cwatts' Blog : ZACKS WIZARD: I WANT TO BELIEVE

Hey cwatts,

Check this out.

http://uwpltre.blogspot.com/

MAGE

My results look promising but in practice it is really hard to take the risk without putting in stop loss orders.
I generally use a 10 pct stop loss. It will take time to see how high the commissions go. I shoot for a 1 week holding period. I'm working on developing the trading decipline and only investing about 25 % of savings.

IT works well but blindly buying and selling stocks based on the screen results can be harmful. One should also do some more analysis with the stock coming in the screen and then act based on that. I used it and lost money but later I realized that if I put my analysis (technical) into the screen results then it really works well. One thing for sure is that Zacks rank 1 and 2 stocks are good if you hold them for some time.

No doubt "blindly buying and selling stocks based on the screen results" can lead to some short term losses. What doesn't? But the only way to test if the screens work in the real world is to actually follow them "blindly" come what may. The backtesting indicates that the Filter Zacks Rank 2 portfolio turned over each week would have gotten you over 80% during the current year. The Filtered Zacks Rank 5 beats those results. So why not just stick to the program? Kapilricha1, have you beaten those gain by adding your technical analysis? I've gotten killed this past month but I can't blame it all on the Wizard because I went into cash at precisely the wrong time and missed the biggest week in months. My failing. But I want to hear some testimony from those who haven't flinched and stayed with a portfolio over a period of a year or more. Does such a creature even exist? Does even Kevin Matras have enough faith in the Research Wizard to faithfully invest in any of these portfolios? Some of the screen have shown as much as 70% per year gains. I've come up with one that beats even those results. Why even bother doing using anything else if those kind of returns are really possible if you are willing to ride out the dips? I've got the guts to endure the short term losses if some more experienced folks can say they have gotten even 75% of what the backtesting indicates on some of the top earning screens. What say you?

Hey cwatts,

I've tried to get some serious discussion about RW here:

http://groups.google.com/group/pp-vip-lounge/subscribe?note=1

You, and anyone interested in Stock Screening and RW, are welcome to join us.

Cordially,

MAGE

I'm not doing that well following it--partly like you my fault. I have some weekly screens with 6 yr annualized return 65-90% but only started a few months ago. I agree if a screen truly works, follow it blindly. The biggest RW flaw imo is that backtesting is run from the Fri close for stocks picked the following Sun, requiring purchase at Mon open, which can often gap up! If you're sells on a weekly trading basis don't gap up as much, the charted return is overstated. RW won't be truly accurate until this problem is corrected. Try calculating an annualized return if, say, weekly average gap is .5%. Comments? JW

Clearly, any measure that includes a stock price from a day prior to the time when a screen’s stock selection is even listed is faulty. Is there any reason why Zacks can’t calculate returns with the opening price Monday morning? Sure, that may mean that the reported returns end up lower but they will be more real. As it is, the credibility of the Wizard is on the line since the Wizard is vulnerable to the accusation that the returns are artificially bloated. The most accurate numbers possible are needed from the backtester in order for users to gauge the risk factor in any strategy. I would imagine that Zacks would want to increase confidence in this tool as much as possible. I hope the powers-that-be will give this some serious consideration.

a Zacks Wizard user community is disparately needed. Mutual Support, advice and encouragement is crucial. Communication is sorely lacking. It is too easy for users to get discouraged and quit after one year. Surely, that is not what Zacks wants to have happen. Public and interactive support from both other users and from Zacks staff is needed if subscribers are going to maximize the usefulness of the Wizard and minimize the frustrations. Those who have not had much success with the Wizard need contact with others who have done quite well. Kevin and the Zacks team, you folks are the ones who can really help make this happen. I want to believe in the Wizard but your help is vital.

I've brought it up with Kevin Matras, the RW guy, in the past, but nothing's happened. In the past there was also sometimes a problem with backtesting symbols occasionally being different than ones initially given--tracking this recently shows it not to be a problem--the symbols are accurate. So if the Fri-Sun thing can be resolved, RW would indeed be reliable and powerful. My gaps this AM were significant. I did weekly backtesting for .5% annualized=29.9%, 1%=67.8%. Even .2%=11%, so any gaps can throw performance figures way off. Try emailing KM and see what he says. JW

cwatts, sorry for so late in replying to this discussion. Here are my two short findings

1) Stock suggested by the RW screens are good most of the time but if one apply the technical analysis to those results then not only profit can be maximized but also chances of getting into the wrong stock is avoided.

2) Also dont hold the stock until monday. If you keep watching your stocks and then exit from the stock based on technical analysis responses then again one can maximize the results.

I have been into both of the above points.

When I subscribed to RW i requested to give me more inputs on the above points but i think based on there strategy they dont want to filter the stocks further and get into manual interaction with the users. That's why sometimes it does not work.