Starting Out Using Rate of Annual Return

[APJ]

Hi

Are there any opinions out there on using ranked rate of return,ROAR (i.e. value change measured over the last 12 months divided by value), whereby the top ten with liquidity are purchased, no more than 4 in a sector.

As I am a 'newbie', my share education will take time, I can spare only a few hours a week, am looking at medium term investing and therefore figure this is better than nothing, even if it is a little unsophisticated.

Alan Hull produces a Blue Chip stock list every friday www.bluechipreport.com.au, that ranks stock by ROAR, and delists them if they hit a 20% stop loss.

Thoughts kindly appreciated.

 

[RichKid]

Hi APJ,
Quite a few of the stocks from his mid year picks have peaked and fallen bigtime. So you need to catch the trend early so I'm not sure how that works out with his system. I like the info in his free manual on his site though, strict rules help. Wonder if it only works well in bull markets...

 

[APJ]

RichKid

Thanks for pointing out an obvious step - look at the current prices.

Food for thought.

When I've gone thru all stock, I notice there are a few big downs and more ups - leaving him about 5% up. Not too good I guess.

I am thinking twice about this.

thanks
APJ

 

[tech/a]

RichKid

Thanks for pointing out an obvious step - look at the current prices.

Food for thought.

When I've gone thru all stock, I notice there are a few big downs and more ups - leaving him about 5% up. Not too good I guess.

I am thinking twice about this.

thanks
APJ

Before you do,the methodology is just like any other it has its merits and it is not perfect.

Why not develope a method around the basic premise.
Look at those stocks that have tanked and see where a better exit would have been.(I Know nothing about this method and have so far heard about an entry and a stop--whats the exit?).

If there are an abundance of selections why not use a closer stop.
Mind you my testing has shown a 20% stop to have the best longterm success rate--however the trade off is a great deal of non performance where the stock buggerises around in the buy to stop 20% for ages.

What are the parcel sizes? why not have 1/10th sizes and that way 20% from buy price will be 2% of equity.
Then how does the method look?

Noticed a whole thread on it here.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=forum;f=76

Perhaps there should be some education in how to evaluate a method and what you should be looking for and achieving?