Some new buys

Two actions for us today:

1. Let's update our BUCY stop to $46.65

2. After 10AM let's buy LANC, GIGM and VR with a 1% trailing stop buy order and the following initial stop loss prices:

• LANC: $45.11
• GIGM: $3.75
• VR: $23.39

Updated Stop Loss Orders

• APOL: $64.94
• BUCY: $30.33
• CSKI: $12.81
• ENDP: $21.88
• EROC: $3.47
• LHCG: $26.37
• WDC: $33.60

New stop loss prices, a question and the strange case of MAXY

The strange case of MAXY

I sold MAXY, but I did not want to. Let me explain: I use eTrade for my trading and there is a technical detail that made me sell MAXY yesterday. eTrade uses Ask Prices for buy orders and Bid Prices for sell orders. So, since MAXY's Bid Price went under $6.63 my order was executed at $6.83. The day low was $6.75, thus higher than our stop loss level. I do not know if other trading platform manage stop loss orders in a different way, but I consider this as an accident that can happen.

The bottom line is that I take home a 9.5% loss on MAXY. If you still have it, keep the stop at $6.63.


Current portfolio and updated stop loss prices



The new stop prices I would suggest are:

• APOL: Stop at $61.14
• BUCY: Stop at $29.13
• CMTL: Stop at $33.27
• ENDP: Stop at $21.66
• EROC: Stop at $3.23
• LHCG: Stop at $24.02
• MIR: Stop at $15.75
• WDC: Stop at $32.30

The question

I received the following question in a comment:

Quick question, how effective are stop losses? I assume you're putting a stop limit on these prices, but on some of the riskier stocks, if the stock opens up really low, the stock will automatically sell. Is that a good strategy?

I try to answer, but my opinion is not necessary matching your idea.

Stop Losses are statistically effective. I mean they usually work. I read books and made simulations and I found the method I use to calculate stop losses works well (on average). It happens stop losses are violated and stocks are sold, and after that they continue to go up. For me it is just part of the game.

There are basically two ways to manage stop losses:

1. Set stop loss orders (this is what I do). If the price goes down during the day the order is executed automatically. Then the price can go up again in a dragonfly doji.
2. Simulate stop losses. Set alerts on stocks at the stop loss level you want. If the price goes down you get an email. At the end of the day you check. If the close price is below your stop loss then you sell the following day on open. What I don't like in this approach is that a stock it may happen to lose 30% in a day. If you use this method you sell the day after losing 30%, while with method 1 you sell during the day when you lose, let's say, 15%.

Your choice. I hope this can be of any use for you.

Current Portfolio and Update Stop Loss Orders

September 14th 2009

Current Portfolio

Stop Loss Orders

• APOL: stop at $61.14
• CMTL: stop at $32.98
• ENDP: stop at $21.07
• LHCG: stop at $23.35
• MAXY: stop at $6.63
• WDC: stop at $31.55

A new buy and some new stop loss

Today I would suggest to buy MAXY.

Actually we should have bought it last Friday (September 4th) but I was not in front of my computer that day.
We can buy it now, or better, tomorrow, since today is Labor Day.

MAXY show a very goos PE ratio, averagePrice/Sales and good Price/Book.
It has no debt and very goos quick and current ratio (cash in pocket).
Operating margin and EBITDA are in Industry's best 20%, as ROI/ROE are.

This stock should offer us a good margin of safety.

I would suggest to set a buy order as a trailing stop at 1% (as an alternative, just buy it on market open) and set an initial stop loss at $6.63.


Updated Stop Loss Orders

• APOL Stop at $61.14
• CMTL Stop at $32.61
• ENDP Stop at $20.92
• LHCG Stop at $23.32
• WDC Stop at $31.04
• MAXY Stop at $6.63

New Stop Loss Orders

August 31st 2009

The market is pointing down today.
It is a good time to update our stop loss orders.

• CMTL Stop at $32.20
• ENDP Stop at $20.64
• TSYS Stop at $7.24
• WDC Stop at $30.53

No need to change our latest additions' stop loss levels

• APOL Stop at $61.14
• LHCG Stop at $22.15

New buy and Updated watchlist

New Buy

I would suggest to buy LHCG today (August 26th 2009). Here's why:

From a fundamental point of view, LHCG show the following

• better than industry PE ratio
• good quick and current ratio and low short and long term debt make it financially solid
• good margins, good return on invested capital and on equity
• good growth

There was a technical buy signal on August 21st.

I would suggest an initial stop loss price of $22.15.


Watchlist

In addition to our previous stocks to watch:

• ASEI
• AZZ
• BKR
• CBST
• CTR
• EROC
• EVEP
• IPHS
• MAXY
• MIR
• PETM

I would add the following:

• AGNC
• AIPC
• APOL
• BMY
• BUCY
• CHBT
• CMCSA
• CPHI
• CSKI
• DRC
• EBS
• ENSG
• PIKE
• POWL
• RIMM
• SMLC
• STRL
• VAR

Please note: these are stocks to watch, not necessarily to buy (at least not now)

Watchlist and new stop loss orders

Whatchlist

I would monitor the following stocks:

• ASEI
• AZZ
• BKR
• CBST
• CTR
• EROC
• EVEP
• IPHS
• MAXY
• MIR
• PETM

Stop loss

• CMTL $31.69
• ENDP $20.10
• TSYS $7.22
• WDC $29.84

Portfolio, Performance and Stop Loss

July 1st 2009

This post is in some way a kind of a mid-year review of our performance.

I started publishing my trades in April, but I think it is fair to share my Year-To-Date performance.

I would like to start with our current portfolio, updated on June 30th 2009, after market close:


We currently have around 50% cash, since the market is still uncertain.

New stop loss prices have been calculated for the stocks we currently own, as follows:

And finally, a quick view to our 2009 performance (green) compared to the S&P500 (blue)

Updated Stop Loss

June 22nd 2009

Updated Stop Loss

ADBE Stop at $26.41
ADM Stop at $25.96
CMTL Stop at $28.16
DECK Stop at $52.70
FLR Stop at $44.24
FLS Stop at $69.24
JCOM Stop at $21.14
MVL Stop at $31.96
NCTY Stop at $9.06
NE Stop at $30.18
NRG Stop at $19.77
APOL Stop at $56.17
BLUD Stop at $14.14
ENDP Stop at $14.89
IPHS Stop at $14.16
TRLG Stop at $20.04
TSYS Stop at $6.18
VPHM Stop at $5.60
WDC Stop at $22.60

Updated Stop Loss Orders

ADBE: $23.88
ADM: $23.20
AFAM: $26.09
ENDP: $14.89
FLR: $38.09
FLS: $60.50
GIGM: $5.64
IPHS: $13.02
MVL: $28.27
NCTY: $8.10
NE: $26.48
NRG: $17.36
RECN: $17.17
TRLG: $17.66
VPHM: $4.96
WDC: $20.87

Calculate Stop Loss Prices

You can easily calculate stop losses on this page:

http://spiderman.servehttp.com/stop.jsp

NOTE: update your stop losses ONLY UPWARD.

Updated Stop Loss

May 13th 2009

ADBE $23.40
ADM $23.20
AFAM $21.83
ENDP $14.89
FLR $36.61
FLS $59.92
GIGM $5.64
IPHS $12.60
MVL $27.79
NCTY $8.10
NE $26.37
NRG $17.28
RECN $16.69
TRLG $14.39
VPHM $4.86
WDC $20.67

An update on Stop Loss orders

In this volatile market we should pay attention to protect our gains, specially for those positions on which we are gaining well.




Let's take our four best performers: TRLG (up 105%), AFAM (up 81%), IPHS (up 61%) and WDC (up 42%).



I would suggest to:

1. Almost Family, Inc. (AFAM) move the stop loss from $21.22 to $21.45
2. Innophos Holdings, Inc. (IPHS) move the stop loss from $12.21 to $12.60
3. True Religion Apparel, Inc. (TRLG) move the stop loss from $14.01 to $14.37
4. WESTERN DIGITAL CP (WDC) move the stop loss from $20.51 to $20.52

Happy trading

Updated Stop Loss

May 6th 2009

ADBE: stop loss $23.14
ADM: stop loss $23.20
AFAM: stop loss $20.83
DECK: stop loss $54.59
ENDP: stop loss $14.89
FLR: stop loss $36.61
FLS: stop loss $58.45
IPHS: stop loss $11.99
MVL: stop loss $26.77
NCTY: stop loss $8.10
NE: stop loss $25.42
NRG: stop loss $16.35
RECN: stop loss $16.02
TRLG: stop loss $12.97
VPHM: stop loss $4.71
WDC: stop loss $20.09