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varan
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Individual investor.
  • Sabrient's Amazing Picks For 2012 5 comments
    Oct 20, 2012 4:49 PM

    If you can pick stocks like these people did early in 2012,

    blogs.wsj.com/marketbeat/2012/01/06/stoc...

    there is no need to waste your time on the internets.

    The equally weighted portfolio of stocks recommended by them has shot up 37% YTD. Wow!

    The only other strategy that might have beaten the performance of their recommendations since 2009 would be to buy the two (non-financial) MLPs (whose average daily volume is more than 250K from the list at www.dividendyieldhunter.com/Master_Limit... ) every six months that performed the best in December and June.

    (Of course this is all about total return, which does not have much attraction to many SA readers.)

    Disclosure: I am long STX.

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Comments (5)
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  • MrBobDobalina
    , contributor
    Comments (70) | Send Message
     
    Can you clarify the MLP strategy? Jan1 you buy the 2 non-financial MLP's that performed the best for the month of December only? Repeat on July1 with the 2 non-financial MLP's that performed the best for the month of June only?

     

    Thanks!
    31 Oct 2012, 10:45 PM Reply Like
  • varan
    , contributor
    Comments (4675) | Send Message
     
    Author’s reply » You are correct. The January buys are based on the December performance, and the July buys are based on the June performance.

     

    SXL and PAA 1/3/2012-7/1/2012 7.35%
    RNF and FGP 7/1/2012-todate 26.9%

     

    Net YTD 35%.

     

    You have to use TLT as a holding filter: if the selected MLP performed worse than TLT, buy TLT instead.

     

    For the period 2000-2012 this yields a CAGR of 31%, with 2005 being the only year of a loss (-0.5%).

     

    The MLPs I have used for back testing are

     

    WPZ, SXL, RNF, PAA, NS, MWE, KMP, EXLP, FGP, DPM, BPL, BBEP and BWP.

     

    Another similar strategy yielding almost similar results is to buy the top two in January, May, and September, each time basing the buys on the performance of the preceding three months (Oct-Dec for Jan, Feb-April for May, and June-Aug for Sep). Quite a few such strategies with different holding and evaluation periods yield quite decent results (If you vary the evaluation period from 1 month to 6 months, and use one of the five holding periods: 1, 2, 3, 4 or 6 months, only two of the thirty runs yield a CAGR in single digits, and one less than 15% - the rest all yield CAGR of 15% or more. However, for some of the runs, even the holding filter of TLT does not avoid the large draw-down of 2008).
    1 Nov 2012, 04:58 PM Reply Like
  • wirechild
    , contributor
    Comments (13) | Send Message
     
    I came up with PDH and NTI for 1/2/2012-7/1/2012. I will track them to see how they end up.
    1 Jan 2013, 04:55 PM Reply Like
  • Lieuallen
    , contributor
    Comments (5) | Send Message
     
    Another excellent strategy idea, Varan!

     

    I have duplicated this strategy in Fidelity's Wealth-Lab, and I appear to have duplicated your results. I also ran the 30 variations on holding time and ROC evaluation length, and got results as you described.

     

    My most interesting result was when the holding and evaluation period were each 1 month. The 5-year CAGR was 213%, and there was never a losing trade!! Likely a wonderful coincidence, but awfully tempting to put some "fun money" into this!!
    6 Dec 2012, 08:33 PM Reply Like
  • Lieuallen
    , contributor
    Comments (5) | Send Message
     
    Uh-oh. I think I may have discovered a problem.

     

    As I said, I've duplicated this strategy in Wealth-Lab. But looking into it in more detail explains why the results are so astounding. Because monthly price data was used, the system evaluates the previous month's ROC (correctly), and then buys using the MONTHLY open price. But that means that at the end of the month, it is buying using the price from the start of the month. So, in effect, the system is using a time machine to buy what it knows is the best performer. No wonder it never had a losing trade!

     

    I'm still working on converting my routine to use daily prices....
    7 Dec 2012, 11:48 AM Reply Like
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