Standard Pacific SPF 10/01/03 -71.60% 51.94%
    Interactive Systems ISWI 1/04/02 -73.25% 8.61%
    Doral Financial DRL 7/01/03 -95.73% 53.04%
             
    A V E R A G E S     218.06% 18.78%

    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 PICKS

    As 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)

    No. Stock Name  Symbol ACE'S Pick Date ACE'S
    Pick Price
    Stock's Price on 12/31/09 Stock's Gain
    (Pick Date - 12/31/2009
    )
     No. Years Invested S&P 500's
    Gain

    (Pick Date - 12/31/2009)
    1  
    Green Mtn Coffee Roasters Inc.
     GMCR 05/15/09 $51.88 $81.47  57.04% 0.63 26.30%
    2  
    Hansen Natural Corp. 
     
    HANS
     
    07/01/05

    $10.61
     
    $38.40
     
    261.92%
    4.42  
    -6.64%
    3 Terra Nitrogen Company  TNH 09/01/04 $10.37 $104.08  903.66% 5.25 0.83%
    4 Southwestern Energy Co.  SWN 04/01/04 $2.98 $48.20  1,517.45% 5.67 -1.51%
    5 Clean Harbors, Inc.  CLH 07/25/08 $79.09 $59.89  -24.28% 1.42 -11.34%
    6 Quality Systems Inc.  QSII 02/10/03 $4.95 $62.80  1,168.69% 6.83 33.39%
    7 Deckers Outdoor Corp.  DECK 06/22/07 $93.91 $101.72  8.32% 2.50 -25.79%
                     

    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). Autozon
    Humanae'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).

    STOCK NAME SYMBOL DATE PICKED
    Watson Pharmaceuticals WPI 02/12/2010
    Goodrich GR 08/28/2009 & 10/12/2007
    VF Corp VFC 09/09/2011
    Intuitive Surgical ISRG 03/19/2010
    Master Card MA 12/04/2009
    Chipotle Mexican Grill CMG 12/03/2010
    Cerner CERN 10/09/2009
    Cabot Oil & Gas COG 06/20/2008

    ^Top page


     

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      Last modified: 10/12/14