Giorgio's  Instablog

Send Message
Giorgio is a weekly stock picker who writes about the next weeks best stock picks during the weekend. Giorgio has an undergraduate degree in Economics & International Relations from Lake Forest College, and is currently enrolled at the University of Illinois at Chicago for an MBA.
  • Making Money with 0 comments
    Jan 24, 2011 2:01 PM

    Is it Possible to Make a Living Using  Historical Returns show Yes!

    Ah yes, another financial newsletter website thinking it can draw subscribers using the allure of great stock picking capabilities.  Fortunately, is a very successful site run by David Ristau who makes over 200 stock trades a year, and is correct over 70% of the time.  His secret?  His brain.  David does not use algorithms or computer generated back testing to choose his stocks.  Instead, David combines his knowledge of fundamental and technical analysis to search through stocks that fit his criteria of overbought or oversold and to base his recommendations.  After reviewing the website I was skeptical, but after seeing the trading results I found that it was actually possible to make a decent living by following this trades.

                    In 2010 David made 199 trades in his buy pick portfolio

    Lets look at Davids 2010 Buy Pick Portfolio results:

    Note: You will see some trades with black boxes around them; this indicates that David was in 2 or more trades, in which case the investor would have to borrow. 


    So did everyone see over 70% green in the returns column?  I wasn’t sure, so I counted.  I found that David had been wrong on 55 Buy Pick Trades in 2010…and I’m including the trades that made 0%.  This means that David was correct on 135 trades. 

    Lets do the math: 135/190 total trades = 71% (Indeed, David was over 70% accurate!)

    Now let’s put some money to work.  Let’s assume we had a margin account (with up to 4 to 1 margin) and $10,000 to spend on every trade David recommends.  Yet every time we make a gain or loss we do not raise or lower the investment amount.  We always invest $10,000 in each trade.  You will notice in December David was in four trades on the same day.  This would mean someone with a margin account would need $40,000 to invest because we would need to invest 10,000 in each position.  Have no fear because as you will see by December one would not need to borrow much money, because the stock pile of profits would be so rich. 

    To make sure you’re following correctly: we start off losing 2% in the first trade on Jan-5th using SRS, so we lose $200.  But if you add up the monthly percentages, we come out with a gain of 19.83% ($1,983) in the first month!  As you scroll down and see the percentages of each months total gains you see in that The Oxen Group never has never had a losing month.  Even as the market corrected in May due to the Greek Crisis, and August David’s trades still prevailed.  By the end of the year we had a 396.44% gain.

    Lets do the math again (396.44%*10000) + 10000 initial investment = 49644

    Wow a yearly gain of 39644 is quite a lot of money….it’s more than I get paid at my work. 

    But not so fast…….I never added commissions nor margin interest rates. 

    Lets see…..lets assume one were to use Scott Trade = $7 trade.

    199 trades*$14($7 to buy + $7 to sell) = $2,786 commissions

    So $39,644 profit – $2,786 commissions = $36,858

    Now lets assume a horrible margin interest rate of 8%.  I counted 41 times that we would possibly need to borrow money.  That’s only 41 days a year at 8% on 10,000.  Lets see 8%*10,000 = 800

    41days using margin/365days a year = .1123

    .1123*800 = $89.84 (only $89.84 to for total margin fees)

    $36,858 – $89.84 = $36,786.16

    Now we must deduct the dreaded 28% short term capital gains tax!

    .72 * $36,786.16 = $26,486.03

    Thus our grand total of profits = $26,486.03

    In conclusion, one can either work for $12.73/hour (40 hours a week), or join and pay their simple $60 a month subscription fee for their Buy Side Picks and get started on making some money.  Or, you can also pay their $130 a month Premium subscription which entitles you to Short Sales Picks which were over 80% accurate in ’10 and David’s Long Term Ratings Portfolio geared towards a less active long term investor. 


    I have used The Oxen Group for a total of 14 trading days and I’m already up 11.55%

Back To Giorgio's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Most Commented
  1. Lets talk charts 3 ( Comments)
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.