Van Meerten's picks

At the time I'm writing this journal the Value Line Index is trading above its 20/50 & 100 day moving averages and the total Market has 57% of all the stocks trading above both their 20& 50 day moving averages. Not a rally but a definite upside momentum.

Journal:

Believe it or not I got a call once from a guy who said all his friends had office jobs and day traded at work. He had a job where he was out at job sites all day away from a computer but wanted in on the action. Could he day trade at night?

I was very tempted to show him how FOREX trades 24/7/365 but some little cricket on my shoulder told me I would be leading a lamb to slaughter. He had no idea what he was doing. I convinced him to subscribe to a good newsletter and then put in stop losses that would trigger during the day so he'd feel like he was always in on the action. He eventually did quite well.

The Strategy Lab has been in play for a full month now so it's time to evaluate what has happened. Well really nothing has happened. I'm about dead even.

I have gotten some emails that accuse me of being very close to an evil day trader and been called a speculator not an investor. There is a difference. A day trader wants in and out with small profits sometimes even in the same stock. I'll buy a stock that shows present promise and hold it until it no longer shows that promise. It might be for a week or it might be for several months. If it meets my criteria I stick with it, when it doesn't I move on.

How is that any different from value or growth investors who makes a watch list and remove stocks when "They no longer meet my criteria"?

At the 30 day mark John Reese is leading the pack with a 4.37% return. I'm dead even. What's wrong? The portfolio I run on Marketocracy VMNHI that uses the same methodology is up 3.92% for the month.

I compare my results in the Strategy Lab to my Marketocracy portfolio VMNHI. I started that portfolio in March of 2005 to test the theory that if I added stocks making new highs and sold them when they begin reversing I'd make money. The old "Cut your losses and let your winners run" theory. It's worked pretty well. At the end of June Marketocracy compared my results to the other 81,000 portfolios they monitor and found that out of 81,000 I ranked #42 for the quarter, #65 for the past 6 months and #24 for the past year. I think being in the top 100 out of 81,000 portfolios for all three periods verify my theory. So why the difference?

The only difference between the 2 portfolios is that all the Marketocracy positions are long positions and the Strategy Lab contains both long and short positions.

Either this is not the time to be short in anything or I don't know how to pick short positions are the problem.

So that brings us back to the title of this journal and some of you are asking what the title has to do with all this? The guy who called me wanted to day trade even though he didn't know how because everyone else was. I guess I decided to short some stocks just because everyone else was too.

Moral of the story: Stick to what you know works and don't do something just because everyone else does.

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 |  Wednesday September 3, 2008