Tuesday, January 26, 2010

BAGAKOAA; January 26, 2010 Lookin’ through my back porch screen.


January 26, 2010 Lookin’ through my back porch screen.

Well it has been 5 days since I bothered you all. It was a stinky cheap scotch drinking week. The main portfolio lost most of its gains in 3 days. It got stopped out of a few positions, got out of a few financials after the words of encouragement from The White House, and a couple of spec stocks got in and out of my portfolio based upon my 8% down sell rule.

There will be an updated Salve Lucrum Portfolio posted shortly.

In a nutshell, sold off the BAC+D preferred for BAC, the GS+A preferred, stopped out of the spec BURKF, got out of the solar diffusion maker ASYS, sold out of the lithium play WLCDF- Western Lithium of Canada, got stopped out of BMY after a profitable run, got stopped out of Flowserve FLS, and got stopped out of SQM (Still a great stock-materials got clobbered over the last few weeks so my trailing stop kicked in).

There was some buying opportunities this last week too if you had some cash to invest and the guts to do it. With all the heebie jeebies in the market, VXX got added to the portfolio. That is Barclay-Schwab’s tracking ETF for the CBOE VIX. As you all know, that is the volatility index fund. When things are spooky and volatile the VIX and various other VIX tracking fund goes up. When all is calm and good, its down. I got in the VXX in the 28 range and will wait to see what other brilliant ideas our leaders come up with before I sell out of the VXX. I am guessing a jump up to at least 35 possibly 40. I got in and of a very speculative stock called WAVX. It was a penny stock I had heard something good about, checked out the 10K and 10Q’s and got scared to death and got out. This is a gambling stock only bet it if you can afford to loose it. The portfolio picked up more ARMH on the dip in prices. It also picked up more RIG and CVX in the dips in prices. It also picked up some more VZ, VOD, INTC, and APPL (Not for the main portfolio but others). The SL Portfolio has a ton of APPL and is way overweight on the stock.

So while all of this carnage was taking place, I have been playing around with stock screens. If you haven’t I suggest you do. Here is why I say this. If you can use screens to determine criteria, it forces you to understand the criteria.

Rather than hearing about a tip from Cramer, your CIO, or some drunk in a bar and acting upon it, you can use various screen to determine a stock based upon criteria you deem important.

Right now, I have been focused on PE ratio (between 5-14 as a general rule), Retrun on Equity (Above 15), Retrun on Capital or Return on Invested Capital (Above 10), and little or no long term debt. The ROC or ROIC are difficult to find in a screen, but they are out there.

Well in my search for a great screen, I went to Yahoo (Very good), Baron’s (good), WSJ (good), Schwab (VG), Financial Times (VG), Reuters’s (VG), to name a few. One of the best I ran across was FINVIZ.com. At a glance you have about 400 criteria across all indices to screen from. More than 13,000 equities are populated in this site. Their Mission Statement is “To provide leading financial research, analysis and visualization.”, and they do. Besides the screen, you can set up screens and save them for your own evaluation of each stock. This will be handy when I want to kick the tires on a stock using my own criteria.

As it has been said here and in countless other articles. If I can remove myself from the equation, I can be a better trader and investor.

Art Cashin of UBS’s Cashin Comments always has some great stories and even better intel. Today he shared the Glen Beck interview of Dick Bove to explain the comparisons of the Obama policies and those of Chavez. You should check it out. Cashin also has a trivia question at the end of each document. It is an idea worth stealing.

Here is the first Cronin Challenge:

Where did the gesture of “giving the bird” or “flipping someone off” originate from?

Send your answers to brian.cronin@padi.com

Salve Lucrum


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