The Tasgall Group

Check out the latest price performance of Natural Gas. It’s at $8, up almost 33% since the mid-July low around $5.50. It’s still well off its 52 week high of $15 last December. (An end-of-day continuous contract chart is here.)

Goodness, I knew natural gas was a bargain at $5.50, but damn, that’s a bit of a price spike. You can see the payoff in natural gas stocks like Chesapeake Energy and Encana.

I’ve devised a new test for traders to weed out the losers before even seeing an account statement.? It’s kind of a taste test, so to speak.? Show them two equity curves for a couple of trading systems and have them pick the one they want to trade.? One has a steep upward slope and the other a milder, upward slope.? Otherwise they look the same with about equal volatility etc.? It’s a simple choice between more profit and less.? The secret is that the system with more profit is actually the result of a random buy-sell rule that was selected for its pretty chart.? The other, less fruitful?curve?is the result of a planned system that attempts to index to a benchmark and was successful in doing so.? In other words, one curve was most certainly luck and the other was most likely not.

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I named this post because of the Peter Principle, which essentially states what the link says it states.? I was reminded of the mention in Running Money of the fund managers who, when they reached a goal for rate of return,?took windfall profits and sat on them so as not to miss their targets for the month.? So my question is, should an investor call it quits during a given timeframe if they hit a good run and, if so, when and for how long? (more…)

Well, as a self-proclaimed avoider of stocks, I still enjoy contributing to our discussion and analysis of stock pick services. I’m still sorting out a problem in getting my Daytraders.com trial started but, hopefully, I’ll have something to report soon. In the meantime, I want to bring light to another service that looks very interesting: WhisperNumber Risk Sentiment Reports. These reports, updated weekly, provide a model portfolio with unambiguous entry/exit signals. So those are two pluses in that it isn’t a daytrading system with lots of market watching and commission expenses and the calls are not fuzzy. The theory behind it is appealing also. Here is what they say:

The concept is simple – present favorable stocks with low sentiment risk and improving technicals and heavy short interest. Conversely, present unfavorable stocks with high sentiment risk and low short interest and technicals that are long in the tooth.

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I just read one of the IITM Weekly Emails and it described an Efficiency Trading System that might be worth following.

The beginning of the article:

This system was created for someone with good market knowledge but not a lot of time. It was designed for someone who can do a thorough analysis of the markets each weekend, who doesn?t need to spend much time on the markets.

The system he describes is very similar to the one put forward in Safe Strategies for Financial Freedom, but it looks like Tharp updated it to be a little more sophisticated in the weekly email.

I am already a subscriber to the weekly email (it’s free), but you guys might want to subscribe to follow along and see how his trades work out.

Ray Johns has been publishing his model portfolio on Daytraders.com since 1997. For $39.95 per month, stock traders can follow along. His live performance record is reported on the site but what can be made from it? I decided to find out so I compiled them all into this Excel spreadsheet which assumes a $1000 investment in each trade call made since 1997. (more…)

Ok, again I mention the Yen and the end of 0% but this time I’d like to talk about it in terms of the Uberman’s Portfolio.? First of all, I’m extremely excited that I get to “participate” in this event because what better way to test out the strength of the UP in its early days than a once-in-a-decade event of this magnitude?? And to make it more exciting (and valid), I’m the “wrong” way on Yen, being short nearly 4.1 million of the little suckers (that sounds like a lot but it’s only about $35,600 worth), in the face of what is supposed to be a bullish outcome.? Now, of course, no one knows what will really happen because life isn’t that easy but being short isn’t the safest place to be I guess.? So this should really put the UP through the ringer and we can see what it’s made of.

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There can be (or should be) a distinction between “setup” for a trade, and the “entry” signal for a trade. For example, with our PowerRatings, having a high rating might not be the only criteria for entry… instead, you may want to consider a high rating a “setup”, and then wait for a entry signal (e.g., the price moving in your favor) before plunging into a position.

This could be accomplished several ways, and should be tested before using (after all, maybe this extra step causes you to lose money). One way would be to watch the shares at open, and only go long if they’ve already started an upside move. Another way would be to place a stop buy order just above the close of the prior day — if the price goes down, your stop buy never gets filled;if it goes up, you get filled, though you may face more slippage with a stop order. (more…)

It’s time.? A project that I’ve been working on extensively for weeks, probably to the great annoyance of the lady of the house, is finally at a point where I’m ready to share my work and begin testing the idea in a semi-public forum.? The working title for this project is the Uberman’s Portfolio, inspired by the infamous Uberman’s Sleep Schedule in that it never sleeps and because of the many late nights spent building the?gears and levers that make it all?possible.? Also, the acronym is UP, which is where I hope my equity will be when all is said and done.

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We discussed at our 2nd Tasgall meeting two two articles, one from Fortune and another by Dr. Fahlenbrach, regarding whether Founder-CEOs could serve as a first-pass filter for determining whether a stock is a potential long-term buy. Based on Fahlenbrach’s research, it appears that Founder-CEOs make up approximately 10-15% of the overall market. Thus, using Founder-CEOs as a first-pass filter to limit the number of stocks up for long-term investment consideration is a potentially effective tool, although it’s clear that additional filters would also need to be employed before making an investment in a company. (more…)