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HOW TO USE THIS SITE--Buying and Selling
 

(Important Note. This explanation is generic and applies to all systems on the site including ETFs Mostly USA and ETFs Worldwide. The words, 'stocks' and 'ETFs' are interchangeable.)

THE STOCKS IN EACH PORTFOLIO are ranked each week from the strongest (1) to the weakest (36). The strongest ranks tend to continue to rise much farther and faster in future price than the weakest. Take this example of JDS Uniphase (JDSU) from the Paradigm 2000 Portfolio in late 1999. While its ranking remains in the top three, its stock price increases in value 94% in nine weeks. (Prices are rounded to whole numbers to conserve space.)

Date Oct Nov       Dec        
1999 29 5 12 19 26 3 10 17 23 31
Rank 1 1 1 2 2 1 1 2 3 3
JDSU Price 83 99 100 107 133 126 122 120 149 161

How high a ranking is "highest?" The top five or six. This can differ from one portfolio to another. Experiment.

Here's another example, from the Classic Portfolio, of stocks rising significantly in ranking. Look at IBM in this case. Stocks crossing the median rank (18.5) tend to be good buys for the weeks or months ahead. IBM crossed median rank on April 30,1999, offering a 30% gain in ten weeks.

Date Apr     May       Jun       Jul  
1999 16 23 30 7 14 21 28 4 11 18 25 2 9
Rank 25 21 12 6 3 2 1 2 3 3 3 1 1
IBM Price 85 100 105 109 120 115 116 116 114 121 123 132 137

Now, to the selling side. When to let go? Give the stock room to fluctuate in rank. You set the ranking level. It need not be as tight as the buying-rank requirement. Here is a good example of a stock, America On Line (AOL) from the Internet Set Portfolio, which headed for the cellar after crossing the median rank (18.5) to the downside on December 17th, with its price then dropping from 85 to 59 in six weeks.

Date Dec         Jan      
1999/2000 3 10 17 23 31 7 14 21 28
Rank 13 14 19 20 21 20 26 27 29
AOL Price 78 91 85 81 76 74 63 65 59

HOW MANY STOCKS TO USE

The optimum for best results is six to eight (see Brealey). If your funds are limited, use as few stocks as it takes to keep your buying commission for each stock less than 1% of the total cost of buying the stock (price per share times number of shares). Do not think in terms of shares. Think in terms of total dollars per position. You should usually enter positions with equal dollar amounts in each.

HOW TO USE THE TRADEABLE INDEXES (ETF's)

Invest or speculate in the strongest of the three widely traded indexes, QQQ, SPY, or DIA, irrespective of their rankings in the portfolio in which they appear. Here is an example of what they looked like in the Internet Set Portfolio in late 1999. When they are ranked in the combined portfolios,100 stocks, the range is from 1 (strongest) to 100 (weakest). Note the disparity of relative performances during this period, with highest ranking QQQ (NASDAQ-100 Index) having the best gain, up 25% vs 6% for each of the other two index tradeables during the period shown.

Date Oct       Nov       Dec  
1999 8 15 22 29 5 12 19 26 3 10
Rankings                    
    DIA 25 24 24 26 25 26 29 32 32 31
    QQQ 16 18 17 16 15 15 17 16 17 21
    SPY 24 23 23 24 23 22 26 30 31 30
Prices                    
    DIA 107 100 105 108 108 108 110 109 113 112
    QQQ 128 120 124 132 136 144 152 155 158 159
    SPY 134 125 130 137 138 140 142 141 144 142

MARKET TIMING--WHAT ABOUT A BEAR MARKET?

It will start to show up in the relationship of the three portfolios with the more speculative tradeables falling down in rankings first and the more conservative rising. The more traditional tradeable indexes tend to move upward in rankings, especially DIA (Dow-Jones Industrials) because of the presence of "defensive" issues among its components. Further, selections from the Classic Portfolio will start to show up in the This Week's Best list (see below) with greater frequency and then dominate it. These indications suggest the presence or imminence of a bear market.

Intermediate market declines lasting several weeks to a few months are discernible from the Money Flow series at the bottom of the weekly Rankings table of each portfolio. These express the energy direction of the aggregate portfolio and may suggest a more or less favorable time for taking or relinquishing individual stock positions. A detailed explanation of Money Flows can be found in the Glossary-Index-Bibliography.

Picking the 'best' stocks is relatively easy. Making profits in them is another matter. In a bear market, losses will occur for most stocks, including the 'best.' Therefore a way must be found to determine 'up' and 'down' in market direction. Several measures point the way: Money Flows, Monetary Conditions, (and Dunes and Ponds in the site's "Separate Section on Market Timing" in the Contents column, Home). Take a look at these pages to see the probability of the presence of a bull or bear market.

USING 'THIS WEEK'S BEST'

This is a source pool for the strongest and most recently dynamic stocks. These tables show the top ten strongest issues both shorter term and longer term. Issues which appear in both tables are prime candidates for potential profits, especially if both sets of the stock's rankings are rising. These ranking numbers may differ from those in the Portfolios tables. That is because each portfolio table ranks itself while This Weeks's Best ranks all three portfolios taken together as a single grouping of 100 stocks.

It will usually be best to pay attention to the direction of a portfolio's Money Flow before buying any of its stocks. Strong, positive Money Flows provide the best environment for successful investing. And Trend Directions profoundly affect profitability.


A simple rule. Stay invested in the top three ranked stocks continuously. For better results, own these stocks only when the market trend is up. The market trend is up when both Paradigm and Internet Set Money Flows are rising. When the trend is down, hold cash. See chart.



DECISIONS AND PRACTICE

The site does not tell you what to buy or to sell, nor when to do so. It does provide you with well developed tools enabling you to may make your own selections for profits. Decisions are necessary. Your own are best suited to you. When you learn how to make them successfully, you will develop a growing degree of investing or speculating self-confidence and self-assurance attainable no other way. With practice, you will become better and better applying these stock-selection and timing methods to your own investment and speculating processes and to the expanding cumulation of profits.

SUMMARY--PUTTING IT ALL TOGETHER

        * A matter of personal judgement. For example, when a stock drops below the top five or top ten, or below the median (18), or logs three or more consecutive weeks of lower rankings, and so on.

        Better for your results would be, after you have some familiarity with the site, to extract your own rules or guidelines. They will suit you far better than mine because you will have chosen them yourself rather than simply accepting someone else's say so even if the fellow is smart--as I am supposed to be.


Anyone who understands my site will never
need other investment advice again.

                                                              — 'Copernicus'


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