BIG is trading below it's 20/50 &100 day moving averages. Right now it's 15.22% off it's high and has traded down the last 2 week.

If you're looking for a bargain in the bargain stores look at 99C Only Stores (NDN). It is trading above it's 20/50/100 day moving average, made 7 new highs in the last 20 days and is trading within 1.38% of its recent high.

Get on board with a stop loss at 7 and I think in 3 months you will agree you got a bargain.

I would enjoy hearing your comments at VanmeertenFund@aol.com

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008
VanMeerten The Amateur Strategy Lab 2008

Comments: View Comments |  Sunday August 31, 2008

As I was looking for a stock to replace my short position I was screening some long positions when my wife walked in. She saw the stock I was looking at and asked: " What does that stock do?" " It goes UP!", I replied. She looked like she wasn't convinced.

I started showing her my notes, including the 6 month price compared to it's 20/50/100 day moving averages. In the last 65 trading session it has made 27 new highs and is up 51.94% for that period. The Barchart overall average is 100 positive. That means all 13 short, medium and long term technical indicators are positive. I could tell she wasn't impressed so I continued: It is trading above its 20, 50 and 100 day moving averages, it has a 14 day relative strength indicator of 74.95%, it has had positive price increases for all periods and is presently trading only 18 bps below its all time high.

She looked at me and said: "No, what does that stock DO? Does it manufacture lawnmowers, provide services, ship products? What does it DO!"

"It goes UP! Isn't that what a stock pick is supposed to DO?"

Now Barbara is the smart one in the family. She has a BS and an MBA in Finance. She has experience as an Investment Banker and a Risk Manager. She has a staff and all sorts of computer models she's authored and follows maybe 25 companies all in the same industry. She won't make a decision until she has read every 10-K, 10-Q, S-8, every press release and listened to all the conference calls. Her staff will amass several hundreds maybe even thousands of pages of documentation.

You remember the part in Arlo Guthrie's Alice's Restaurant where Officer Obie "uses all kinds of cop equipment to take plaster tire tracks, foot prints, dog smelling prints and took twenty seven eight-by-ten color glossy photographs with circles and arrows and a paragraph on the back of each and every one of them explaining what each one was to be used for as evidence against us. Took pictures of the approach, the getaway, the northwest corner, the south west corner and that's not to mention the aerial photography."

That's what fundamental analyst do.

She asked: "What does it make? What is it's Market Share? Is that share increasing or decreasing? What is its earnings per share, book value, price/sales ratio, price to book ratio, enterprise value/EBITDA, profit margin, operating margin, return on assets and return on equity and a lot more questions.

Fundamental Analysis and Value Investing ask all those questions and more. But remember, they have tremendous computer models, and a staff and they are making multi million dollar investments. They want to know the causes behind the effects before they happen.

They want to analyze all the qualitative and quantitative data. All Macro economic, Micro economic and Nano economic data. Before you run for an Economics textbook for a definition of Nano Economics I made that term up. It's my term for all the small stuff that we aren't sure effects the outcome but someone mentioned it and it might be important so we have to put it into the model so no one can criticize us for leaving it out or ignoring it. Mister Lee my high school algebra teacher used to give us word problems with a lot of stuff we didn't need just to trick us. That's what Nano Data is.

But I am writing to the every day investor. The size of your orders mean they will always be filled. You dumping a stock won't effect it's price and you always get executions while you are still on line. You do not have the time to do all that research and sweat equity. You have a life!

I do believe the Market is efficient. All the information about a stock will eventually be assimilated and the stocks price will attain it's "true" value. The movement of the stock is a recognition that it is moving to the value all the known information says it should.

Analyst are trying to determine all the factors before they effect the price and try to predict how far it will move before it does.

I contend that I don't want to do all the work to try to be a fortune teller. If I properly use stock screeners I can detect that movement, buy the stock and try to get off the train before it stops and reverses direction. I don't not need to know why the price will move, I just have to see that it is moving and how fast and in what direction.

I look for the effect not the cause.

Just a few years ago that information was not available to the Average Joe. Now Programs like BarChart, MSN Stock Screener, Big Chart and Blocks.com make all that information available to anyone with a computer for free. They just ask you to notice the ads in the margins.

This journal won't change the practices of hedge fund, pension or mutual fund managers but maybe, just maybe it might be of use to you.

Find out how to use a stock screener to detect the momentum of stocks. Don't ask why it is moving, just detect that it is moving and get on for the ride. Online computer services let you see what is happening right now as it is happening.

This information wasn't within your reach even 10 years ago.

The you can answer the question: "What does that stock DO? It is going UP! I go LONG. It is going DOWN! I go SHORT.

I would enjoy hearing your comments at VanmeertenFund@aol.com

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008
VanMeerten The Amateur Strategy Lab 2008

Comments: View Comments |  Friday August 22, 2008

"What's up Dad?"

That's the email I got from my son James who just graduated from University of Central Florida. He had just looked at my fund's performance and wasn't expecting to seeing negative numbers. I wasn't either so I wanted to take an objective look at my transactions. I found 3 fundamental problems:

1 - I didn't dollar cost average into the market. For years I've always read that the best way to enter an uncertain market was to ease your way in by buying in slowly. You can't predict the valleys and peaks so why even try. If you buy a set amount of dollars in purchases spread over a period of time you buy fewer shares on the peaks and more shares on the dips. I wanted to get off the porch from the start to play with the big dogs and should have entered the market more slowly. I notice that's what Ken Kam is doing and he is probably right.

2 - Never try something new until you've played it a while on paper. Most of my investing experience has been in cash accounts whether it was my 401K or Self Directed IRAs. I've made money over the years by always buying long when times are good and buying defensively when the market is bad or choppy. I looked at a new strategy that I hadn't tested but sounded good to me. The strategy was that when the market was choppy there were always a few stocks going up and a few going down and it was possible to play both sides of the market. In all the past contests I've been in only long positions were allowed but this contest allowed short positions so I thought I'd take a try. Why try something just because you can?

The Market moved against me and I didn't realize it quickly enough. I am not saying that the bear market is over but since July 14 my proxy for the Market - the Value Line Index has made steady gains. It is now trading above it's 20/50/100 day moving averages and 61% of the entire Market is trading above it's 20 day moving averages so the trend is slightly to the upside.I had too many positions on the wrong side of the Market.

3 - I didn't use shorts properly. Shorts are really a defensive position and I tried to use them as a money making proposition. I will be the first to admit I don't have an original thought in my head. My head is like those connect the dot puzzles we all liked to play as kids. I've got a lot of unrelated thoughts in my head, kind of like the random dots when you begin the puzzle and occasionally a few of those dots get connected and a picture emerges. Let me connect some of those dots and see if you see the same picture I do.

Dot #1 - In the Strategy Lab Open I was on a tear and at one point my portfolio was up over 60%. My portfolio was heavy into commodities and energy not because I wanted it to be but that's what was coming up on my screeners. My portfolio started to lose momentum and out of nowhere came this guy called Aardvark that was using Ultra Short ETF's and starting to soar. At the same time I saw those Ultra Shorts appearing not only in Ron Prichard's Summary reports but also in some of the portfolios of the Pros. These weren't available until recently and now several fund families have inverse and double inverse or Ultra Shorts. I'm sure if they can figure out a way to do it there will soon be 3x and 4x shorts and then be ready for a wild ride.

Dot #2 - I had an opportunity to spend some time recently with the former Amateur Vad and he made a comment that created another dot in my mind. He said that no one could make money in the long run because in the long run there was always inflation and an expanding and growing Market. Over time the Market always goes up so you can't make money always shorting the Market.

Dot # 3 - I saw some of the pros like Andrew Horowitz - The Disciplined Investor using Ultra Shorts. Now here is a guy with a lot of experience who I know can use short selling effectively that is using these short side ETF's instead of just shorting individual stocks. If the really good pros are using these there must be something to them and they warrant looking in to.

Dot #4 In this weeks Strategy Lab Summary Ron Prichard made some comments that stated to connect some of these dots. Ron wrote:
"Of course, and particularly with Horowitz's play, we're talking about adventurous investing -- not the sort of long-term, buy-and-hold strategy most investors use by default. Shorts by nature are short-term plays; over time, stocks tend to go up.

The best a short can do for you is a 100% gain, dropping to zero. But a stock can rise forever, so your potential loss on a short is unlimited.

Whether you incorporate shorts in your strategy is up to you, but remember they take active -- very active -- management."

Basically he points out that shorts have a limited potential for gain and an unlimited potential for loss. These connected dots have gotten me to rethink my strategy. I have to agree that you can't play both sides of the Market all the time and make money. When the Market is rising, go long and stay for the whole dance. When the market is tanking make a few short commitments on the short side but cut your losses quickly. If you find a sector that is tracking contra to the market look at Short ETF's as an alternative to cherry picking the industry.

You'll be seeing me close out of most of my short positions as they lose their momentum. The Market appears to be in at least a short term upward trend so why bet against it? I'd enjoy reading your comments to see if you think I'm on the right track.

My last recommendation is this. Read all of the Pros' journals and especially Ron Prichard's Summaries. You may not be able to use all that you read but maybe some dots will be created in your mind and some day, when you least expect it, the dots will connect and a picture you never realized was there will emerge.

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008

Comments: View Comments |  Saturday August 16, 2008

The Market -
According to BarChart.com 67.59% of the stocks are trading above their 20 day moving averages and the Value Line Index has made 9 new highs in the last 20 trading sessions. Still too short of a trend to call a rally but not a Market I'd like to make additional shorts into.

My portfolio should now reflect 65% long so I'll reallocate sell my losers and add some new long positions.


"Know when to hold 'em, know when to fold 'em, know when to walk away, know when to run" Kenny Rogers - The Gambler

At the Money Show everyone was looking for stocks to buy. People would ask: " What should I buy?" and then quickly write it down. They never seemed to ask: " What values stocks are selling at a good price?" or "What growth stocks are still keeping their earnings momentum intact?" I never heard anyone say: "I'm a growth investor, what stocks do you think will grow and why?" There were very few questions about pruning out the dead wood or accumulating cash. No plan.

That's why my title is Right now the Market is like a game of Frogger. The Market is a highway going in both directions at once. Some stocks are going up and some stocks are going down and all in different directions and at different speeds. Too many investors just want to buy and never ask why or what the plan might be.

Remember that you add or delete a stock from your portfolio because it fits your plan.

The person who will make money in this market is the ones who have a disciplined plan to accumulate value, growth or momentum stocks into their portfolio and also have a disciplined plan of when to sell.

Don't just look for buy/sell recommendations. Look for advice on how to develop your plan and the tips on how you can stick to the plan.

Stock investors sometimes remind me of dieters. Everyone wants a secret quick fix. Just like weight loss has no secret, just eat right, exercise and practice portion control. Investing also has no quick fix. Study and learn, match your investing style to your needs and personality and then practice the discipline to stick to your plan.

Know that the Frog will get smashed if he jumps from lane to lane without knowing what's happening in the lane he's leaving and the lane he's going to. Don't jump into lanes until you know the where and why of the lane and don't jump in and out of stocks if you don't know why you are buying or selling.

Make your plan, then work your plan.

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008

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Looking

Comments: View Comments |  Monday August 11, 2008