Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Thursday, October 12, 2006

Am I a Stock Picker?

I’m a little late to this party but I was reading the blogs debating the issue of posting stock picks and not posting stock picks. My thoughts on the subject tend to agree and disagree with some of the points and comments on those blogs but I can only explain what I do.

Here were the original blogs to debate the subject:

Taz Trader Blog: 6 Reasons Why There Are No Stock Picks

FallondStockPicks.com: Why stock selection *is* important

I write this Market Talk with Piranha blog as an add-on to my main equity research site MarketStockWatch.com. I don’t provide “stock picks” at MSW but I do supply my members with daily and weekly screens and an MSW Index. Maybe I am taking the easy way out but my screens are designed to do the actual research work for investors that don’t have the time to compile the research or some members that are just learning to invest. I integrate specific screens with educational aspects that I have learned while trading my own accounts. I do list individual stocks and I place pivot points, entry areas and sell stop areas but I don’t highlight specific stock picks for them to buy (that is up to each individual investor). One of my main goals is to teach novice investors how to develop their own method of screens by using some of the things I currently do. This will enable them to invest for themselves for the rest of their life and become their own “stock pickers”.

A typical daily screen may contain anywhere from 5 to 20 stocks in one night that meets the criteria of the screen. A couple of my favorite and most successful screens for finding winners is “Interesting Stocks making New Highs” and “Strong Stocks within 15% of a New High”. I run several computerized fundamental screeners to narrow down approximately 7,000 stocks to about 100 candidates and then perform the technical analysis. My service derived from the actual research I performed for myself each night when trading my own account using a modified CANSLIM approach. I shared this research on a weekly basis for a couple years on several free internet forums and then decided to format it and charge a fee for doing all the tedious work (after the idea was given to me by a reader). I trade and we all know that trader’s income isn’t consistent so a research service made complete sense since the work was already done each night for me. I am also an entrepreneur so the idea of an additional income stream made complete sense for me and my family and I did not feel selfish for charging a price. I perform work while filling a niche and I do expect to be paid as long as it benefits the people using it. They wouldn’t pay me if it didn’t benefit them and I would close shop if the service was no longer in demand.

However, I am seriously considering moving to a free platform in 2007 while using advertisements in the form of Google Adsense and the like to cover my expenses and time for formatting my research. This would eliminate charging members and would allow me to expose my work (which I feel is excellent) to a wider audience. Over 600 people have signed-up for MSW since officially opening in January 2005 and I am extremely proud of the fact that I created this business from thin air. Whether I charge membership fees or post up my work for everyone, I don’tmake specific stock picks for anyone. I give them research based on a set of criteria that includes fundamental and technical analysis.

Essentially, I make stock picks each night but its’ up to each individual member and investor to make their own choices based on the stocks presented. I will not and do not form an opinion or bias towards any one stock (at least I try). Members ask me questions and I tell them what I see based on my own beliefs about the market. One of the most important rules I teach to my community is the use of money management rules and the fact that many of the trades they put on will actually be losers. I do have a section titled “All-star stocks” to help promote the service (it is a business) but that by no means indicates that I only screen winners. I always admit when I am wrong and eliminate losers on a monthly (and sometimes) weekly basis and explain why they are being removed. The toughest aspect to teach new investors is the fact that they will have to accept losers. This is by far the toughest idea for novice investors to comprehend and integrate into their system. By teaching position sizing techniques and expectancy, most people come to realize that it is okay to lose but you will always find a few people that want winners at all times and always want to be invested.

So, do I support stock picks?

What ever floats your boat! Do what you love to do and do what you feel help others. Some people like stock picks and some don’t. I like to provide researched screens that take both fundamental and technical criteria into consideration and I love the fact that every stock that ever makes one of my screens was studied by my own eyes on the charts.

My modified CANSLIM screening strategy can be found though this link:
Buying and Screening Strategy

I’ll attempt to teach you about investing and provide you with opportunities you wouldn’t otherwise find!

I guess I am a stock picker but I will never tell you what to buy or sell.

Piranha

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