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Get your investing groove back

A little over 5 years ago I began a fantasy portfolio on Marketocracy. I was in love with the stock market since I was 14 but because of positions held by either myself or family members I was unable to actually trade the way I wanted to. After seeing an article in Forbes -- Best of the Web about fantasy stock market simulation games I was hooked. In the same article they also recommended BarChart as a stock screener and technical analysis tool. I began trying all sorts of investing strategies, some worked for a while and some were total disasters from the start. I read the comments of other players, especially Marketocracy's M100 - their top of the line players and learned a lot from them. Finally I got into a groove and settled on not only my own stock picking strategy but my portfolio management strategy as well. It is very simple:
  1. Add to my portfolio stocks that are hitting new highs at least 50% of the time during the last 20 trading sessions. If there aren't any don't buy anything.
  2. Use BarChart's 13 technical analysis indicators to get a TA consensus about the stock. I don't know how to compute all of those indicators myself but if the stock isn't a buy on at least 80% of them I pass on the stock.
  3. Once in my portfolio I prune the stock if it fails to maintain a trading range above its 50 day moving average.

It sounds simple and as I shared my ideas on various Internet sites many, many people told me it wouldn't work. I now have 2 funds on Marketocracy that use these principles: VMNHI - stocks hitting new highs and trading over 100K shares a day and VMSLO - stocks hitting new highs trading between 25K and 99K shares a day.

As a side note the VMSLO is the continuation of the Strategy Lab Open portfolio where I won that competition and got the opportunity to begin blogging for MSN's Top Stocks.

Here's the results as computed by Marketocracy against the other 81,00 portfolios they evaluate:

VMNHI - established 3/3/2005 - #50 out of 81,000 for the past 3 year period. This portfolio has been in the top 100 for various periods 8 times since inception. Since 3/3/2005 the return of the S&P 500 has been -2.98% but VMNHI's return was 53.14% beating the index by 56.12%

VMSLO - established 1/31/2008 ended the quarter beating 99.1% of the 81,000 other portfolios and has been in the top 100 3 times since its inception. Since 1/31/2008 the S&P 500 has returned -19.29% while the VMSLO has returned 48.70% beating the index by 67.99% for that period. My message is simple:

  • If you want to take charge of your own financial future read and share ideas with other successful investors -- read, listen, share and learn.
  • Find complete investing sites like Seeking Alpha, MSN's Money Central or Motley Fool and read all the various ideas from their contributors. It's amazing how often they differ. There are little jewels in almost every article.
  • Join several fantasy investing simulation sites like Wall Street Survivor, Marketocracy or Motley Fool CAPs, try out your hunches and learn and share ideas with the other participants.

I hope you all will test your ideas with fake money before you put your real bets down and each of you finds you own investing groove. Read, share, listen and learn.

Jim Van Meerten is an investor and writes on financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com.

Disclosure: I do not hold positions in any of the investment ideas I share on this site