Van Meerten's picks

The average Investor can beat the pros !

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85% of all the professional mutual fund managers can't beat the S&P 500. If you think the average amatuer has no chance against the pros then you are wrong. You can trade like they can't. You don't have to worry about compliance. You can over weight a good stock and you could go fully into cash and stay as long as you'd like.

With your smaller trades you can invest where they can't and most of your trades will be filled in one lot. You have flexibility they can only dream of.

Your main question is can you beat the S&P 500 and add value to the selection process. You can use market trading simulation games to test all your theories. If you find you can't beat the market with your individual stock selection then spend your time looking for fund managers that do.

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The Individual Investor

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You can learn a lot about investing by spending a day at the beach. When you first get there you ask yourself if the tide is going out or coming in. As you watch each wave, some go short and some go long. You really can't tell. You put a stick in the sand by the top of the last wave and pretty some it's either covered by water or standing 20 feet from the last wave. Now you know.

I have learned that although you may not be able to tell how high the next wave will come up the beach and you might not be able to tell which stock will go higher, it is essential to know which way the market is headed.

I use Barchart.com. Much of the site is free. It has a real good Market Momentum that tells how the market overall did that day, and what percentage of stocks traded above their 20,50,100,150 & 200 moving averages. As an additional gauge I use the Value Line Average which incudes approximately 1700 stock covering about 96% of the entire stock markets market cap.

This give me a sense of how fast and which direction the market is currently moving and how strong and long it's trend might be. I then know when to jump in and when the rip tides my suck the profit from my portfolio. You don't spit in the wind or swim against the tide.

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The Individual Investor

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My comments are not geared to the pros but to all you hard working people who want to manage your own portfolio. What I do is not rocket science. I learned from Wayne Folrey a very wise man. He told me: " I'd rather be approximately right than precisely inaccurate". The lesson was simple. All these MBAs and PHDs with the Craig Super Computers and a staff of programmers can be beaten by some one with a $1,500 dollar Dell, a computer connection, a knowledge of the internet and a $10 calculator that add, subtracts multiplies and divides. You don't need anymore than that.

All you are trying to do is find stocks that are presently beating the market and sell them when the peak. Any decent stock screen can find you stock presently rising in price faster than the S&P 500. I use BarCharts.com ( before the copyright police panick I have asked their permission to mention them and use their charts and have that in writing ).

I want stock rising faster than the market, are above their 20, 50 & 100 day moving averages and have a chart that looks steady. Using todays screen and only looking for stock beating the market over a number of periods I come up with a list of only 7 stocks that fit my criteria. Let's look at one of them -WLT Walter Industries. Fiirst I go to Barchart and look at the Quote page:

Date Open High Low Last Change Volume % Change
05/14/08 87.88 90.59 86.49 87.65 +0.08 1945683 +0.09 %
05/13/08 84.00 87.79 82.41 87.57 +3.66 1729300 +4.36 %
05/12/08 82.72 84.97 81.16 83.91 +1.45 1274300 +1.76 %
05/09/08 85.47 85.48 81.76 82.46 -2.38 1405000 -2.81 %
05/08/08 82.00 85.28 80.45 84.84 +3.06 1783400 +3.74 %

Earnings: 05/01/08 02/19/08 11/01/07 08/02/07
0.36 0.54 0.46 0.33
Price Earnings Ratio: 51.86

-- Period -- -- High -- -- Low -- -- Percent Change --
5-Days 90.59 on 05/14/08 80.45 on 05/08/08 +3.31% since 05/08/08
20-Days 90.59 on 05/14/08 66.05 on 05/01/08 +26.66% since 04/17/08
65-Days 90.59 on 05/14/08 44.11 on 02/15/08 +91.04% since 02/14/08
100-Days 90.59 on 05/14/08 30.68 on 01/22/08 +140.53% since 12/27/07
260-Days 90.59 on 05/14/08 20.33 on 08/03/07 +200.07% since 05/17/07
Year to Date 90.59 on 05/14/08 30.68 on 01/22/08 +148.16% since 01/02/08

For The Last Made New High Percent From Made New Low Percent From
5-Days 4 time(s) -3.25 % 1 time(s) +8.95%
20-Days 12 time(s) -3.25 % 4 time(s) +32.70%
65-Days 28 time(s) -3.25 % 2 time(s) +98.71%
100-Days 37 time(s) -3.25 % 9 time(s) +185.69%
260-Days 49 time(s) -3.25 % 8 time(s) +331.14%
Year to Date 39 time(s) -3.25 % 6 time(s) +185.69%

I see it is trading within 3.25% of it's high and has made 28 new highs in the last 65 day. A nice steady progression. I nest look at it's chart of price and 50 day moving average:

I buy it and sell when it drop below th 50 MA

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The Individual Investors beat the "Pros"

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For all the 600+ of you that entered this "competition", Charley Blaine has really dissed us all. This week in his column he mentioned all the success the pros have had and did not use one word of praise for all the rest of us. If they were playing against us how would they fair?

Vad Yazinski The Amatuer would be #22
Russell Carpenter CAPS would be #25
John Reese Guru Investor would be #36
Ken Kam All-star Team would be #53
Robert Walberg Dog Pound would be #80
Kelly Wright High IQ would be all the way down to #218

The pros get top billing and lots of inches of press. What about the 21 plain old folks who took them to school????

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Stop losses for the Individual Investor

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Although I've been known for some smart-ass replies I do value the opinions given to some of my questions.

Even though some of you are adverse to using stop losses I still use them. I've been toying with the proper stop loss for years and really can't decide. I know it must be close enough to save you from adverse market actions but not so close that you get whip-sawed from normal maket volitility. How close is too close and how far away isn't too far?

I've settled on 2 different ways to set my stop losses and can't really decide so I ask for your guidance. Here are my two methods and I'd like to hear your pros and cons.

1 - A SET % - Say 10% -15% below the stock's high. I'd use this as a trailing stop loss only moving the stop loss up when the stock price warrants it. The overall strategy is to at least get out 85%-90% of the that stock's market peak.

2 - Using a MOVING AVERAGE , maybe the 50 or 100 day moving average. Most TAs believe that stocks tend to have support and resistance levels. When they hit these on both the top and bottom they tend to test those levels for a period of time and either make a major break through or give up and retreat. As these stocks test those levels the moving averages tend to get tighter and tighter. Can they get too tight using this method?

What are your thoughts??

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The Ultimate Investment - Education

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The is a direct correlation between the educational level of your community and the quality of life in your community. Invest in either your education or someone else's. If you know a drop-out encourage, no nag them till they go back to school.

The higer the educational level the less likely one will commit a crime.

The higher the educational level, the higher the level of income.

The higher the educational level the less likely one will commit domestic violence.

The higher the educational level the less likely one will commit child abuse.

The higher the educational level the healthier lifestyle choices one will make and even live longer and healthier.

Write a check to help a student persue a teaching career. Teachers touch lives 20 students at a time.

Education - the best investment you can make. It's the solution to most of Society's problems

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My pick of the week -CXO Concho Resources

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I use Barchart.com as my major stock screening tool. Most of the features are free but I upgraded to the $20 per month to get more features. It's easy and straight forward so it doesn't numb my mind with useless garbage. The opinions are purely technical and with red for no and green for yes, I can understand that.

It ranks CXO as a 100% buy on all of it's TA indicators. It has had 22 new highs in the last 65 trading sessions and is presently at 1.34% below it's high of 32.75. Over the past few years it has not only increased revenue but improved it's margins. Of the 6 analyst that follow the stock all have either buy to hold with no sells or underweights.

This is an oil and gas company that acquires and develops most of it's producing properties. I can't find any reason why this stock will not continue to outperform not only the market but other oil and gas stocks as well.

Although BarChart has an indicator of a support level at 30.50, my stop loss on this stock is at 27.

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BarChart 2 picks of the week GEOI & ANR

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No hype just the facts: This week's two best industries are Oil and Gas and Metal and Mining. and the top stock in each industry are GEOI GeoResources - a vertically integrated oil company with 22 new highs in the last 65 trading sessions and ANR Alpha Natural Resources - a coal extraction and marekting company with 19 new highs in the last 65 trading sessions.

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out WSCI in CWEI

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In short duration games like this I look almost stricly at price momentum. I don't have sell targets other than trailing stop losses. I might buy and never sell and try not to get whipsawed in a choppy market.

Since the market has been good to me so far, this is my first sell ticket in this contest WSCI - WSCI Industries, Back in Feburary it was on a tear I got in around 8.75 rode it up to 18 and now it's around 12. I use Barchart because it's simple and every single one of their technical indicators is a sell. I also see short interest exceeds long volume 4 to 1. Everyone now hates this stock. After all it's in Auto Parts and who wants to be in that now.

Unfortunately volume is slow and everyone is selling so it will take Marketocracy several days to get me out ( I hope in time with some of my profit saved.)

I'm replacing it with CWEI - Clayton Williams Energy a domestic oil and gas exploration and production outfit. Yes, I know my portfolio is heavily weighted in energy but it's what's happening now and this company is in Texas, Louisiana and New Mexico. No worries about world events disrupting supply and market flow. In fact if problems disrupt oil flow from the Middle East that would be even better. The story is good and the technicals are even better: doubled revenue, 26 new highs in the last 65 days, buy signal on every single one of Barcharts tecnical indicators and within 1% of it's high. Since it's been on a fast rise ( 30% in 20 days) I'm putting a tight stop loss in at 80 and moving it several times a week.

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