January 12, 2017

Turtle traders, part I

About the book

I’m about 1/3 of the way through “The Complete Turtle Trader” by Michael W Covel, and I’m enjoying myself.  His narratives about the people are entertaining, though that’s not why I bought the book.  It does give me color into how technical traders think, though.  It also is nice to hear that simpler is better.  I also like his scientific approach:

  1. Figure out what you are going to do while the market is closed.
  2. Follow the rules while the market is open.  Don’t put new ideas into practice in the heat of the moment.  Follow the rules you’ve made!
January 10, 2017

The Industry Transition of Retail

   In my last blog, I wrote about getting used to the Equities Lab software and how it can be so very useful for finding value in certain sectors with advanced screening. Another useful way to use the stock screening software is to find investments you should avoid. For example, let’s take a look at some big retail names. Macy’s is arguably the most well-known American retail store, but its stock has been taking a beating in recent times.

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   As you can see, Macys’ beating started mid-August of 2015 due to low revenue growth.
  The chart above shows Macy’s performance in more recent times, the chart below shows an expansion of Macy’s performance all the way back to the year 2000.

August 6, 2014

Where have all the small caps gone?

It certainly feels like all the small cap stocks have had a terrible time of it.  Since the beginning of the year, the Russell 2000 Index fund (IWM) has gone down 3.5%.  The S&P 500 Index fund (SPY) has gone up 4% in the same period.What's going on here?  Is it due to some particular stock or set of stocks in the S&P 500 or in the small cap universe that are acting oddly?  If it were a particular set of stocks, then equal weighting the S&P 500 and picking a basket of small cap stock should kill the effect.  We plot the S&P equal weight (similar to RSP, but rebalancing weekly), along with smallcap(here 100M to 1B), and midcap(1B to 5B), and the picture doesn't change much (notice the clustering).…