Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Contrarian Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (253)	9/19/2006 5:21:08 PM
From: OldAIMGuy	Respond to of 4080

Hi EKS, Re: Method of contrary stock selection.............. I've been keeping a list and ongoing histories of several stocks going back to around 2001. You can find them at aim-users.com As you'll see, most have done fine, but there's several doggies in the pound. Overall it's a simple selection process. I don't own all of them, by any means but do own several and have for many years. (1) What triggered the contrarian stock screen? The page describes the method. It is derived from Value Line's "100 Highest Growth Stocks" list. I check it weekly for new #5 Timeliness rankings (they're quite rare). (2) were there stock specific news stories that triggered the sell off? Many times there are, but for the sake of the exercise, I don't investigate those. The ones that I happen to choose for my own account I study thoroughly and, yes, there's usually some adverse news on the company or the business sector. (3) when did capitulation finally come in? In general these stocks have taken usually about 6 months for the dust to settle after they show up on the PIC list. Sometimes longer. Value Line's "Timeliness" rank of 5 is supposed to indicate the highest possibility of under-performing the market over the next 12 months. I have found that the first 12 months is a good time to do some "volatility capture" on the holding as these stocks tend to bounce around a bit near the bottom. (4) how did you established your position? Usually once the stocks appear on the PIC list I watch them for a while in a "virtual" portfolio. When the stock retreats an additional ~15% is when I start to get an itchy trigger finger. I will buy the core position at such a time. (5) what was your strategy that you used to exit the position w/ maximum gain? Many times I find that these former "highest growth stocks" become more cyclical in nature (or maybe cyclical growth) after they've shown up on the PIC list. So, they fit well into my volatility capture program and also do okay for long term cap appreciation. I've exited or significantly reduced my position when these stocks 3-5 year price appreciation potential as defined in Value Line is less than 30% above the current price. My motto is: Buy from the Scared, Sell to the Greedy! Best regards, Tom