Investing

Trading idea- Based on Graham (TSX)

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  • Nov 18th, 2017 11:29 pm
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Nov 30, 2010
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rodbarc wrote:
Nov 4th, 2017 10:37 pm
November 5, 2017 signal:

SELL: SJ
BUY: TIH

Stats updated on the website.

It now features the status for the market timing indicator as well.


Rod
Thanks for adding in the market timing.
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Oct 20, 2011
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rodbarc wrote:
Nov 4th, 2017 10:37 pm
November 5, 2017 signal:

SELL: SJ
BUY: TIH

Stats updated on the website.

It now features the status for the market timing indicator as well.


Rod

Thanks for the update Rod! I was wondering if it would be a good idea to include the ranking stats with the latest buys/sells. The holding table is always updated with the latest - so that's great, but it would be interesting to see the latest ranking stats for the positions that we are selling and the new one that we are buying as well.
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Another 5.8% drop for ZCL, lol.
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ksgill wrote:
Nov 6th, 2017 3:09 pm
Another 5.8% drop for ZCL, lol.
And that's why you shouldn't gamble with one position. :) I've always suggested to buy all 10 stocks to follow the model.
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kimnhacle wrote:
Nov 5th, 2017 12:13 pm
Thanks for the update Rod! I was wondering if it would be a good idea to include the ranking stats with the latest buys/sells. The holding table is always updated with the latest - so that's great, but it would be interesting to see the latest ranking stats for the positions that we are selling and the new one that we are buying as well.
A stock is usually sold when rank falls below 80. It's not straightforward to see that info, and posting the rank before the rebalance adds little value as it's outdated. The info is posted after the rebalance as it deals with the latest rank update. I'll try a mechanism to display ranks for each addition and deletion nevertheless. Some buys are close to rank 80 (as not every stock meets Graham's criteria), while others are highly ranked.


Rod
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rodbarc wrote:
Nov 6th, 2017 3:51 pm
And that's why you shouldn't gamble with one position. :) I've always suggested to buy all 10 stocks to follow the model.
It was a gamble, sold at $11, oh well. That's why I buy the whole index as opposed to picking stocks. It was a good experience, worked great for my confirmation bias. :)

Question: If you have a sell signal and you sell a stock at a 20% loss and replace it with another stock, is that loss reflected in performance data? Are you tracking the total dollar amount or are averaging the individual stock returns?
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ksgill wrote:
Nov 6th, 2017 5:51 pm
It was a gamble, sold at $11, oh well. That's why I buy the whole index as opposed to picking stocks. It was a good experience, worked great for my confirmation bias. :)

Question: If you have a sell signal and you sell a stock at a 20% loss and replace it with another stock, is that loss reflected in performance data? Are you tracking the total dollar amount or are averaging the individual stock returns?

Your bias was confirmed with one trade that closed for a loss? You bought a stock that just reported disappointing earnings, so not much of a surprise that negative sentiment continues today, right? Because the model is live for 2 years and continues to outperform the market, so you don't have to pick stocks, the model will do it for you :). By design, there will be losses when picking stocks, regardless of the method chosen. In any case, apples and oranges to compare with indexing. Both have pros and cons. Neither is for everybody. I believe in cherry picking stocks, and writing models for it, so the odd bad apples don't take the merits of apple picking in the long run. If I were unable to beat the market, I'd work harder, fix my models, and then beat the market. Comparing a trading strategy with indexing is a pointless anyway, because the model doesn't simulate getting the whole basket at market price as the index does. Also, the model attempts to time the market, and the index doesn't. Different strategies for different goals.

Yes, performance is reflected accordingly and the lower proceeds from SJ were used to buy TIH. There's no added cash into the model. The model rebalances trying to keep an equal weight for transactions over $1,000. ZCL hasn't been sold yet.


Rod
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That's how confirmation bias works! Btw, 5 out of your 10 stocks are showing negative returns albeit the overall gains are much higher than the losses.

ZCL hasn't been sold = there is a chance it'll go up in the next 4 weeks? Earnings were missed by what, 4% and the subsequent loss was 21%... sounds like it's in the oversold territory. Good luck tomorrow.
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xb0yHF wrote:
Nov 6th, 2017 4:47 pm
I’m just gonna add more to ZCL 🤷‍♂️
ZCL was hit hard on disappointing earnings, not weak fundamentals. From a fundamentals perspective, gross margin is decent at 23.1% TTM. ROE is 16.2%. Net margin is 10.1% TTM. Dividend increased over 50% and payout ratio is at 71%. ZCL's net margin has been higher than its industry group (Containers & Packaging) for each of the past 5 years. From the 8 firms in this sub-industry that has reported debt-to-capital, ZCL is one of 4 companies whose balance sheet is free of long-term debt. ZCL accrual ratio is -11.3%, much better than industry peers which is 4.1%. The accrual ratio is a way to identify how companies are generating cash (without looking at earnings, which is more complex). The formula is (net income - free cash flow), divided by total assets; when free cash flow is greater than net income, cash earnings are higher than accrual earnings, and the accrual ratio is negative (which is good). Unfortunately, negative sentiment until the stock finds a bottom, and since the model is focused on short term investing, it will sell once the stock falls of the top 20% quintile.

Ranking deteriorated today again, and if it continues this way, it will be sold next Monday. It's best to not let emotions make any decision for us - hence I follow blindly in the system.


Rod
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ksgill wrote:
Nov 6th, 2017 8:29 pm
That's how confirmation bias works! Btw, 5 out of your 10 stocks are showing negative returns albeit the overall gains are much higher than the losses.

ZCL hasn't been sold = there is a chance it'll go up in the next 4 weeks? Earnings were missed by what, 4% and the subsequent loss was 21%... sounds like it's in the oversold territory. Good luck tomorrow.
ZCL has been held for 3 months now, so it will be sold as soon as it drops from the top 20% quintile ranking. At the current pace, it will be sold next Monday.


Rod
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OMG ZCL finally showing some life... Will it be enough to not get voted out on Monday?!
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boyohboy wrote:
Nov 9th, 2017 10:54 am
OMG ZCL finally showing some life... Will it be enough to not get voted out on Monday?!
Unfortunately, no. It's ranking at 46 now. It's ranking at 99 at quality, because fundamentals remain solid, but it's ranking poorly at momentum and growth. It's ranking ok at value. Likely to be sold on Monday.


Rod
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Oct 7, 2017
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I’m going long on ZCL
Last edited by xb0yHF on Nov 9th, 2017 6:28 pm, edited 1 time in total.
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xb0yHF wrote:
Nov 9th, 2017 6:12 pm
I’m going long on ZCL
See rodbarc's post above. I think you guys should all sell your ZCL on monday. Grinning Face With Smiling Eyes

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