The Select 20 is a list of twenty stocks selected from a symbol universe of large cap, liquid stocks based on the S&P 100 Index, NASDAQ 100, and top stocks held by hedge funds.
As of April 27, the Select 20 Stock Picks are up 11.73% vs. 11.59% for the S&P 500 Index.
How It Works
The 20 stocks are selected based on quantitative metrics.
A broad filter based on a proprietary stop-loss indicator is then applied.
When the number of stocks “on buy” outnumber those “on sell”, cash in the model portfolio is deployed for the entire coming week for performance tracking purposes.
You may wish to use stop losses such as those from Pete’s Total Indicator.
This Week is a *NO GO*
As of the close on April 20, 2012, 78 out of 205 stocks on our list are on buy; therefore, this week is a STOP. The percentages on the table below refer to position size and add up to 100%.
If you really want to look at what would have been on the list, click here.
How to Implement The Select 20
The ticker symbols typically change from week to week. There will be weeks where the model portfolio will be 100% cash. Traders can:
- Sell at the close on the last trading day of the week, stay in cash over the weekend and deploy on Monday morning at the end of the first hour, OR,
- Adjust the positions after the first hour of trading on the first trading day of the week; that is, sell and buy at the same time on the first day of the trading week.
Because stock picking and trading of individual stocks is A STRATEGY THAT CONCENTRATES RISK, you are strongly urged to adhere to the 1% rule; that is, no more than a total of 1% of your capital (retirement, portfolio and “mad money”) should be allocated to any one particular stock in case something happens to it.
WE DO NOT TRACK ECONOMIC EVENTS OR CORPORATE ANNOUNCEMENTS AND CANNOT BE RESPONSIBLE FOR MATERIAL ADVERSE NEWS, CORPORATE DEVELOPMENTS OR ACTS OF GOD. YOU SHOULD ALLOCATE NO MORE THAN 20% OF YOUR CAPITAL TO THE SELECT 20 STOCK PICKS.
The book Moneyball inspired our 2012 research topic: can we identify stocks that are moving up in slow-and-steady fashion? If so, this group of stealthy stocks may continue to make gains with relatively less volatility than others on the list.
Each week, we will evaluate the same symbol universe as the Select 20 and rank the ticker symbols in order of “Moneyball” score. The higher the score, the more steady the price performance has been, like a tortoise. The lower the score, the more erratic, like a rabbit.
For now, this list is provided without comment.
Weatherproof Your Money
Stock picking is essentially the intentional concentration of risk in search of higher return. The key is to limit your exposure. The bulk of your funds should be allocated to all-weather strategies that include other asset classes in a way that is appropriate for your financial situation. See HedgeFundGuy.com for more information.