Based on this attached details, Pls, help to explain can Hold ABTL.
fyi: ABTL is part of my 20 position portfolio.
In trading books and question to google, suggesting don’t hold stock before their earning date; because if some numbers are missing in the earnings; the stock will go down -20+%.
Peter lynch book says differently, hold stock in difficult time if stock has strong fundamental value.
Believe, in Quant way; -20+% pct down in a day is acceptable as we are expecting 60% win rate on a holdings.
I would like to understand how fundamental cum quant experts approach the earning date.
Kumar - I’ve tried to develop systems that don’t hold through the earnings date but have been unsuccessful. So if there is a reason to sell… I haven’t found it. Or at least I haven’t found the right strategy.
Steve
Using an assumption that when the market is trending up more stocks will have a positive announcement than a negative one, then hold stocks through the earnings date. And conversely, when the market is trending down more stocks will have a negative announcement than a positive one so sell stocks before the earnings date.
A while back, I tried to use the P123 market timing rule to avoid a stock buy and force a sell prior to the quarter earnings date if the market was trending down. I tried various values of rules similar to this:
Buy rule; Eval(sma(5,0,#SPEPSCY)< sma(20,5,#SPEPSCY) & WeeksToQ <= 3 ,0,1). If the market is trending down, & the end of the quarter was less than 3 weeks away, that rule wouldn’t buy the stock.
Sell rule; Eval(sma(5,0,#SPEPSCY)< sma(20,5,#SPEPSCY) & WeeksToQ <=1 ,1 ,0). If the market is trending down, & the end of the quarter was less than or equal to 1 week away, that rule would sell the stock.
Although I was able to affect a positive improvement, the affect only worked well when the Sim didn’t use timing to exit the market. With timing, the Sim was not buying stocks when the market was trending down so there was little of no affect. I didn’t try it with a Sim that only used timing to hedge while staying in stocks.
If anyone comes up with a good solution for this please post it for the members to see.
Thank you for the expert advice on earning date during bull market can hold if the stock has strong fundamental.
ABTL 16%+ up today; I closed the position with BIG smile. [:))]
Still, Looking for Mgrstein’s value connection/Tomyani’s approach for earning date.
I am reading books from Peter Lynch and Thorp.
Their hedge funds 15%+ to 20%+ annum performed consistently for 20+ years in their respective time, then all investor placed money expecting it will continue to grow as it is world’s top performing fund, But, It turned down to perform worst in the following few years and investor took money at the bottom and lost money.
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You also advised some time ago;
In table tennis, “Don’t get fancy, if you return the ball every time you will always win”. The same thing holds with investing. If you always sell at a profit you will never go bankrupt.
ABTL was already up 10% until yesterday from my initial buy.
I have set profit taking limit order 20% from yesterday’s close. So, It got triggered;
I have a better ranked stock in my portfolio for Mon day. (I will not look-back ABTL).
Thank you for your helps to learn P123 and I start to follow the Quant systems without emotions.
??? That seems absurd. I assume numbers missing typically refers to the level of detail between the initial earnings release and the final filing. That’s less of an issue than in the past (early releases have been including more info in recent years) but to the extent differences remain, they tend to be regarded as irritants, but not something that should send a stock down 20%. If,in fact, a stock has a big move (in either direction), it results from by-now commonplace and often temporary emotional over-reactions by idiots who think the latest piece of news (good or bad) will be extrapolated forever into the future; stoked of course, by the financial media that needs eyeballs to look at ads and understands the best way to get eyeballs is to deliver spectacle (whether substantive or not).
Can one play this tendency? These earnings-reactions trades are definitely dumb. But we can work with – make money by trading around – dumb if it occurs in a systematic manner of some sort, as is the case more often than many (i.e. what I refer to as the Value Police) realize. Portfolio123 has the WeeksToQ item, along with the usual data on surprises, revisions, etc. You have to experiment. Some things work. Some things don’t. About a decade ago, Mitch Zacks published a book on Zacks estimate revision models. It was a good book, but I suspect changes in the market environment may have taken some steam out of that specific approach. For things like this, i tend to suggest looking at books by Jim Cramer, who, notwithstanding the clown act he delivers on CNBC, is an exceptionally bright guy who really understands market psychology. (As to the TV act, don’t let it put you off. He’s just playing and he knows it; he already busted his butt doing real work and already made his money.)
Thank you for the details and ideas to handle earning date with some experiment with p123.
I observed most of the top gainer and top loser happened to be based on Earnings.
Feb-26-15 08:07PM Autobytel (ABTL) UP 24% posts 4Q profit.
Feb-26-15 08:30PM Weight Watchers (WTW) shares fall Down 35% After Weak Q4 Earnings.
Same market, same day earning announcement; Both the stocks made news for different reasons (1 with excitement another one with disappointment).
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I kept watch list for Jim Cramer Bullish/Bearish recommendations stocks from www.seekingalpha.com, around December 2012. Monitored for 3 months and 6 months.
Jim Cramer’s
Bear recommendation outperformed Bullish recommendations and
Bullish recommendation underperformed bench mark S&P 500;
What is the right methods and holding period to follow Jim Cramer recommendation’s? Does anyone has success with Jim Cramer’s stock recommendations ?
Thank you for sharing knowledge and valuable guidance.
Kumar,
Ignor Jim Cramer’s recommendations. Other people have observed the same as you: “Cramer’s bullish recommendation underperformed S&P 500”
Best,
Georg
