Aardvaak Factor

[2020hindsight]

Testing the easy rules.
I warn you that this is pretty unscientific, and is unlikely to be the basis of any new volumes about surfing the stock market.

But I'm reminded of Alan Kohler's comment (made incidentally in May) that the stock market is easy - "sell in May and walk away" - "buy again in September" - and you will win 90% of the time. The man seems to be a master of expressing things simply.

I got to thinking that there might be a few other simple rules. Maybe even the Aardvaak Factor had an influence?

Ever noticed how many people give preference to the top end of the alphabet. Probably research alphabetically and get tired after a while.

Take the tipping competition for this month - there are 18 entries starting with A, B or C, and 36 starting with D through Z. 33% in the first 3 letters.
But the winner so far - defying the odds - is from the D through Z group, LVL !!

Theory 1 - Based on Yellow Pages.
Call your business Alpha rather than Zeta, and it could make all the difference. This should give an edge to the A-K entries.

Theory 2 - Based on Lotto.
Everyone picks their lucky number 7 or 11 etc, but when they win so do 100 other people. The BIG winners are the ones who use rare lucky numbers like 40-7= 33 and 40-11= 29 etc. When they win they are alone ! and evryone says - what strange numbers to pick!

So I checked the following two portfolios made up of A-K and L-Z resp.
And checked what changes had occurred since 30Jun06.

Bank + Iron ore + Zinc + Uranium + Retailer :-
Representing A-K :-
ANZ (376 at $26.59 = $10000) now down -1.5%
BHP (345 at $29.00 = $10000) now down -5.1%
KZL (2410 at $4.15 = $10000) now up +19.5%
ERA (779 at $12.84 = $10000) now down -4.2%
CML (880 at $11.36 = $10000) now up +15.1%

Orig Value $50,000), now up +4.8%

And representing L-Z
NAB (484 at $35.16 = $10000) now up +1.3%
RIO (129 at $77.80 = $10000) now down -6.0%
ZFX (998 at $10.02 = $10000) now up +9.7%
PDN (2430 at $4.11 = $10000) now up +10.9%
WOW (496 at $20.15 = $10000) now down -0.3%

Orig Value $50,000), now up +3.1%

Based on this I am as confused as I ever was.
I would have to conclude that Theory 1 was almost exactly the same as Theory 2.

 

[doctorj]

Interesting theory - I'm all for these theories that try to capture the human element to give an individual an edge. Portfolio testing would need to be far more thorough and random before enabling any conclusions.

Of the 1666 stocks (according to my data) currently trading on the ASX, 472 or 28%, of them have a ticker beginning with A, B or C.

Therefore, the sample selected for the tipping competition does seem reasonably representative of the population.

It'd be interesting to know what percentages of stocks from each catagory go parabolic within a given time frame. If you're correct about people's researching falling away the further they venture into the alphabet, you could expect that stocks D-Z would go parabolic more often as the markets would be relatively less effecient (as fear/greed is more of a factor as people buy to join a trend without being as well informed of the fundamentals supporting the sudden change in sentiment).

 

[It's Snake Pliskin]

Nice post DJ.

 

[2020hindsight]

Of the 1666 stocks (according to my data) currently trading on the ASX, 472 or 28%, of them have a ticker beginning with A, B or C.
............

If you're correct about people's researching falling away the further they venture into the alphabet, you could expect that stocks D-Z would go parabolic more often

1. Thanks for this DJ. The difference between 28% of the listings and 33% of the predictions in the tipping competition is not as significant as I implied. Perhaps the "Alphabetic Myopia" I was referring to to can be corrected by a fairly gentle pair of spectacles.

2. No big deal, but it demonstrates that companies like to use the front end of the alphabet, just as they do in the yellow pages. - (no scientific conclusion)

3. Getting back to the tipping competition, Of the tipped letters there are 5A, 6B, 7C, 2D, 4E, 1F, 0G, 1h, 2I, 2J, 0K, 1L, 4M, 2N, 1O, 2P, 1Q, 2R, 3S, 1T, 4U, 2V, 0W, 0X, 0Y, 1Z.
There are 30 in the A-K band, and 24 in the L-Z. Probably pretty close to representative as you say.

3. The winner so far is LVL with 80% gain. Buddha in his wisdom has ruled with the Middle of the Road. (L) Again no scientific conclusion, except that it will make some Tibetan monks smile.

4. When I said that was against the odds to be in the D-Z bracket (66%), I should have said that "Buddha does not appear to have the same myopic preference to the front end of the alphabet".

5. I wonder what title you would give your phenomenon of investors being caught out with lesser researched stocks at the end of the alphabet. maybe the "ZZZ's Factor". or the "What-the-hek Wakeup call"?


6. Getting back to something with more merit and research, I should also correct my misquote of Alan Kohler - in recollection, I believe he said that you have much better odds selling in May and buying in November, than doing it the other way round. Stocks were in general pretty dormant through the northern summer. You could infer that Bears should sleep May - Nov, which is anti-intuitive for the northern summer, but makes sense for any bears out there in Aus I guess. Call this the HIBERNATION SEASON THEORY.
Must remember that nextyear

 

[blueroo]

But I'm reminded of Alan Kohler's comment (made incidentally in May) that the stock market is easy - "sell in May and walk away" - "buy again in September" - and you will win 90% of the time. The man seems to be a master of expressing things simply.

But what do we do from May through to September? Get a job!

 

[2020hindsight]

But what do we do from May through to September? Get a job!

yep - or try out for Australian idol - maybe take up ice skating with a view to meeting some Belgian chick - anything but invest in the market - put your winnings in the bank mate May thru Nov - and put the bull in with the cows to take his mind off shares - just grin and "bear" it. His graph was bludy convincing. Nov thru May he averaged about 4 or 5% (from memory) - then May thru Nov his graph did the "dead cat bounce". Wish I'd a) kept a copy of the graph and b) heeded his advice.

But Aussies love a gamble, and even a market doing the dead cat bounce gives is a better result than the nags I guess.

 

[2020hindsight]

For interest....

The Zeta team are winning

So much for that theory.

 

[2020hindsight]

I swear the foreign press spend their weekends reading ASF , lol

http://www.abc.net.au/news/stories/2008/09/01/2351766.htm?section=justin

Aardvarks top zebras in spam stakes
Posted 41 minutes ago

A British researcher has found that email addresses that start with 'a' get the highest proportion of spam.

Richard Clayton from the University of Cambridge collected data from eight weeks worth of email traffic from a UK internet service provider - over half a billion messages - earlier this year.

He found that email addresses starting with 'a' received more than 30 per cent spam, while those starting with 'z' received less than 20 per cent spam.

The best way to avoid spam, the study found, was to have a number as the first character of your email address.