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There are guys on Motley Fools Mechanical Investing board who take the
IBD list or the VL T100 list and pass the list through additional
screens to improve the list performance.
According to my backtest results, these additional screening
techniques do work if the portfolio is being constructed on a buy and
hold basis.
The issue when applying TA, is how many stocks do you want in your
trading candidate pool. For example if you can only buy 15 stocks,
having a pool of trade candidates 200 or 300 stocks deep only confuses
the issue by giving you too many trade choices.
If the list is screened down to the 25 stocks that are likely to be
the best performers in the list of the T100, then there are only 25
stocks to use to fill out the 15 stocks necessary to be fully
invested. In that case, the portfolio winds up being only partially
invested in say 5 or 6 stocks instead of the 15 needed for both
diversification and max return.
If you want to see an example of secondary screening look at First
Trust Advisors.
http://www.ftportfolios.com/
Scroll down to the VL Target 25 and see how they do it. They publish
the results in a table along with the criteria. If you put Target 25
in the search window you can see previous portfolio's.
backtested this method also and basically, it doesn't beat the returns
from the straight up VL 100 using the criteria I've written about in
Roy's newsletter. In fact, nothing I've tested over the last 10 years
has beaten that on any kind of consistent basis. As I've said
consistency is really the issue and the key to long term trading success.
Maybe you can find a way to combine the lists that increases returns
that I haven't found. Good luck.
Super
-- In equismetastock@xxxxxxxxxxxxxxx, "metastkuser"
<andysmith_999@xxx> wrote:
>
> Thanks Super.
>
> By the way, I've always wondered if there is a downside to combining
> lists. For example, combining the T1 and IBD100 lists, ranking by RS,
> and then using only the top 50 stocks?
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, superfragalist <no_reply@>
> wrote:
> >
> > I have only traded the low caps under $10 occasionally, but as I
> > written about several times, I use the VL and IBD list all the time.
> > The trading is good in that pond as you know from the test results
> > I've published in Roy's newsletter as well as from my own experience.
> >
> > I've tested the same system on the small cap, under $10 a share
> > stocks. I've used VL's S. cap list and IBD's under $10 list, as well
> > as a filter of my own.
> >
> > The returns are excellent, but the volatility is higher, the list
> > turns over a lot and the liquidity can be a problem. Small caps are
> > often harder to screen for fundamentals and quant scores. AAII has a
> > very good screener for small caps, and their data is among the best
> > for that size range.
> >
> > For me liquidity is the big issue, so I don't trade them much. I look
> > at small cap stocks in the $10 and under price range as spending time
> > riding the roller coaster at Six Flags and the VL stocks as tending my
> > sheep herd (portfolio). They both make money, but with the sheep, I
> > can catch a nap or two, and the days pass slowly.
> >
> >
> > Super
> >
> >
> >
> >
> >
> >
> >
> >
> >
> >
> >
> > --- In equismetastock@xxxxxxxxxxxxxxx, "metastkuser"
> > <andysmith_999@> wrote:
> > >
> > > The combination of a strong set of stocks (T1, IBD, etc) along with
> > > technical analysis is powerful. Has anyone tried using this approach
> > > with micro-cap type stocks (usually in the <$8 range)?
> > >
> >
>
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