3SOF

Is there going to be a Tuesday 3SOF update?

Quote from: eggman11 on April 24, 2007, 10:16:30 AM
Is there going to be a Tuesday 3SOF update?

As you can see on the 3 Stocks on Fire Portfolio page Ramsburg did all the necessary improvements so I can do the Tuesday's and Friday's update to the 3 Stocks on Fire Portfolio.

Expect it about 3 hours after the market close, see ya

David,

I have a concern about the model. Since stock price is a major factor. Everytime a stock makes a little move up, it might have to be rotated out of the 3SOF portfolio for a laggard with "more potential", because the stock price has went down. I think the 3SOF can't be totally objective, I think it it might ultimately have the be a combination of the model to determine "potential gain" and some subjective analysis to see if the stock in the current enviroment (market, company news and Economy). (i.e. - Stocks is consistantly hitting new highs - blue sky breakout, new contracts are signed, dollar is cheaper)

Any thoughts?

Thanks

Quote from: eggman11 on April 24, 2007, 10:16:30 AM
Is there going to be a Tuesday 3SOF update?

As you can see on the 3 Stocks on Fire Portfolio page Ramsburg did all the necessary improvements so I can do the Tuesday's and Friday's update to the 3 Stocks on Fire Portfolio.

Expect it about 3 hours after the market close, see ya


[/quote]

Update?

3 Stocks on Fire Portfolio Update - 04/25/2007

The idea of these bi-weekly updates is to keep track of the 3 Stocks on Fire Portfolio holdings and trading strategy. The 3 Stocks on Fire Portfolio is a very concentrated portfolio of just 3 different stock holdings (approximately 33.33% of capital initially invested in each holding).

Evolution Since Inception

The 3 Stocks on Fire Portfolio started in January 19, 2007, with $15,000. Currently the portfolio is up 57% to $23,550:



The problem is most of the gains were made in the first month of the portfolio's history, when I was buying momentum+value small cap stocks and selling them when they lost short term momentum. I've abandoned that strategy because it couldn't be followed by subscribers (because decisions were made on an intraday basis, and people don't have time to be glued all day watching quotes or the e-mail, and there were also slippage costs). Also it was stressful, nice while my hand was hot, but that never lasts.

I'm much more happy with the current strategy of holding the top 3 stocks of the Main Portfolio, in terms of their share price CAGR, or "% to Exit". According to my valuation model, the 3 stocks held in the 3 Stocks on Fire Portfolio are the 3 most attractive stocks of the Main Portfolio.

Current holdings

The current holdings are CIMT, GIGM and SILC:



I'm winning on all three, especially on CIMT, since I bought it at the same time here as I did for the Main. If I had done the same with SILC, where the Main is gaining 89%, results on this portfolio would be a lot better, but what could have been done doesn't matter, just reality.

I update the analysis on all these three stocks at the Main Portfolio message board every trading day, so I have nothing to add to those analysis now. Just that these three seem to be the top 3 holdings of the Main Portfolio, given the current fundamental information, but that is always very hard to know. I'll feel good if they rise over the long term, even if they turn out not to be exactly the best stocks.

Current Strategy

QuoteDavid,

I have a concern about the model. Since stock price is a major factor. Everytime a stock makes a little move up, it might have to be rotated out of the 3SOF portfolio for a laggard with "more potential", because the stock price has went down. I think the 3SOF can't be totally objective, I think it it might ultimately have the be a combination of the model to determine "potential gain" and some subjective analysis to see if the stock in the current enviroment (market, company news and Economy). (i.e. - Stocks is consistantly hitting new highs - blue sky breakout, new contracts are signed, dollar is cheaper)

Yes, there will always be subjectivity and stock price trend analysis involved, but I hope to be flexible enough to lower fundamental estimates if a stock starts trending down, in a way that a   bearish stock doesn't get more attractive than other bullish stocks.

What I mean is, the market should confirm my fundamental views of the future. If it doesn't I'll work hard to find out what's wrong, and be more inclined to change my views according to what the market thinks, because, in the end, the market is always right. What needs to be done in this respect is to differentiate what is short term technical noise and what is genuine market talk. The market isn't talking when a stock trades within a trading range of +/- 5%. Or if the reaction is too abrupt due to news (like it is happening with TZOO today), the market isn't talking in my opinion, it is screaming emotions. It will be very natural for me to see the stock closing near the opening levels and start climbing from there over the next few months.

Anyway, the basic premise of the current strategy is that one can't predict short term movements in a consistent manner over the long term. The highest long term returns will be made by long term investors in the best small cap stocks.

That's what I'm doing and will continue to do.

The Future of the 3 Stocks on Fire Portfolio

I'm going to put back on the table the objective of turning $15,000 into $150,000 with this Portfolio, and if the objective is accomplished sometime in the future, reset it and start over again. The objective of this portfolio always was, and will always be, to help people with little starting capital achieve an equity that allows them to diversify their investments through 15 different holdings, like we do at the Main Portfolio.

From the current value of, let me see, $23,476.5, to get to $150,000 in say, 3 years, the 3 Stocks on Fire Portfolio needs a compound annual growth rate of 85.56%. The average expected share price CAGR of the current 3 holdings is, curiously enough, 82.61%. So, if these 3 stocks do their job properly, the objective of turning $15,000 into $150,000 in about 3 years will be achieved (or there about).

I welcome your suggestions, but I'll stay the course, stick to my guns (just love this sentence, I can't help using it )

David,

In choosing the 3SOF, do you take into account current developments or is strictly based on the expected percentage rate of return. For instance, TZOO had a recent drop in price along with the recent buyback announcement from TZOO, authoring the buyback of 1 million shares, which is 1/3 of the float coupled with its drop in price might make it more attractive then SILC which its expected reuturn percentage has been cut in half. Even though SILC has higher  a expected percentage of 208% vs. TZOO at 158%, but its expected increase is trending down. Would it be possible for it to be replaced with a lower expected gainer, beacuse the outlook and recent developments have not effected their CAGR percentages, like TZOOs Expected increase in revenue due to Europe and Asia and their buyback.

I am not saying you should replace SILC with TZOO in the 3SOF portfolio, but I was wondering if the 3SOF is going to be stictly based on the percentage of expected return. I believe the expected rate of return is a good place to start, but you can't  go strictly by a formula, it must include news and developments thatc an't be quantified in a formula. -i.e. new product introduction, stock buyback, new contract signed...etc

Thanks,

Eric

David,

There was no tuesday update, for the 3SOF portfolio. Please don't ignore the 3SOF portfolio.
For finding new leads, I liked the idea of people sending in stocks for you to analyze and then analyzing a few each day. I found some good winners that way, some ended up as part of the 3SOF portfolio and some were not (ex. BTJ). Granted about 90% don't make the cut, but I still think it is a great way to uncover some hidden gems.

Thanks for your hard work.

Quote from: eggman11 on May 02, 2007, 09:42:07 AM
David,

There was no tuesday update, for the 3SOF portfolio. Please don't ignore the 3SOF portfolio.
For finding new leads, I liked the idea of people sending in stocks for you to analyze and then analyzing a few each day. I found some good winners that way, some ended up as part of the 3SOF portfolio and some were not (ex. BTJ). Granted about 90% don't make the cut, but I still think it is a great way to uncover some hidden gems.

Thanks for your hard work.

Yep, I was expecting the 3 Stocks on Fire Portfolio to be higher than the latest update to do a new one, but you're right, that's not a sound way to work. I'll try to do it today.

Yes, analysis on demand seems like a nice way to find good stocks. I would like to cover 3 new ones each day, but not being disciplined enough for now. Thanks for your suggestions, I'll consider them.

QuoteDavid,

There was no tuesday update, for the 3SOF portfolio. Please don't ignore the 3SOF portfolio.

Hi eggman11, I've been ignoring this (sorry) because honestly  I don't know what to say. I update the analysis of the 3 Stocks on Fire Portfolio holdings everyday, and the 3 stocks held are still the ones I consider the most attractive of the Main Portfolio.

I'm not ignoring the 3 Stocks on Fire Portfolio, I just think there isn't any change to make at this point. SILC and CIMT are going through a corrective process, but I believe that suddenly they will shoot to new highs, so, no reason to sell. GIGM is a more stable (also much higher market cap) stock and one of the top 3 holdings of the Main.

QuoteFor finding new leads, I liked the idea of people sending in stocks for you to analyze and then analyzing a few each day. I found some good winners that way, some ended up as part of the 3SOF portfolio and some were not (ex. BTJ). Granted about 90% don't make the cut, but I still think it is a great way to uncover some hidden gems.

Yes, me and Ramsburg, we're having extra work (I believe you'll be pleased when it's ready), but when that's done I'm going to restart making 3 analysis on demand per trading day.

Thanks for your suggestions eggman11

David,

in your trading strategy, you consider more important the 3stocks on fire portfolio or the Main Portfolio?
I continue to see a decline in 3SOF portfolio, since I subscribed (it was up 56%, now 18%).

I lost 40% of the capital invested, so I guess what your subscriber should do: Main or 3SOF?

Cheers,

tera

Quote from: terainvestment on June 28, 2007, 10:14:40 AM
David,

in your trading strategy, you consider more important the 3stocks on fire portfolio or the Main Portfolio?
I continue to see a decline in 3SOF portfolio, since I subscribed (it was up 56%, now 18%).

I lost 40% of the capital invested, so I guess what your subscriber should do: Main or 3SOF?

Cheers,

tera

I believe that from the effort I dedicate to each portfolio, the daily newsletter content and the history of both portfolios you clearly see that I consider the Main Portfolio a lot more important than the 3 Stocks on Fire Portfolio.

I think this goes to show a diversified strategy beats a high risk, concentrated strategy over the long run.

The 3 Stocks on Fire Portfolio has the stocks with the highest potential, but also with the most risk. Any day one of those stocks (especially CIMT and GSCP.OB) can run up 100% and completely change the performance, but for the past few months the portfolio has been declining steadily.

I probably should have shut down that portfolio when I stopped being active on it, it wasn't a good idea to try to adapt it.

What can I say, I pay little attention to the 3 Stocks on Fire Portfolio. Do you think I should try to do something and push it higher? I believe the three holdings have huge potential and with time they'll perform, but drawdowns and the waiting time can be somewhat long. 

Thanks for your reply David, I saw that performance of 3SONF portfolio were great.
The fact is that I have a small amount of money to invest in the market and dividing it by 15 trades it is not a good idea (for transaction costs, mainly).

Looking forward for a great coming back of 3SOF!

:-)

Quote from: terainvestment on June 28, 2007, 11:49:35 AM
Thanks for your reply David, I saw that performance of 3SONF portfolio were great.
The fact is that I have a small amount of money to invest in the market and dividing it by 15 trades it is not a good idea (for transaction costs, mainly).

Looking forward for a great coming back of 3SOF!

:-)

Yes, that portfolio rose 80% or so in just about 2 months, but then it came off quite sharply. I had NVTL in the 3 Stocks on Fire Portfolio, but people insisted that I should replace it for SILC because the valuation model had superior results for SILC than for NVTL. If I had kept NVTL history would be different. But of course "if" doesn't count. But it is also true that I kept NVTL.

I'm feeling dizzy watching SILC rise 8% today ... but it's fair, I sure deserve the punishment for being a weak hand. Now I'm more confident than ever the market doesn't know what will happen next. And that gives me even more confidence for CIMT, GIGM and GSCP.OB. I'll hold them as strongly as I can and will certainly be rewarded.

Thanks for being so cool

 David I copied and pasted this from the 3 Stocks on Fire Portfolio page 2
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Re: About the 3 Stocks on Fire Portfolio
« Reply #20 on: April 18, 2007, 11:39:23 AM »
   Reply with quoteQuote
Quote
Now that you have the new data in place. Are you going to update the 3SOF portfolio soon? Will you make regular updates to the portfolio? Possibly twice a week or something.

Ok, every Tuesday and Friday I'll write a post about the 3 Stocks on Fire Portfolio holdings and strategy on this thread.

Quote
David,
  I understand the strategy you'd like to apply to the 3SOF portfolio as the 3 ones with the
highest potential out of the bunch in the Main. Does this imply you defy the idea of any short term trading in this portfolio as well?

Yes, no short term trading in the 3 SOF Portfolio.

Quote
I thought playing with small capital and using stocks that are experiencing a technical explosion for whatever reason, may bring some short-term gains and, for some, help establish a more substantial capital. You'll always have new and current subscribers with modest investment amount that may need help to get on their feet.

David this is your quote!
The best way for a small account to grow is to own the top 3 holdings of the Main Portfolio, that is, the 3 Stocks on Fire Portfolio. (/b) You say "playing" with small capital. That's not a way to grow a small account, most probably it is a way to lose one's money. If a small investor wants to be a bigger investor, the best way to do it is to start thinking and acting like big (or experienced) investors do.
----------------------------------------------------
So, according to this I invested a few dollars (less than $5,000) I had into the 3 Stocks on Fire Portfolio. What are you talking about I probably should have shut down that portfolio when I stopped being active on it, it wasn't a good idea to try to adapt it.
I know you update the individual stocks from the FIRE portfolio because they are listed on the MAIN too. But you hand picked the top 3 stocks to invest if you did not have the 100,000 to invest into the main. So, is it now up to individual investors to pick 3 stocks we think are the best long term investment?

Why not place a * star next to the best stock from the Main, in your opinion, based on parameters you list and delete the FIRE portfolio. Please keep us informed. This is a little dishearting to read. I was following the FIRE with maybe one pick from Main on occasion. So what is 3 stocks on FIRE? Change the name of your service to "Stocks on Fire". I was relying on your knowledge and gaining your knowledge because I know very little compared to some other guys & gals on this site.

Feeling  confused.
David I have learned so much and your service has saved me a lot of time. The market is very tough to play now, but there are still winners out there.

It's hard to know if a stock will go up or not, even harder to know which ones will rise the most.

Anyway, I believe the 3 stocks currently in the 3 Stocks on Fire Portfolio have the highest potential, but it may take months or even years for that to happen. Or I might be wrong.

The best way for long term wealth creation is to hold a diversified portfolio of stocks. It is very, very hard to turn a small account (say, less than $5,000) into a meaningful investment account, of say, $100,000. It is as difficult as turning $100,000 into $2,000,000.

I need to manage expectations better.

What do you want me to do? I'm sure you know that on other services (for example, TheStreet.com, Fool.com or Zacks.com) they'll present you a list of 100 or more stocks and then it is up to you pick from the list. I went further and have just 15 stocks. It still wasn't enough to please everybody, because several people didn't diversify over 15 holdings. So "what about 3? - it has to do with the name of the website and all". But of course, having just three stocks is risky, even more so when those three stocks are micro caps that may explode higher or be put to sleep for months.

Be patient, or else ... I'll write you a private message.

Quote from: David Randolph on June 28, 2007, 03:58:29 PM
It's hard to know if a stock will go up or not, even harder to know which ones will rise the most.

Anyway, I believe the 3 stocks currently in the 3 Stocks on Fire Portfolio have the highest potential, but it may take months or even years for that to happen. Or I might be wrong.

The best way for long term wealth creation is to hold a diversified portfolio of stocks. It is very, very hard to turn a small account (say, less than $5,000) into a meaningful investment account, of say, $100,000. It is as difficult as turning $100,000 into $2,000,000.

I need to manage expectations better.

What do you want me to do? I'm sure you know that on other services (for example, TheStreet.com, Fool.com or Zacks.com) they'll present you a list of 100 or more stocks and then it is up to you pick from the list. I went further and have just 15 stocks. It still wasn't enough to please everybody, because several people didn't diversify over 15 holdings. So "what about 3? - it has to do with the name of the website and all". But of course, having just three stocks is risky, even more so when those three stocks are micro caps that may explode higher or be put to sleep for months.

Be patient, or else ... I'll write you a private message.

David it seems you are being pulled in all directions.
Trying to please short term trader and long term traders and market timers.
I suggest you focus on what you do best, short term trades and micro caps.
Let some one handle a portfolio for the long term holder, of course people can
pick and choose stocks between them if they so desire. Both portfolio can have special situations for short term trade.
What do you think?