March 23, 2017

What happens when you eliminate the 10%

Getting rid of the top 10% of performersWe’ve been making a lot of assumptions recently, so why stop now? I was speaking with someone the other day and they made the statement that since the majority of the market doesn’t really perform that well, and the general market only increases so much as a result of a few superstars. This got me thinking. What would happen if we eliminated the top 10% of last year’s performers from our screener and ran a backtest.Firstly, let’s go ahead and get our baseline in. How have all companies done when put in the same pool over the past 17 years?…
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March 22, 2017

What is the Piotroski F-Score?

Piotroski F-ScoreWe mention the Piotroski F-Score in a lot of our articles, videos, and even within a lot of our prebuilt screens. So, it poses the question, what exactly is the Piotroski F-Score?Created by a professor of Accounting at the University of Chicago named Joseph Piotroski, the score is used to identify possible investments. Here is the score built within the Equities Lab system using the Equihack language. For each line item that is deemed true a point is added to the score. For every line item that is not true, nothing is added to the score. The score itself is broken up into three different parts –· Profitability – though not outlined in the editor, this contains the first four items of the score.…
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March 20, 2017

Are Solid Companies Really that Solid?

Firing on all four CylindersThe world is run by computers. Almost every field has been automated to a degree that the workplace wouldn’t be able to really function without technology, and finance is no exception. With HFT firms and algorithms dictating how we trade, let’s take a step back and assess the fundamentals. How integral is strong corporate performance, through the relationships between profit margin, income growth, revenue growth, and profit margin growth, to being a successfully traded company on the market.For this, we will be exploring the recently designed “Firing on all four cylinders” screen which can be found under the informative section of the Equities Lab software.…
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March 17, 2017

Traditional Technical Analysis Kinda Working

Why it’s hard to Trust Technical AnalysisOver this past month or so we‘ve been writing a lot of articles that are very pro-technical analysis. Personally, I was fascinated by technical analysis when I first started investing, but I have to say, my tastes have changed. Either way, our most recent featured screen is actually based off of the SCTR designed by StockCharts, and it works amazingly. This led me on a little excursion to find other technical indicators to test and program into our system. After a short period of time I found ABG Analytics, a Quantitative investment site, and in their technical analysis section there is something known as the “Traditional Scoring Technique” This technique looks good on the surface and hits all of the basic technical analysis points, but let’s see how it fairs.…
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March 13, 2017

Chasing the Market Never Works

Chasing Never Works Momentum based investing is everywhere, and there’s nothing we can do about it. From investing in trend lines or price oscillations, it’s an investment philosophy that is here to stay. Though it isn’t my favorite style of investing, it’s at least worth a look. Recently I was approached with the investment idea that, if you invest in the top performing industry, you are likely to make money. So, I went and created a simple industry rotation screen.  For this screen you need two tabs, the editor and industry change. In the industry change tab we look for the average of the change of close over the past year broken up into each industry.…
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March 10, 2017

Be Careful What you Short

Using the Right “Close” When I’m going through a testing process to check over a new update, my go to screen is “Close > 444”. This seems all fine and well, and will return companies that have a close greater than 444, but, believe it or not, this usage of “close” is incorrect.  Within the Equities Lab system, there are two types of close – Close and RawClose.  · Close is the split adjusted closing price· RawClose is the unadjusted closing price. This differentiation is important when you are looking at a static line using close as a parameter. Does it really make that big of a difference?…
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March 7, 2017

Cash is King – Featured Screen

New Featured Screen – Cash is KingBy this point, most of our users have become pretty good at building successful screens for their accounts. These screens can beat the market at a reasonable rate of volatility and match up pretty well to that individual’s investment philosophy. However, there is always room for improvement, and that improvement is exactly what Mr. Manzitti found when he reached out to discuss having a couple of his personal strategies featured to allow all users to have access to them. One of these screens is his “Cash is King” screen.I know you don’t have all of the information of the screen right here; but, without diving into it, what do you think this screener returns over the past 20 years?…
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March 5, 2017

Correlation Between Earnings and Close

Plotting the distanceHaving not read anything written on Seeking Alpha in some time, it was nice to see Chuck Carnevale’s articles again using strong fundamentals and taking a look at the big picture of investing rather than the short term trading that takes place today. In the specific article that I was reading I saw that he was using (insert name of program here) to plot the stock price and that company’s earnings to compare. It got me thinking, can I do this in Equities Lab, and better yet, can I take it a step further.Let’s make $SIRI our example company, let’s go ahead and plot the earnings.…
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March 1, 2017

When Your Screener “Blows up”

When Strategies go BustWhat would you do if I told you that you could have earned an average of about 50% annually over the past twenty years? Would you believe me? Would you go out and invest in the strategy? Above we have a screen that has increased by over 600,000% over the past 20 years. We’ve gone through and verified the trades and these results are actually legitimate.I haven’t been building investing strategies for long – roughly two years. And when you first begin learning about Quantitative investing, you’re told one thing more than anything else. One day, your strategy will die.…
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See how XOM's price mostly follows its earnings
February 27, 2017

Exxon Mobil: Does a prolonged earnings slide mean anything?

Looking at XOM Companies’ stock prices generally go up when earnings do.  So, when faced with a stalwart household name whose earnings have been steadily going down for two years, what should we do?   Consider Exxon Mobil.  Since it has some history (Rockerfeller founded Standard Oil in 1870), we can take the long view.  Here I present 20 years of price history. Figure 1 20 years of XOM price history Since 2007 (halfway across the chart) XOM has gone up about 5% annually, while the S&P 500 went up almost 10%.  What’s more, XOM had the same volatility as the general market .  …
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February 27, 2017

Private to Public: The IPO

 The IPO Wall Street has been salivating over for months is finally becoming a reality. Snap Incorporated, the parent company of Snapchat, officially announced it will be going public. The company will have its first day of trading at the New York Stock Exchange sometime in March (No specific date as of yet) with Goldman Sachs and Morgan Stanley as the underwriters. Snapchat is a unique company with the majority of its user base coming from a very young demographic. The company’s SEC filings revealed steady revenue growth over the past couple of years, but will this growth continue as the company competes in a sink or swim business environment?…
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February 25, 2017

About Rebalance Periods

What is rebalancing?When you first start screening and backtesting for companies you are going to be presented with a number of different variables that need to be decided. One such variable is the rebalance period. Think of a rebalance as the following.– When a portfolio is rebalanced it is assumed that all positions within that portfolio are sold, and all companies that are returned by the screener are purchased at the same weight at the same time. This activity is portfolio wide and doesn’t include individual position management.Within the Equities Lab system, you can adjust the rebalance period within the trading rules tab.…
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February 24, 2017

How Important is the Bitcoin Rally?

BitcoinBitcoin, we’ve all heard of them, and some of us even have a few. Personally, I’ve been a huge fan of the coin since early 2011 when the coins were trading at less than $5. I actually distinctly remember picking a number of them up at below the $1 mark. Where are they today? A single coin is currently trading for roughly $1200 – that’s some serious appreciation.Bitcoin since 2013BTC-e has been tracking the price of bitcoin and placing it into a quandl data set since the middle of 2013 even though the coin has been around since 2008, so we will work on this time scale to address just how investable BTC is.…
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February 20, 2017

Why are Large Caps still Increasing?

Why is Large Caps Increasing when their Earnings Haven’t Changed? It would make sense if a company’s share price increased roughly in time with earnings and profits. It’s simple, logical, and based purely on the core fundamentals of the company. This logic even worked between 1995 and 2012 as shown below.  Most everything moved in line with the overall performance of the screen. They may have larger movements in either direction, but the general shape matches up pretty well.So what does it look like after 2012?  There is no rhyme to this rhythm. There is honestly no way to explain this sort of behavior from simply looking at the fundamentals of the company.…
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February 14, 2017

Buying at the high vs. Buying at the low

Buying at the high vs. buying at the low For this article we are going to need two extremely simple screens. The first screen looks for companies who have just reached their 52 week high, while the other screen looks for companies who have just reached their 52 week low. The goal, to figure out if you should buy high and sell higher, or buy low sell high. New Highs Screener  Like stated in the first paragraph, these screens are incredibly simple. For the new high screener we are just looking for all companies whose previous close was greater than the highest close within the past 251 days.…
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February 10, 2017

Investing in Government Contractors

Government ContractsThere is no bigger consumer in the United States than the federal government. The sheer amount of money the government spends on subsidies and goods is enough to make any business’ mouth water. The Screen ItselfHow should we go about finding companies that are likely to be receiving government contracts?  We first start with four industries that we know the government spends a lot of money in. · Waste Management· Aerospace and Defense· Agriculture· Regulated Utilities When I think of the government, one of the first words that come to mind is stability to some degree.…
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February 6, 2017

Bringing Technical Analysis into Value Investing

Bringing Technical Analysis into Value InvestingThough I’m a strong believer in the fundamentals, and will die by the principals that fundamental investing works the best, I do have to admit that there are some virtues to technical investing. This is especially true when we look at how technical analysis can help us build and maintain our more fundamental and value based strategies.  The Trending Value has a very simplistic editor. Basically, for a company to pass, they just have to have a market cap of greater than 15% of the companies within the universe, and have an O’Shaughnessy VC2 score of greater than 90% of the market.…
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February 2, 2017

Protecting Your Portfolio in a Possible Recession

Recession ProtectionAs people become more jumpy when it comes to the market, I decided to take it upon myself to build a screen that we could use in order to protect ourselves in the event that we do enter another recessionary period. Now, I want it to be known that I don’t necessarily believe that another recession is imminent; rather, I just like being prepared for any situation.Sadly, there are only two recessions over the past 20 years, so we don’t have a ton of data to work with which results in a lot of guesswork and relying on fundamental factors to find companies that are secure rather than trading via speculation.…
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February 1, 2017

StockChart’s SCTR Really Knows how to Rank Technical

SCTR – Technical Analysis Equities Lab has historically focused our screening efforts on identifying companies with strong fundamentals that are undervalued in the market, and investing in that value. However, as time goes on we want to push both our own investment philosophies and our system capabilities. After looking around for a bit I stumbled up the SCTR, the StockCharts Technical Rank.Originally the brain child of Mr. John Murphy, an author and contributor on StockCharts, this score is based on six different indicators weighted according to term.Alright, let’s talk about the actual screen.This entire screen is based on one thing – the SCTR formula.…
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January 30, 2017

Market Momentum

   Unless you’re living under a rock, you’ve probably heard the news about Dow 20K.  You might be asking why Dow 20K matters and what it even means. Well, Dow 20K is a major milestone for the Dow Jones Industrial Average. The Dow Jones Industrial Average has been around since May 26, 1896, and is an index of 30 large publically traded companies based in the United States to give investors a general idea of how those stocks were traded on a day to day basis. The Dow is built up of notable companies such as Apple, Goldman Sachs, Boeing, IBM, Nike, The Home Depot, Coca-Cola, etc.…
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