Placed several trades orders tonight

I put a limit order in to sell part of my Ceradyne CRDN holdings. Even if this goes through CRDN will still be my largest position.

I put in several buy limit orders. Orders to increase positions in Palomar Medical Tech PMTI and Tradestation TRAD.

Also put in small buy limit orders on Immucor BLUD and VASCO Data Security VDSI.

Other serious considerations for additions were LIFC Lifecell (which I already own), PNRA Panera Bread Company, and BEBE Bebe Stores.

I also considered lightening my Garmin GRMN position, but decided to sit tight with what I have despite the rapid run-up in price recently.

I'll have to wait until tomorrow to see if any of the orders fill.

Coelacanth

Here's an interesting story about a fisherman who pulled up a rare coelacanth, an ancient fish once thought to be extinct. In the photo note the limb-like fin for which it's "famous."

Here's more specific detail on the fish.

Mid year Marketocracy review

Mid-year review: I run some play money mutual funds over at Marketocracy.com to make sure the overall stock picking strategies/methodologies work over time.

Here's my "best effort" fund's performance SMF, a fund I've been managing properly since about mid-to-late 2002. (It's been in existence longer, but the funds were not invested fully until mid 2002.)

Here's a secondary "best effort" fund SOS started in mid-2003 that invests in a lot of the same companies as the first fund, but I've tried a more concentrated approach in the SOS fund where I sell more quickly, and hold larger more concentrated positions. In contrast, I ease out of positions more slowly in the initial SMF fund.

In both funds the past month has been very good to me, otherwise the shorter term performance would be pretty ordinary. Longer term results I think are pretty good.

I use both approaches as tests for sell strategy (sell slowly or sell quickly) because I find left to my own devices I have the tendency to trade out of winning positions too quickly.

In general both the SMF and SOS strategies seem to work well, but I think I the strategy of easing out of a position more slowly over time (the SMF approach) tends to outperform the more aggressive approach of selling more quickly (the SOS approach). This is good to know and helps me resist temptations to move out of stocks too quickly and instead let positions run longer than I would normally be comfortable doing. From a momentum standpoint, stocks that fit my investing profiles will tend run longer than I think they should so I'm probably better to give them more rope.

In practice in my real life portfolios, I've adopted the standpoint that if I'm getting the urge to sell something I own and it's nearing my "fair value" levels I'll sell only a part and let the rest ride.

Another couple interesting thing I'm learning from these funds:

1. Picking a small number of really good growth companies and sticking with them can make all the difference. My biggest dollar gainer is in the SMF fund is Cognizant Technology CTSH (also one of my real life largest holdings). I initially purchased a smallish position in the SMF fund back in August 2003 back at a split adjusted $18.60 per share. CTSH is around $85 today. I added and subtracted to the position through time, but it doesn't take many winners like that to make up for a lot of mistakes.

2. It's entirely possible that the best investments for today may be the the best investments from last year and the year before that. I haven't seen a necessity to change horses very often, as the same names typically keep turning up month after month on my valuation screens. Every once in a while I retire large positions when the business is deteriorating or clearly overvalued (BBY Best Buy and CHS Chicos FAS are two ex-large holdings that come to mind), but in general much of what's here today - especially the larger positions - was likely here a year ago.

Sailing away

This balloonist has been laughed at, derided, and given a Darwin award, but there's no doubt this has got to take guts. I'm linking to the Snopes site which asserts the tale of a man taking a high altitude trip floating with a gun in lawn chair tethered to weather balloons is true, or at least based upon a true story.

Interesting Trading Strategy

All, I apologize for not posting over the past several days. I've been swamped at work and when at home have gotten absorbed in an idea I encountered on the traderfeed.com blog.

I'm not a trader - far from it - but this got me interested, especially with the ability to do automated programs. I didn't believe this example when I first read it because based on the "random walk" hypothesis something as simple as this shouldn't exist. Basically the idea is that if you buy the S&P on days when the S&P is down and sell 3 days later then those trades will double the performance vs. buying the S&P on up days and selling 3 days later. So I had to check the data and sure enough I got similar findings.

I pulled historical S&P data from Yahoo back through 1993 and ran the test. I found that 3 and 5 day trades buying the S&P on down days averaged gains of .21% and 0.34% respectively. Buying on up days returned 0.07% and 0.13% respectively. Again, very interesting. This shouldn't exist in efficient markets - but thinking about it I think what may be at work is simply playing off of hard-wired crowd behavior and the market reflects that interplay of exaggerated fear/greed/herd behavior. Buy when everybody else is selling. Don't buy when everybody else is buying.

Of course starting from this finding leads to a million different options, but I started looking at this from different angles, and returns of buying on down days can be enhanced if you restrict yourself further to only placing these trades in generally "down" markets. I'm defining "down" markets here as a market where the current market price is down over both 30 and 60 days (rough estimates- I'm not exact in constraining dates).

In these down markets buying on down days for the S&P and selling 3 days later generates 3 and 5 day returns of 0.55% and 0.76%. In contrast buying on up days in down markets generates -0.07% and 0.04% returns on the same 3/5 day trades. In effect - almost all the enhanced benefit/value of this strategy is captured in "down" markets - when fear is presumably sitting in with investors over extended periods.

All this is very interesting to me and I'm looking at feasibility/transaction costs/investment vehicles (SPY or futures)/generating leverage/size of positions/etc, but maybe trading in some type of automated format is workable considering how low transaction costs have become.

It looks like in an average year since 1994 this approach would generate around 30 trades per year. (with minimum of 0 trades in 1995 and 70 trades in 2002.) The strategy is generally historically profitable, although you would have lost money in 2001.

So far in 2007 the down market strategy described above would have generated 9 trades that averaged 3 and 5 day gains of 0.84% and 1.35%.

Here are the trades for 2007 to give an example.



Pretty cool stuff in my view. Right now I'm trying to understand how a practical and automated implementation of something like this could be done. The cool part is it gets you into the market at times when there's a good chance for strong gains. It reduces risk by getting you out into cash for most of the year. It could also be combined with some other strategies since it only occupies capital for a portion of the year.

Most common county names - answers UPDATED

updated: I've filled in the unguessed county names below in italics. "Franklin" is tied for the second place with Jefferson. I tried to give you "turkeys" a clue but to no avail. Maybe everyone was out flying a kite.

= = = = = = = = = = = = =
If you haven't guessed yet, stop now. Go to this post first and place your guesses. Otherwise read on...

Based on guesses/emails I've received so far, here are the top county/parish names in the U.S. along with the number of times a particular name is used. My Dad got the first one and 5 of the top 6. My brother guessed 3 of the top 6 and added Grant as a guess. There's still a big common name out there that no one has guessed yet though. One of you turkeys can guess this one.

# county
31 Washington
26 Jefferson
26 Franklin
24 Jackson (go Jesse!)
24 Lincoln (for the toy logs)
20 Madison (for the famous snack treat company)
18 Montgomery
18 Clay
18 Union
17 Monroe (added after a guess from Dad)
17 Marion
16 Wayne
15 Grant

Pro-Fireworks Rant

There must be something about a day off work that brings out the best in people, but this rant in the San Francisco Chronicle in support of fireworks is one of the best I've seen in a while.

Here's an excerpt:

This country was founded on blowing stuff up, and 231 years later it continues to be the thing that we do best. And yet in the past few decades, almost every Bay Area municipality has banned the use of fireworks within city limits. It's like we don't even want to be Americans anymore.

I see two choices: Either we all start learning to speak French, or we bring the Bay Area back to the stocked-with-fireworks glory that we all enjoyed in the 1970s and 1980s. Not next week. Not after a bunch of politicians have a chance to assemble focus groups and hear public comment for three years. Right. Freaking. Now.

(Thanks to the Steve Olson Blog for the link)

July 4th

I'll post the answers to the most most common counties soon, but one of the more common county names on the list is "Jefferson."

Here is a quote from the last letter of Thomas Jefferson as he looks back nearly 50 years after the signing of the Declaration of Independence. In the letter he declines attending a 50th anniversary celebration of the signing due to ill health. He has a way with words doesn't he?

"May it be to the world, what I believe it will be, (to some parts sooner, to others later, but finally to all,) the signal of arousing men to burst the chains under which monkish ignorance and superstition had persuaded them to bind themselves, and to assume the blessings and security of self-government. That form which we have substituted, restores the free right to the unbounded exercise of reason and freedom of opinion. All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately, by the grace of God. These are grounds of hope for others. For ourselves, let the annual return of this day forever refresh our recollections of these rights, and an undiminished devotion to them." - Thomas Jefferson

(Thanks to the Marginal Revolution for the find.)

Toyota Prius

The New York Times ran an article about the Toyota Prius and its owners today. The Prius is the most popular hybrid vehicle on the road today and probably averages around 45-50mpg in normal use from reports I've seen from drivers.

from the article:
- sales of the Prius are up over 93% vs. prior year
- Over 94,000 of the Prius's have sold year-to-date June.
- Despite there being many other hybrid options available (including a hybrid Camry), most Prius owners want the Prius because it comes in only a hybrid model, and makes a statement about the driver.
- other car companies are rushing to increase the volume of hybrids to market. Here are some examples.

To me it's looking like a critical mass / concensus is forming that's on the verge of pushing a new type of automotive to the mainstream. From an investment standpoint it may be time to look at companies supporting this new industry vertical. Toyota is clearly in the lead as a manufacturer, but I'm betting suppliers are interesting too. Batteries come to mind initially, but there's also alot of energy conserving devices built into these vehicles - some of which might be outsourced.

Mroe Sreect Cdoe

Tisrh and I are gtenitg radey to go wctah smoe frie wroks oevr by the lkae. It's jsut a sorht wlak and tehy nlaolrmy hvae a pterty good sohw oevr trehe.

Hppay Jluy 4th erbedyovy!

Victoria Crater

Wow! Look at this image of Victoria Crater on Mars, the crater that the Opportunity rover is getting ready to descend into.

Might be a one way trip? (you can click the photo and zoom in - it's a fairly high resolution shot).

Here's another picture of the crater from a tad farther back.

Stock Holdings - July

It's been a while since I posted stock holdings, so here goes:

My stock holdings from largest to small-
CRDN - Ceradyne - ceramic armor (body armor)
CTSH - Cognizant Tech - information tech (India)
GRMN - Garmin - GPS systems
HANS - Hansen Natural - Energy Drinks
LIFC - Lifecell - tissue generation for reconstructive surgery (like skin for burn victims)
INFY - Infosys - information tech (India)
NGPS - Novatel - GPS system components
NTES - Netease - online video games (China)
PMTI - Palomar Medical Tech - cosmetic surgery lasers
TRAD - Tradestation - online brokerage and trading platform
CKFR - Checkfree - online billpay provider

the last 5 are really pretty small positions. I'm disappointed in the performance of recent purchases of PMTI and TRAD and am considering breaking my rule of not adding to a stock that's down, but I like both of these valuations right now.

Google's been doing well since I missed on my limit order a while back. I probably shouldn't have been so stingy on it as it seems on the move currently.

In the live and learn category: I sold half of my position in Garmin on 12-4-06 at 50.47. Garmin is at 76.05 today, up over 50%. Sometimes I should just keep riding a winning horse. I sold with expectation of buying back at lower prices, but sometimes the market doesn't give you that chance.

Hansen Natural Rumor

HANS - Hansen Natural is one of my larger stock holdings.

There's a rumor posted from Forbes saying that Anheuser-Busch may be looking to buy Hanson Natural. Anheuser-Busch already has a major distribution agreement with Hanson's Monster Energy drinks.

Here's the other part of the rumor from NASCAR - if the buyout happens Dale Earnhart Jr. might be driving a Monster Energy Drink car next year... Heres' the story.

It's all rumor, but it seems plausible to me.

Most common county name?

What is the most common county name in the United States?

Think about it and check back in later (or post your guess in the comments section).

Update: 7-2-07. I already have a correct answer by email for the #1 county from my Dad. I'll wait a couple of days to post the answer. The most common county name occurs in 31 of the states.

While you're at it, think about #2-5 also. These are all common county names, occurring at least 24 times.