Big Money (New and Improved!)

When I published this screen back in November of last year, I said I was going to continue to work on it and report on my progress. Well one of my customers couldn't wait and started working on it right away. After some interesting conversations and many backtests, progress indeed was made.

When I first wrote about it, it was pretty spectacular just the way it was. I reported that in 2002, the average cumulative gross returns were over +75% and in 2003 they were over +115%. But since the screen would typically find stocks that had already made some big moves, I found that it came with a larger degree of volatility. But with a few modifications and a new Price/Sales parameter, it performs even better with seemingly less volatility.

The parameters are;

Percent Change in Price over 12 weeks = Top 10. (Looking for the top 10 price performers out of the list above.)

Percent Change in Price over 4 weeks = Top 3. (Looking for the 3 best price gainers out of that list above.)

As you can see, this is primarily a price momentum strategy, so it's not for the faint of heart. And it's still is not without its volatility. But the numbers below make it all worth it.

The results;

In 2002, the average cumulative gross returns were over +118% with an average win ratio (winning periods) of over 72%. (Rebalanced every 4 weeks.)

In 2003, the average cumulative gross returns were over +143% with an average win ratio (winning periods) of nearly 85%. (Also rebalanced every 4 weeks.)

And aside from the big returns, one of the main benefits of this screen is that it generates the same number of qualified stocks each period. (3)

This week's 3 picks are:

HMX Hartmarx Corporation
IES Integrated Electrical Services, Inc.
SPCH Sport Chalet, Inc.

Use this screening strategy as it is or try and improve upon it yourself. Either way, incorporating some or all of these ideas could dramatically super-charge your portfolio.

I hope to refine this strategy even more and report on it yet again in future articles. But experiment with it on your own by signing up for a 2 week free trial to the Research Wizard. Click here and find out how.