The idea for the following article I thought of because the Olympic Games just started this week. I will be running an investment challenge that will last from the Open on August 1st to the close on August 31st. There are no prizes for this challenge just bragging rights for being a good stock/ETF picker. The idea for challenge is not just to see who the best stock/ETF picker but also to see what methods the top performers used in making their picks. Below are the goals of the contest and the rules, my picks for the contest.
- Chooses 2 stocks/ETF's that you think will perform the best from the beginning to the end of August.
- Post the two selections in the Comment section of this article, along with the method[s] used for the selection. Example: Fundamentals, technical analysis, growth, value, etc.
- All picks must be entered before the open on Wednesday August 1st.
- Only stocks listed on the NYSE, Nasdaq or AMEX Will be allowed. Stocks listed on the OTC are not allowed.
- Only stocks with Prices Greater than $5.
- No Leveraged ETF's.
- The winner will be calculated by taking the average of each person's two picks and the person with the highest average will be the winner. Winner will get the "Gold Medal", 2nd place will get the "Silver Medal", and 3rd place will get the "Bronze Metal".
- I will be using open and close data from Yahoo Finance.
- At the end of the challenge I will write a follow up article detailing which methods worked the best and worst, and see if there are any patterns or similarities between the top finishers.
- The second goal of the challenge hopefully generate interest in the top finishers in the contest, and their abilities to pick stocks/ETF's and get them recognized by fellow Seeking Alpha readers.
- The final goal is to show that stock picking can make a difference and can out perform a broad market index fund like the SPDR S&P 500 (SPY).
Tyson Foods Inc. (TSN) - Methods Used: I ran a technical analysis screen for stocks that have recently made a short term low, and I also crossed that with Fibonacci lines as well. So Tyson Foods met the technical analysis screen so I ran Tyson through some fundamental analysis to see if Tyson was under or over valued. The fundamental analysis I did showed the shares are undervalued based on my modified Ben Graham Formula highlighted here.
Cummins Inc. (CMI) - Methods Used: I ran a technical analysis screen for stocks that have recently made a short term low, and I also crossed that with price channels and a trend strength indicator, the ADX [Average Directional Index]. So Cummins met the technical analysis screen so I ran Cummins through some fundamental analysis to see if Cummins was under or over valued. The fundamental analysis I did showed the shares are undervalued based on the same modified Ben Graham Formula that I used for Tyson Foods.
Good luck everyone!!