April 16th, 2008
What if you had wiped the slate clean at the end of 2007 to prepare for a fresh start for 2008. All the headlines about the continually exploding credit crises were making you extremely anxious and you saw no positive news over the horizon. While your goal was that your portfolio beat the S&P 500, your spouse says that’s not good enough. You’re goal is to not have a loss … period.
Other than liquidating everything and moving completely to the sidelines, you wanted to stay in the game by finding some stocks that will move up even when the market’s heading south. What are your odds, where will you find the winners?
Would knowing in advance which of the 207 industry groups will show a positive performance from New Years to April 15:
It might not have made much difference. When you get right down to the details, it looks pretty grim. The averages of only 32 of the 207 Hemlscott Industry Groups , or less than 31% have gone up since the beginning of the year. But to make things worse yet, only 45.4% of the 985 comprising these groups have risen. In fact, the gains have been concentrated even more than appears since 15 of the 32 groups had fewer than half the stocks comprising the group show positive results so far this year.
How do these top performing groups compare to the all stocks (I can only address the 7150 in the Telechart database)? Excluding the above 985 stocks, 28.5% of the remaining 6165 stocks were either flat or showed a gain year-to-date.
I must confess, the results were less conclusive than I imagined they would be:
- The odds of finding winners among the best performing Helmscott Industry Groups wasn’t overwhelmingly better than the remaining population of stocks (45.4% vs. 28.5%), as I had expected it might be.
- Except for the Biotech group, the larger the Industry Group then the more the group seem to move together; some of the small groups had only one stock that outperformed.
- Part of the problem might come because of the way Helmscott categorizes individual stocks. More on that later.
My record on using Industry Groups to help zero in on winning stocks is on the record for anyone who wishes to use Google search for “Industry Group” on this blog in the box above. My believe is founded on the previous success in focusing on various energy, steel, precious metals, among others. But perhaps those were unique situations. I’ll have to ponder this.
It’s a daunting and humbling process. You don’t often read a blogger second-guessing themself, do you? But this is a work in progress. You’re a part of the process of exploring, discovering and refining an approach for improving stock market trading performance.