My topic for today’s meeting will be a tactical one, and I hope to answer the question, “How can I limit the risk of the fundsI put into a given mutual fund?”

I use mutual funds for general asset allocation, usually for funds in taxable accounts to minimize taxable sales. (I use my retirement accounts for trading that typically creates holdings of less than 1 year.) At times, I might choose to invest large amounts in a single mutual fund to get to my asset allocation targets (e.g. 20% in international stocks).

If international stocks or gold stocks go down a helluva lot (which they have great tendency to do), do I just accept it as my fate? Not I… So, how do I limit my risk?
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This will be the most juicy post thus far regarding PowerRatings. I signed up for the free trial (required a credit card, so I used one that’s set to expire on 7/31/2006–ha ha). I went straight to see the top 25 stocks with PowerRatings. They are posted below: (more…)

In response to the comments from Data Set #1 post, I have created a second data set to lookup the PowerRating on each of the 500 stocks (large cap) in the S&P 500. I will bring a print-out of my findings to the upcoming Tasgall meeting and this will be the topic of my discussion. A summary of my findings are below: (more…)

Well, I didn’t get much data that was worthwhile from Trading Market’s PowerRatings system. Since the free tool that they have available allows you to plug in one by one the stocks you’re interested in, I ran 3 separate screens from another site to create a bag of stocks to use. I just picked a random stock screening site and used their built-in screen to search for the best Value stocks, best Growth stocks, and stocks with Recent Brokerage Upgrades.

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Well, Friday saw the release of the real PCE, my favorite of macroeconomic indicators and the one I feel leads all others down the road.? After revisions, the drop from the last release was pretty intense, from around 4% y/y to only 2% y/y.? This is like a bomb siren.? Rather than buying a new set of Gucci loafers, the consumer may be buying cement shoes for corporate profits.? I expect that the next set of quarterly numbers could begin to paint the next few months red in the equity markets.? And given the recent rally in stocks, the old adage of sell high comes to mind.

Think about all the interconnections that go into this.? Oil/gas demand could finally fall leading to lower prices in a commodity that isn’t in low supply to begin with.? Corporate profits will decline with less spending.? All of this would call for lower interest rates which means a lower dollar.? But the Fed might have a hard time lowering rates now without causing a crises due to the amount of government debt owned by foreign entities (lower rates makes our debt less attractive).? I wonder if Ben likes his new job.

You can draw connections all day long and get pretty tangled up.? The key is to find good value in all of this and exploit it, especially after any declines in asset prices in your favored vehicle.

Every day, Trading Markets has a web link to Everything you need to know for day-of-the-week. Consistently in the past week, nothing’s been out of the 3, 4 or 5 range, which based on their site means that none of their indicators are leaning in any particular way on these stocks. While they don’t tell you want indicators are used in the PowerRating formula, I’ve found that you cannot get a PowerRating on any stock that hasn’t been trading for more than 200 days. A “How To” for PowerRatings can be found here. Based on their studies which have been back-tested to 1995 (yeah, I know, it’s relatively easy to find something that would have worked if you only knew about it), stocks rated 9 or 10 have on average been the S&P 500 over the next 5 days by a better than 14-1 margin. The success rate? Unsure, and there’s a paucity of information that I could find by searching for independent testimonials, independent commentary, or external reviews of the PowerRatings system.

Make no mistake, there’s something slightly shady about this since everything on the site points to standard glitz and glam to make things look so easy. What I’ll do over the next month is come up with several batches of stocks (let’s say 30), get PowerRatings on this batch and see how the do after 5 days. I’ll do this as many times as I can and report the results here.

My daily routine is non-existant, mainly due to my investment choices thus far. As you both know my focus in on asset allocation coupled with dollar cost averaging within me and my SO retirement accounts. One account gets 2 installments per month, the another gets one installment per month, and our IRAs get one installment per year which I try to market time as much as possible within a range of 1-2 months in the year. My investment options are self limited at this point to index funds, since that allows me the ability to minimize expenses and go along with the research that shows that index funds out perform 80% or more of the actively managed funds. Since I cannot invest in many of the excellent actively managed funds anyway within my employer sponsored retirement accounts, I don’t bother looking too hard at the actively managed funds–not a good use of my time. (more…)

On a daily basis, I do a couple of things…

  • Daily news & chart briefing
  • Monitor news and markets during the day
  • Review positions to see if I should sell anything (preferably before close of day)
  • End of day review

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I’m curious about what each Tasgall member does each day to keep a finger on the pulse of the world and the markets in particular.? For example, do you have a morning routine of blog reading or news watching?? What charts?and such do you check on a regular basis, if at all?? How often to you deal with your investments and in what manner?

My routine is constantly changing and growing, primarily because I’m constantly finding new sources of information from other people.? But this is what it typically involves:

  • A quick check of updated Bloglines feeds focused mainly on sites like Minyanville, Economist’s View, Big Picture, etc. and, of course, Tasgall.
  • Write something on Tasgall blog.
  • Log into Barchart.com ($) and check the latest futures charts for a general picture of commodities.
  • Pull up my FX accounts to see how things are looking.
  • Spend some time checking my personal finances to make sure everything is on track.
  • On weekends, rebalance my Uberman’s Portfolio (new).
  • Also on weekends, spend some hours throwing around new ideas and testing them.
  • In general, try to find?convergence between what I’m seeing and reading and hearing.

All in all, nothing too fancy or regimented, but it’s what I find myself doing day-to-day.? I’d like to peek into other people’s routines to see if I can adopt some good habits.

I absolutely enjoyed this and will be posting these somewhere to be in view at all times and will recite them daily:

Defining Features of Market Pros

Hopefully, The Tasgall Group is a perfect way to fulfill #5.

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