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Portfolio123 » List all forums » Forum: Simulations and Portfolios » Thread: Rejecting Recommendations |
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Total posts in this thread: 17
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plan_trader
Advanced Member
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Al, How many positions do you hold? Does your approach of looking at financials give you better results over time vs the raw models you are running? Gary ---------------------------------------- Gary |
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acamus
Advanced Member
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Gary, I target about 50 stocks, both before I joined Portfolio 123 and now. I can't say yet whether my discretionary approach will result in superior results but I have started a mirror portfolio for my trading portfolio that rebalances automatically to benchmark myself against. Al |
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DennyHalwes
Advanced Member UNITED STATES Joined: Apr 28, 2004 Posts: 1555 Status: Online |
An Update: A few post ago on March 26th I gave an example of a stock (FUEL) that should be rejected. On that Monday, when it was recommended, it opened at $1.28 after trading as high as $4.22 a couple months earlier. As of April 24th it was delisted from the NASDAQ, and has filed for bankruptcy. It is currently listed as FUELQ and opened this morning at $0.27. This is why I reject some of the recommendations! Denny  ---------------------------------------- "The significant problems we face cannot be solved at the same level of thinking that we were at when we created them". Albert Einstein |
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dwpeters
Advanced Member
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Denny, That's a good example, but I have found the news can often be misleading. I trade a strategy that has done very well. The picks often have current news and my strategy trades contrary to news. For a time I tried to evaluate the news and so I rejected some picks. After going back to see how those stocks did, I realized that I was rejecting more winners than losers and so I concluded that reading the news did not give me an edge. My point is not that there are not good reasons for overriding P123, it's just that it is not so easy to trade off the news. That's what many people without P123 try to do. Don |
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Chipper6
Advanced Member
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It could be that Denny (who was helped by looking at the news) and Don (who got burnt by looking at the news) are both correct. As Don pointed out, most of the time you can safely ignore the news. In fact, there are people (such as David Dreman) who have made a carreer out of buying the 'bad' news. True, once in a while he got burnt, but overall he was successful. When there is such news the stock may be oversold. A good ranking system (and buy rules) almost always took the news into account already (think value factors, growth factors, earnings surprises...) and recommended the stock in spite of (or perhaps because of) the news. Such news is so common that a ranking system should not backtest well if it doesn't work when there is such news. In most cases if the ranking system recommends it anyways then it may mean that the stock is way oversold and will bounce up. However, as Denny pointed out, some news is worth paying attention to. One example is the one that Denny mentioned; a fraud. In such a case the reason it looks so cheap is based on false information. Value, growth momentum etc don't matter. It is all based on false information. Buyout news is also worth paying attention to, because again, the standard factors don't really matter and what really matters is invisible to the ranking engine. Chip |
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acamus
Advanced Member
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I think the news is worth paying attention to if one is prepared to be a bit contrarian. A recent example, Total SA had a gas leak at one of their rigs in the North Sea, the Elgin platform. Understanding that, I had an idea why not only Total but perhaps the other oil majors were down. I did "technical analysis" on the news, from sources like this: http://www.google.com/trends/?q=elgin+platform&ctab=0&geo=all&date=2012&sort=0 and, understanding the bad news, IMHO, better timed my entry into other oil related recommendations like CNOOC. The news peaked shortly before CNOOC bottomed. A value oriented ranking model might tell you that oil majors are down but not when it might possibly stop. Al |
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azinvestor
Advanced Member
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If you are still interested in investing in Chinese companies, you should take a look at this . "And it’s not just a few bad apples. At least 105 Chinese companies listed in the United States have been delisted, are under investigation or have financial problems, according to The Pittsburgh Tribune-Review." FYI. |
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Re: Rejecting Recommendations
