Seeking Alpha

Tony Pow's  Instablog

Tony Pow
Send Message
I share my experiences (good and bad) in trading stocks and results of thousands of trading simulations in my books. My primary book is The Art of Investing. ebtonypow.blogspot.com Retired early from IT and work full-time in investing. Develop strategies to trade. It is my passion to check out... More
My company:
Tony Pow
My blog:
Stock ideas
My book:
Debunk the Myths in Investing
View Tony Pow's Instablogs on:
  • My Best Top 5 Stocks

    Here are some stocks selected from the 100 stocks from my new book Best Stocks 2016.

    Choice List

    It includes selected stocks from the screens that work recently. It may have short-term surges from my previous experiences. However, time the market as the book suggested. You do not want to buy any stock during a market plunge.

    I put my money where my mouth is. I invested more than $150,000 on the first two days when the book was published. They are all in retirement accounts as I can trade them without considering the tax consequences. I also have ALK, EBIX, GILD and SKX in my previous purchases months ago.

    The following is my evaluation of the stocks in this list as of 6/29/2015.

    Stock

    Score

    S.T. Score

    L.T. Score

    Blue Chip

    Fidelity

    Price

    Passing

    Score

    2

    15

    15

    B

    7

    6/29/15

           
           

    ALK

    6

    13

    25

    B

    10

    63.86

    AMAG

    3

    17

    30

    A

    3

    67.14

    EBIX

    7

    19

    32

    A

    10

    32.36

    GILD

    8

    18

    35

    A

    10

    115.46

    SKX

    3

    10

    29

    A

    9

    110.46

    Explanation

    · Three scoring systems have been used. They are used as references only.

    · The first one Score is described in my book Scoring Stocks. It is adaptive, so it may not be identical from the book.

    · The other two scoring systems (S.T. for short term) are proprietary incorporating rankings from several vendors I subscribe.

    · Blue Chip Growth is currently free.

    · Fidelity's Analyst Opinion is available for their customers. If you are not one, use finviz.com's Recomm.

    · From the above, most stocks score pretty good with some minor exceptions. AMAG scored 3 on Fidelity's Analyst's Opinion. ALK and SKX do not pass the S.T. Score.

    More on stock analysis

    You need to know yourself. Are you a growth investor or value investor? I have divided all my stocks into these major categories. In addition, I created many short lists such as Large Cap, Small Cap and Dividend.

    Here is a way to find the information using Finviz.com and SeekingAlpha.com. There are many other financial web sites will give you additional info. I will concentrate these two first.

    1. Find the current stock price and most fundamental metrics about the stock from Finviz.com in your browser. The next chapter will describe them in detail.

    2. Find information about the company. Enter SeekingAlpha.com in your browser. Enter the stock symbol such as IBM. You should have many articles of this stock. If you have a handful of stocks, use the Portfolio function that will give you updated articles. When the stock is a small cap with low volume, ensure the description is not written by one trying to "pump and dump".

    Risky Market

    2015 and 2016 are risky years for the market. I provide the following in this book.

    1. I provide a simple market timing technique without charting. It will tell us when to unload the portfolio and when to come back. The average loss of the last two major market crashes is 45%.

    2. I select more value stocks than growth stocks and large cap over small cap.

    Summary

    It would save you a lot of time to research the stocks selected by the book. Do not forget do your home work and you are the only one who is responsible for your trading.

    Disclaimer

    Do not gamble money that you cannot afford to lose. Past performance is a guideline and does not guarantee future performance. All information is believed to be accurate, but there is not guaranteed. All the strategies described have no guarantee that they will make money and they may lose money. Do not trade without doing due diligence and be warned that most data of this book would be obsolete by the time you read it. All my articles and the associated data are for informational purposes only. I'm not a professional investment counselor or a tax professional. Seek one before you make any investment decision. The above mentioned also applies for all other advice such as on accounting, taxes, health and any topic mentioned in this book. I am not a professional in any of these fields. Same for all the links contained in this book. I may own a few stocks in the recommended list. As a trader, I may sell these stocks, but I may buy them back later. My limited size will not change the stock prices. Some articles may offend some one or some organization unintentionally. If I did, I'm sorry about that. I am politically and religiously neutral. I try my best effort to ensure the accuracy of my articles. Data also from different sources was believed to be accurate. However, there is no guarantee that they are accurate and suitable for the current market conditions and /or your individual situations.

    Jul 01 9:03 AM | Link | 2 Comments
  • Best Stocks 2016

    Many articles and even books were written to select the best stocks including my Best Stocks 2016. This article outlines the pitfalls and the benefits of this kind of book. In a nutshell, you should do your own due diligence to evaluate the stocks again as the fundamentals could have been changed. Also, you should check the author's past performance even it does not guarantee the future performance.

    Hints of good recommendation

    The following is my sales pitch of my book but you can use the same guidelines to evaluate recommended stocks from a magazine article or a book.

    1. Find out when the research was done. My book's research was done by 7/2015 (6/23/15 to be exact), not half a year ago. A book published in Dec., 2016 may have the research done long, long time ago. Ask for the research date.

    The more current is the research, the better will be the predictability. The weather man can predict the weather better for the next few days than a month away.

    2. The performance of the stocks from my last book, Best Stocks 2014, is important, not good English. Now we omit the "Riskiest" and make the total to 100 stocks. Short lists are created from "All" that has 135 stocks. After 3 months, the stocks should be re-evaluated with the instructions as the fundamentals may have changed.

    Annualized

    Return

    3

    Months

    Beat

    SPY

    All

    23%

    44%

    SPY

    16%

     

    Short lists:

      

    Conservative

    30%

    88%

    Riskier

    39%

    144%

    Riskiest

    -11%

    -169%

    Small Cap

    75%

    369%

    Dividend

    20%

    19%

    All Around

    18%

    13%

    3. I divide my 100 stocks into shorter lists so it will save you time to concentrate on stocks that fit your requirements. They are Value, Growth, Dividend, Large Cap, Small Cap, All Around and Choice.

    4. I do not pay attention to my old selection, so most stocks are not left over from the last book. I only pay attention for the appreciation potential.

    5. As of 7/2015, the market is risky. I provide a simple market timing technique without charting. It will tell us when to unload the portfolio and when to come back. The average loss of the last two market crash is 45%.

    6. For this risky market, I select more value stocks than growth stocks and large cap over small cap.

    7. I put the money where my mouth is, not just a writer making money in writing and not in investing. On the publish date (6/24/15), I invested over $110,000 my own money on the stocks in the list. Check out the authors of similar books how much and when they bought the selected stocks.

    8. My credential. Here are my articles written in Seeking Alpha, an investment site.

    Amazing Return, A Tale of Two Portfolios and My Amazing Quarter.

    9. I do not give you obsolete info of the selected stocks, but a way to access the latest info. In this way, we do not have to burn down many trees and the information is up-to-date. I also give you techniques how to use this updated information to re-evaluate the selected stocks.

    10. I may post recommended stocks in the future - not a promise. Check the web site in the Epilog of this book.

    Performance of my last book

    Performances are measured by the average return of all the stocks in the recommended lists. To illustrate, the average return of 2 stocks with one 40% and one 10% is 30%.

    Annualized Return

    The annualized return is a double-edge sword. It amplifies the result in either direction.

    If you have 3 test returns: 10% in 2 years, 10% in 1 year and 10% in 6 months. It appears there are the same. However, the annualized return tells the right story. They are 5%, 10% and 20% respectively for the 3 test results.

    Beat SPY by

    In addition, beating SPY (an ETF simulating S&P 500) is a good yardstick on how the selected stocks perform. Ask any mutual fund manager how his/her career would improve by beating it by 5%. Beating it by n% is huge. It may not be sustainable in the future. But, the last selection did.

    Beat SPY = (Avg. Return - SPY return) / SPY return

    Performance of the last book

    My last book, Best Stocks 2014 According to Me, was published in Dec. 16, 2013. Here is the performance from Dec. 16, 2013 to March, 16, 2014, 3 months away. The returns do not include dividends. Hence, the returns should be better in reality particularly on dividend stocks.

    Annualized

    Return

    3

    Months

    Beat

    SPY

    All

    23%

    44%

    SPY

    16%

     

    Short lists:

      

    Conservative

    30%

    88%

    Riskier

    39%

    144%

    Riskiest

    -11%

    -169%

    Small Cap

    75%

    369%

    Dividend

    20%

    19%

    All Around

    18%

    13%

    After the first three months, the reader is supposed to do further analysis using the techniques described. The fundamentals of some of the stocks may have been changed.

    The 'Riskiest' short list is not available in this book due to the poor performance. Instead of 130 stocks, I cut down the total to around 100 stocks for the current selection.

    As of this writing, the market is risky and the follow will be used to reduce the market risk.

    o Add more conservative stocks at the expense of risky stocks.

    o Add more large cap stocks at the expense of small cap stocks although small caps had the best return in the last book.

    o Add more dividend stocks.

    o Add more stocks that would survive better in a down market.

    o Practice market timing. It is quite simple without using charts. Sell all stocks when the technique tells you and reenter the market when it tells you so. It is not always work, but it worked in the last two market crashes.

    o When you reenter the market, select the same stocks available and sort them by Earning Yield (reversed P/E) in descending order.

    Summary

    It would save you a lot of time to research the stocks selected by others, especially from the authors that have good track record. However, you need to do your own research.

    Disclaimer

    Do not gamble money that you cannot afford to lose. Past performance is a guideline and does not guarantee future performance. All information is believed to be accurate, but there is not guaranteed. All the strategies described have no guarantee that they will make money and they may lose money. Do not trade without doing due diligence and be warned that most data of this book would be obsolete by the time you read it. All my articles and the associated data are for informational purposes only. I'm not a professional investment counselor or a tax professional. Seek one before you make any investment decision. The above mentioned also applies for all other advice such as on accounting, taxes, health and any topic mentioned in this book. I am not a professional in any of these fields. Same for all the links contained in this book. I may own a few stocks in the recommended list. As a trader, I may sell these stocks, but I may buy them back later. My limited size will not change the stock prices. Some articles may offend some one or some organization unintentionally. If I did, I'm sorry about that. I am politically and religiously neutral. I try my best effort to ensure the accuracy of my articles. Data also from different sources was believed to be accurate. However, there is no guarantee that they are accurate and suitable for the current market conditions and /or your individual situations.

    Jun 25 11:14 AM | Link | 1 Comment
  • My Amazing Quarter

    After finishing some new books and making quite a lot of money recently, I need to take a vacation. However, I feel I need to write this article asking for contributions to the victims in Nepal by buying my books. All my book royalties will be donated to them for a limited time.

    I would like to share my investing ideas using this quarter as an example. My quarterly returns are amazing comparing to S&P500 return of 0.95%. They are copied from my broker's account statement.

    Account

    YTD

    (as of 3-31-15)

    Cash %

    (as of 5/3/15)

    My son's account

    15.9%

    2%

    My taxable account

    3.3%

    7%

    Roth IRA

    3.7%

    33%

    Traditional IRA

    7.2%

    15%

    Rollover IRA

    3.7%

    36%

    It is even more amazing when you consider they are not totally invested as indicated by the Cash%. The accounts not included here are my Annuity and my 529 account to my grandchild that are not under my control. My wife's accounts are not included and they have similar YTD returns: IRA 3.4% and Rollover IRA 6.4%.

    I suspect there will be a lot of doubts on my performances from my experience on a previous SA article. After a year from the publish date of that article, the return beat S&P 500 by more than 100% as described in this article. Who said you cannot make money by reading Seeking Alpha?

    The following describes how I achieved these high performances from Dec. last year to today.

    Christmas comes early for oil stocks (so far)

    Where are the analysts predicting the oil price will go to $20 per barrel?

    No one (except God and the Middle East terrorists) can really predict the short-term direction of oil correctly. However, the long-term direction is clear. It will be up. When? One year, two years or three years. I can tell you exactly "when" when I fix my time machine.

    It is based on a simple supply and demand rule in Business 101. The demand is increasing due to the recovering economy and the rising population. The diminishing supply is due to a limited resource especially with today's decreasing investing. Shale gas/oil most likely cannot be profitable at the current price.

    Many oil companies are fundamentally sound with the exceptions of drillers and explorers. I recommended buying OIL when it was $30 (about the same as today's oil price adjusted to inflation). It went down to $15 or so and the rest is history. When we do not learn from history, we will repeat history. I put money where my mouth is:

    Oil or related stock

    Return

    (as of 5-3-15)

    Bought

    OAS

    21%

    12/05/14

    SM

    60%

    12/04/14

    SM

    65%

    12/04/14

    TPLM

    47%

    12/04/14

       

    PBR

    42%

    01/28/15

    REX

    11%

    02/20/15

    LRE

    10%

    03/04/15

    OIL

    30%

    03/17/15

    OIL

    28%

    03/16/15

    PBR

    68%

    03/27/15

    Some PBR shares were sold with about 20% loss to offset the short-term gain (40%) of BIIB. The current shares of PBR and LBE were sold from my taxable account. LRE was sold with a small loss due to not wanting it in a taxable account (extra work for filing tax returns). Gained 20% on VLCC bought in 12/08/14. Many of these stocks were bought as the year-end losers that showed high appreciation potential.

    I do have XOM (sold) and CVX. They are about breaking even. They are diversified, integrated oil companies. As expected they do not move a lot with the price of oil.

    The annualized returns (that should be used for comparison) are even far higher.

    China connection

    Oil represents a good percent of newer purchases and China stocks represent another. FXI is recommended in my SA article on China. FXI, EWH and HAO (small cap Chinese stocks) were bought briefly after the publish date (11-5-2014) of the article. Again, reading SA may make you money.

    China or related stock

    Return

    (as of 5-3-15 if not sold)

    Bought

    Sold on

    FXI

    32%

    11/17/14

     

    EWH

    12%

    11/19/14

     

    HAO

    28%

    11/20/14

     

    XIN

    15%

    11/04/14

     

    XIN

    34%

    11/17/14

     

    XIN

    18%

    11/05/14

     
        

    GLUU

    91%

    01/28/15

     

    NHTC

    58%

    03/04/15

    04/10/15

    PME

    -16%

    03/12/15

     

    NHTC had a great run. It may still go up. GLUU is in gaming industry. It may still have a lot of appreciation potential. XIN is under priced even after its recent upswings. The ghost city and the frauds of small Chinese companies give us a good price to enter. PME is a loser so far. I'll still keep it for a while. Most rivers in China are polluted. Chinese depend on deep-sea fishing and PME is in this business. However, China and Indonesia has a dispute in the fishing territory. I bet it will be resolved as Indonesia's economy depends a lot on China.

    Short squeeze on chicken stocks

    I have losses (less than 10 %) on PPC that I have a huge bet expecting a short squeeze. It has an incredible high short percent of about 50%. Besides its fine fundamentals, the long-term prospect is good:

    · Chicken is cheaper and more nutritious than beef and pork.

    · Bird flu can be easily contained and isolated. Most chicken are raised in door and under good control.

    · In Hong Kong, when there is an outbreak, normally they only control live chicken, not the frozen ones.

    · Stopping chicken import by foreign countries is more a political game to me.

    New purchases

    Do your due diligence and you may find some gems from my recent purchases.

    Recent purchases

    Return

    (as of 5-3-15)

    Bought

    AA

    11%

    03/27/15

    CENX

    6%

    03/31/15

    SPWH

    19%

    03/31/15

    AMAG

    -8%

    04/01/15

    GME

    6%

    04/06/15

    PLUS

    -2%

    04/06/15

    POZN

    5%

    04/06/15

    RDN

    3%

    04/06/15

    STX

    52%

    04/15/15

    SKX

    25%

    04/22/15

    USCR

    -1%

    04/30/15

       

    Here are my five steps in evaluating stocks.

    · Search stocks from proven screens.

    · Fundamental analysis.

    · Intangible analysis.

    · Qualitative analysis.

    · Technical analysis.

    I have about 20 screens and I'm currently using 10 screens that have been proven recently. I usually can get about 10 stocks from the ten screens. After the initial fundamental analysis, I can get about 5 stocks. I only do more analysis if the stocks look promising.

    Technical Analysis is good to detect market plunges. For me, it does not work as I am looking for stocks with high values and not the trends.

    Other stocks

    I have heavy bets on UVE and SWKS. They are doing great. I do not know whether they are peaking or not. However, I will take some shares off the table. QRVO has a return of 72%. The prospect still looks great with the demand from credit card chip functions. MU and SNDK are profitable but they have lost a lot of their luster recently. I also have heavy bet on GILD and it has not taken off yet.

    I unloaded some TTWO, a heavy bet. Currently their average return is 45%. Its stock price depends on the cycle of its major video game. I unloaded all my shares of AAL. I double bet it and it returned 200% just over a year, my best return I sold this year.

    My son's account

    His one-year return is 33.5% vs. S&P 500's 12.7%. It is the best among all of my accounts and it will be a model for my other accounts. The current improvement is due to several changes:

    · The stocks with the highest scores may not be the best performers. Second best scored stocks seem better.

    · Fully participated in investing stocks when the market is not risky.

    Currently it has the following stocks: ARTX, BIDU, FONR, LUV, SFNC, SWKS and UVE.

    2015 and beyond

    I am cautious this year but I will be very careful next year in timing the market. From my memory, we do not have a down year in a year before election including 2007. When the Fed hikes the interest rate, the market will fall like a deck of cards and it will be amplified by the record margin debt.

    Many experts including a best seller tell their readers to abandon stocks, some as early as 2009. If you followed them, you would have lost all the profits from the recommendation date to now. My simple technique tells you to invest fully since September, 2009. I play corrections by buying during dips and selling during upswings. When the market plunges, sell everything. Usually the plunge takes longer than one year to reach the bottom. The average loss of the last two market plunge is about 45% and followed by the most profitable time to buy stocks.

    Conclusion

    Hope I have shared some of my investing ideas.

    · The media amplifies the news. When the oil price is dropping, they just predict a higher loss in order to sell their stuffs.

    · Selling a loser in a taxable account and buying it back in a retirement account avoids wash sale.

    · Small stocks though risky have chance of larger appreciation. However, when the market starts to plunge, they should be the first ones to sell from my experiences.

    · Chinese stocks are risky but they have been highly profitable in the last year.

    · I prefer to churn my portfolio so I have better appreciation potential with newer info. If I do not sell, where can I get money to buy new stocks? One's strategy.

    · Selling a stock does not mean you will not buy it back. We should be emotionally detected to any stock.

    · Expect losses. Nothing risked, nothing gained. When the market is risky, reduce purchases and sell some stocks whose fundamentals have deteriorated.

    The following is from my book "How to be a billionaire" and it is used to conclude this article.

    "We come to this earth with nothing and leave with nothing. Why do we fight for wealth, prestige and power? However, if we do not have the objective for wealth, prestige and power, it is a life without meaning. In addition, money should not be our primary objective in life and happiness/health has to be earned and cannot be bought with money."

    Now, you are ready to set your objective, enjoy and help the victims in Nepal on your road to wealth.

    This article is dedicated to those who help the victims in Nepal.

    Tags: long-ideas
    May 05 8:49 AM | Link | 14 Comments
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.