final results for January Effect 2001 portfolio:
I'm closing the portfolio after today, the first Friday in February, as I indicated in the first post of this thread.
Here are the results:
12/29/00 -- the final trading day of the year:
The Russell 2000 closed at 483.5
my port closed with a value of $ 8,405.
InfoStream's port closed with a value of $18,726.
2/2/01 -- the first Friday of February:
The Russell 2000 closed at
500.99, a change of + 3.6%
My port closed with a value of
$10,902, a change of +29.7%,
or +26.1% compared to the index.
InfoStream's port closed with a value of
$37,039, +97.8%,
+94.2% compared to the index.
These results do not reflect trading costs of commissions or spreads.
I'm pleased with my results, and they were much better than my previous years, when I also outperformed the RUT. This time I outperformed the RUT by a wider margin. I attribute my better performance this year to choosing cheaper stocks, with prices as low as $1.50 this time, and to our good luck of having a bubble burst in 2000.*
However, my results are almost embarrassingly poor compared to the superior results of Infostream. Probably the main differences were that
* his stocks were even lower-priced than mine (including Nasdaq stocks trading well below a dollar)
* he selected many stocks that that took a terrible beating in the final weeks of December. These stocks were among the best performing in January.
In my stock picking, I chose only stocks priced > $1.25, with an average of $3.40. I was more concerned with value considerations, such as cash per share and cashburn than I was with the RS during the final ~2 weeks. My analysis of my picks this year was presented here: Message 15093906
After this experience, I think I will next year put less emphasis on the safety issues like cash per share, and more emphasis on low-RS in the final weeks of December. I think I'll retain the other aspects of my stock screening: low RS for the year and high ownership levels by individuals. Since I only keep the stocks for about 5 weeks anyway, safety isn't that important. This approach, modeled after Infostream's, will have the disadvantage of higher trading costs, but the superior performance seems to more than justify the costs.
My actual trading profits were different from the paper portfolio especially because I actually bought before the last trading day of the year. In retrospect, the optimal time to buy was generally about halfway between Christmas and New Years Day. By buying one day before the last trading day of the year, my portfolio would have returned +36.3% on paper, as compared to +29.7% for buying on the last day.
* The year 2000 was peculiar because it featured a tech-stock bubble that inflated until March and then burst, leaving huge numbers of stocks at a level 90% below their 52-week high. This doesn't happen very often. I suspect that a good part of our success this year is attributable to this bubble burst.
All in all, it was a very satisfying and profitable January Effect for me, and I'd like to thank everybody here who participated and suggested stocks.
In December 2001, I'll start a new thread, "January Effect 2002." I'll post a message here, so if you bookmark this thread now, you'll find out when I start next year's thread. Please join me then. |
