December 21, 2007

    HEDGE FUND--Your Own

(Print out this text section, and it may be easier to follow the sequences below.)

-7.9% in six weeks.

Over the years I have had requests about buying top ranked stocks and selling short bottom ranked ones at the same time--widely known as hedging.

Below is a preview of the revision of 'This Week's Best' page. Its an upgrade to include the week's worst stocks at the bottom of the 100 Stocks Portfolio rankings list. This will enable users to run their own hedge funds. Compete with the finest!

A few simple rules should apply. Don't short the worst ranked stock alone. Use three or more stocks. Hold these short continuously as long the market trend is down. If they rise out of the bottom ranks, replace them with the next worst stocks lower down.

See the WEAKEST STOCKS / This Week's Worst section in the page below. Five are listed. All are bottom ranked and sell at share prices of $10 or more. Using the trend of the market reported by the Mostly USA Portfolio (what you see in real time each week in this Systems Tips Letter), you will want to be long or short. USA most recently turned down November 2nd. It's shown as the last row at the bottom of this page.

The bottom ranked stocks that week (not shown here) were Citigroup, Novellus, Digital River, F5 Networks, and J2 Global Comm, the first three from the Classic portfolio, the last two from the Internet Set. Their rankings were 93, 92, 97, 96, and 98 respectively.

Over the six weeks to December 14th, C and HD were down -18% and -12% respectively. All five averaged -7.9%. The Dow was down -1.8%, the S&P500 -2.8%. The top five ranked stocks, Apple Inc., Baidu.com, Netease, Open Text, and Sohu were all down except Apple which was up. As a group they averaged -6.2%

There is a second lesson here. The market trend leads most stocks, including both the strongest and the weakest. If you want to be an aggressive hedger, forget about being both long and short simultaneously--the original and still valid meaning of 'hedging'. You would have made a small profit of +1.7% instead of the much more generous +7.9% in the few weeks covered.

Timing trumps selection. For convenience, I have included the weekly USA trend at the bottom of the page.

This new page goes into effect this week in the Mostly USA ETFs subscription letter. It replaces the Stocks Entering High Percentiles section. If there is demand to see the bottom ten rankings instead of five, that may be accommodated.

-7.9% short sale in six weeks.
Make that +67% profit, annual rate, selling short.

>>More tips here

STRONGEST STOCKS / This Week's Best

12/14/2007

Weekly Rankings Three Portfolios Combined 100 Stocks

(see Index/Glossary)

1=Strongest

100=Weakest

(explanations: see below)

SHORTER TERM

prev

last

this

Source

Top Ten

week

week

week

Symbol

Price

Portfolio

Apple Inc

6

6

7

7

5

4

AAPL

190.39

Paradigm

Research.Motion

4

5

5

5

8

9

RIMM

105.98

Paradigm

Amazon

20

30

28

20

13

10

AMZN

89.08

Internet

Baidu.com

2

3

3

3

2

2

BIDU

392.91

Internet

Google

7

7

6

9

7

7

GOOG

689.96

Internet

Netease

1

1

1

1

1

1

NTES

35.07

Internet

Open Text

5

4

4

4

4

5

OTEX

30.66

Internet

Salesforce.com

17

9

8

8

9

8

CRM

59.55

Internet

Sohu

3

2

2

2

3

3

SOHU

56.02

Internet

Verisign

27

19

9

6

6

6

VRSN

36.31

Internet

LONGER TERM

Top Ten

Apple Inc

5

6

6

6

6

6

AAPL

190.39

Paradigm

Biogen IDEC

8

8

7

8

8

10

BIIB

58.79

Paradigm

Research.Motion

2

2

2

2

4

4

RIMM

105.98

Paradigm

Ariba

15

13

11

10

10

9

ARBA

11.56

Internet

Baidu.com

1

1

1

1

1

2

BIDU

392.91

Internet

Google

14

11

8

7

7

7

GOOG

689.96

Internet

Netease

7

4

4

4

2

1

NTES

35.07

Internet

Open Text

4

5

5

5

5

5

OTEX

30.66

Internet

Salesforce.com

16

14

12

9

9

8

CRM

59.55

Internet

Sohu

3

3

3

3

3

3

SOHU

56.02

Internet

WEAKEST STOCKS / This Week's Worst

Weekly Rankings Three Portfolios Combined--100 Stocks

1=Strongest

100=Weakest

(explanations: see below)

SHORTER TERM

prev

last

this

Source

Bottom Five*

week

week

week

Symbol

Price

Portfolio

Citigroup

97

97

97

97

95

95

C

30.70

Classic

Novellus

87

94

98

98

94

91

NVLS

20.01

Paradigm

Digital River

37

56

80

85

88

92

DRIV

34.11

Internet

F5 Networks

85

87

90

96

98

93

FFIV

29.23

Internet

J2 Global Comm

81

89

92

91

92

94

JCOM

21.88

Internet

* share price equal to or greater then $10

EXCHANGE TRADED FUNDS (ETFs) *

1=Strongest

100=Weakest

Rankings

Shorter Term

DJ 30

52

47

43

38

35

35

DIA

133.45

100 stocks

NASDAQ 100

24

27

27

26

27

29

QQQQ

50.97

100 stocks

SP 500

51

48

44

39

38

38

SPY

147.17

100 stocks

Internet Holders

40

51

56

47

40

42

HHH

58.97

100 stocks

PORTFOLIO TRENDS & MONEY FLOWS--Previous/Current *

T-1

T

T-3

T-2

T-1

T

CLASSIC

Up

Dwn

-34

-27

-20

-16

MF Up,

level less than zero

PARADIGM

Up

Up

-11

-10

-9

-8

MF Up,

level less than zero

INTERNET

Up

Up

-8

-12

-10

-9

MF Up,

level less than zero

Combined

Up

Up

-4

-4

-3

-3

MF Up,

level less than zero

USA mrket trend

Dwn

Dwn

Dwn

Dwn

Dwn

Dwn

from oldest

to most recent

See explanation How to Use This Site

* And see Explanation of "Trend Directions" and "Money Flows" in Glossary/Index/Bibliography
also "Exchange Traded Funds" in Occasional Commentary

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