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Sensible Investing's Journal - Quest For Consistent 30%+

Discussion in 'Trade Journals' started by SensibleInvesting, Aug 30, 2019.

  1. SensibleInvesting

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    Hey guys,

    Hope you're all having a high-return weekend! Today I wanted to get your thoughts on my unorthodox investing strategy for picking stocks - typical investment horizon is 6 - 18 months, with the aim of 30 - 40%+ returns during this period, then compounding the returns into perpetuity:

    https://youtu.be/lRabzGAhDb4


    Current open positions:

    upload_2019-8-31_10-4-14.png

    Investment strategy overview:

    - 6 - 18 month horizon per position
    - get in after >70% drop in last 12 months
    - use positive earnings calls as catalysts
    - deep, deep research to ensure sufficient evidence suggest >85% probability of positive earnings call in next 1 - 4 quarters
    - sell when target price is reached, or when market sentiment is more bullish than own sentiment

    Feedback is appreciated!
     
    T0rm3nted and StockJock-e like this.
  2. T0rm3nted

    T0rm3nted Moderator
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    Looking forward to following along here! Always love seeing new journals. Keep us posted my guy
     
    SensibleInvesting likes this.
  3. Three Eyes

    Three Eyes 2018 Stockaholics Contest Winner

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    Yep, nice to see a new approach laid out here. Hope it works for you!

    I admittedly did not check out the video, but it's not clear to me from the post above:
    1. how you determine your investment size (so far , a $3k, $4k, and $5k stake)
    2. how you intend to compound returns into perpetuity (for example, keep the invest stakes in the $3 to 5k range, but just add more symbols?)
    3. what your sell signals/triggers will be (for both winners and losers)
     
    SensibleInvesting likes this.
  4. SensibleInvesting

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    It's all answered in the video :)
     
  5. SensibleInvesting

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    Update:

    The Weightwatchers position has continued to perform well - after their most recent earnings call, the market has continued to rerate the stock. QD and SFIX haven't really moved - QD had a fantastic earnings call with 57% EPS growth and great guidance, however the market has continued to treat it like a P2P lender and subsequently sold it off around 10% - funny that!
    upload_2019-9-22_14-6-48.png
    upload_2019-9-22_14-6-5.png
    I'm anticipating a solid earnings call for SFIX on 1st October, and hopefully the gains to hold - their previous 2 earnings calls saw a ~40% increase only to regress, as the market was not willing to accept the company's fortunes have turned, so will be watching closely to see what management delivers in a couple of weeks!
    upload_2019-9-22_14-4-4.png
    I'm also considering adding a new position - EVH:NYSE - have spent about 100+ hours researching the stock, and the negative sentiment seems unjustified. For those interested, here's part 1 of the EVH analysis video below - part 2 out in a couple of weeks:

     
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  6. Onepoint272

    Onepoint272 Well-Known Member

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    "The fundamentals drive price over time, but the amount that people can be incorrect about fundamentals at any given time can be quite substantial....there may be other things going on....what investors need to do is look beyond fundamentals." ---Rick Bensignor

    By my method, actually Richard Wyckoff's method, QD appears to be in re-accumulation by the big/smart money. It appears they are trying to sop up as much of the stock held by weak hands as possible, and lock it up so it can't come into the market as sells when they are ready for the stock to be marked up. So right now it is at a critical juncture. They have driven it below the trading range into what is called the "Spring" position. It is positive that the trading volume (the supply of stock coming to the open market) is shrinking as it goes thru this time under the trading range. Now it needs to get back into the range and take off to the top of the range. If it breaks down with high volume, then the trading range will have been distribution instead of re-accumulation. This is actually a great place to enter with low risk with a buy stop just above 7.36 and a follow-up sell stop just below 6.98. I might take it. Thanks.

    upload_2019-9-22_0-48-38.png
     
    #6 Onepoint272, Sep 22, 2019
    Last edited: Sep 22, 2019
  7. Onepoint272

    Onepoint272 Well-Known Member

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    WW was a great pick. It looks as though it'll run into some resistance in the $38 area and may consolidate for awhile, but it had built enough "cause" in that base trading range to conservatively "effect" a move to the $45.50 area. I may look to pick some up on a pullback.

    Point and Figure Chart using daily data, a 25-cent-box and a 3-box-reversal:
    upload_2019-9-22_1-6-58.png
     
    #7 Onepoint272, Sep 22, 2019
    Last edited: Sep 22, 2019
  8. SensibleInvesting

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    This is beautiful technical analysis Onepoint! I look forward to seeing more of your insight into technicals, because that's an area I need MUCH more work on! Based on your technical chart, would you say the $38 potential consolidation might reflect what happened 2 years ago (as per the image below)? I'm expecting them to continue to outperform fundamentally - they may not repeat their previous run-up, but perhaps $45 is possible based on what I'm seeing on the fundamentals side.

    upload_2019-9-25_19-52-53.png
     
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  9. SensibleInvesting

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    I accumulated more SFIX last night - GS downgrading 4 days before an earnings call seems VERY fishy to me. The last time they did this on Afterpay in Australia, they accumulated 5%, then sold it about 2 weeks later for a 15% gain.
    upload_2019-9-25_20-1-20.png
    upload_2019-9-25_20-0-51.png
     

    Attached Files:

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  10. SensibleInvesting

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    As you're probably all aware, on the 27th, Trump's administration are having discussions about having the ability to delist all 156 Chinese listed ADRs from the NASDAQ and NYSE, for whatever reason. This means $1.2T could be wiped from existence with the click of a finger, and directly affects anyone who holds US listed Chinese ADRs. As a risk management strategy, I've shifted half my holdings of QD into a new position MED:NYSE.
    upload_2019-9-29_17-31-7.png



    For those of you interested, I made a video about the 27th update and discuss how many people could be affected by the incident, and what the likelihood of Chinese ADR delisting may be.
     
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  11. SensibleInvesting

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    SFIX had a great earnings call, but the stock bounced around from +4% - -12% in the AH trading. They guided for slightly softer Q1 due to a warm and longer than expected summer, therefore holding back some of their marketing $$ for the next quarter, but guided FY revenues to exceed Wall St. forecasts. Despite this, the market was unhappy with the result and sent the stock down 9% AH.

    I'm holding tight as there will be some really exciting stuff happening in the next 2 - 4 quarters - didn't hear anything negative on the earnings call from an operational and fundamental perspective. It'll be trading around the $18 - $19 range until the next call however though (I think).
     
  12. Onepoint272

    Onepoint272 Well-Known Member

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    Yep, $18 is an important level and $18 on down to $16 was supported in Dec 2018. It is these high-volume days when the public panics that gives the big-money boys an opportunity to accumulate a meaningful number of shares. If the large amount of shares sure to come into the market today are absorbed above $18 that would be good. However in the coming days they could take it lower in an attempt to mop up more of the supply currently held by the weak public hands and that is when it is tough to sit on your hands. It would be bullish to see the trading volume today lower than the previous 4 ER trading days as that would show the supply of stock in public hands is drying up. As much of the stock as possible needs to be held by the few big players so that when they are ready to move it higher the supply of stock is low (small supply -->higher prices). The big-money can't sell a significant number of shares without driving the price lower (like the fat lady getting out of the tub leaves only an inch of water) so they hold it, lock it up in a box (to reduce supply available for trading) and they will buy as much as possible to get the weak hands out of the way so they don't end up having to buy it from them later at higher prices when they attempt to move up the price. In the meantime they'll make the news bad and wear out the weak hands. They could take it down as far as 14.48 to scare the shares away from the public. But who knows what they will need to do? That's why I don't buy and hold, I wait for supply to dry up.

    Weekly bars as of Tuesday's close before ER:
    upload_2019-10-2_4-54-12.png
     
    #12 Onepoint272, Oct 2, 2019
    Last edited: Oct 2, 2019
  13. SensibleInvesting

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    I sold my WW position before market closed, thinking it was the start of the next crash. Turns out the stock tanked because Novo Nordisk just got FDA approval or an anti obesity drug - ended up being just noise... why would this one work, when many other companies have released the same thing, but saw no success.

    They said they partnered with Noom who have 45M users worldwide (apparently). Bit farfetched considering they have lower user ratings, and lower number of user ratings than WW, who only have 4.5M users - smells like artificial number inflation to me.

    I've put in an order to buy back my WW shares at market open. @Onepoint272 - this may be the pullback you were waiting for.

    I'm feeling pretty stupid selling now, but couldn't find any news on WW until market closed. The trading volume was double that of average today, but I suspect it's shoters selling the news...

    WW next earnings call in 30 days. I'm looking forward to another positive result.

    In other news, I interviewed two Optavia coaches at Medifast who are high up the food chain - this company is going to do well for at least 1.5 years methinks - might double my position!

    Also, looks like a massive volume of shares got absorbed today for SFIX - this is good news.
     
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  14. Onepoint272

    Onepoint272 Well-Known Member

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    Yeah it got stalled at $38 like I thought it might. So that was the Buying Climax (BC) and then the change of character led to what looks like will be the Automatic Reaction (AR). It needs to print a Secondary Test (ST) of the BC to know the uptrend is stopped and a trading range established, but I think the uptrend being stopped is a given. The bigger concern I think, is, has the down move ended? I'm suspicious of yesterday's closing hour which had a lot of volume but not much price range compared to the bars in the vicinity. It may still test lower before advancing. However most of that volume came in during the last 1/2 hour when it is normal to see a lot of churn (day-traders closing their positions). Some Wyckoff traders specialize in buying ARs, I'm not one of 'em, yet. So far I prefer to wait for the trading range to develop and buy when supply dries up in the bottom or middle of the trading range.

    EDIT: If I bot the AR, I'd be selling at the top of the range. It likely will make its way back to the bottom of the range. There is still supply down there that the big boys need to mop up. I'm impressed though how the volume (supply of stock for sale) on the sell-off yesterday dried up between noon and 1pm CDT.

    65-minute (~hourly) bars:
    upload_2019-10-3_8-11-31.png
     
    #14 Onepoint272, Oct 3, 2019
    Last edited: Oct 3, 2019
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  15. SensibleInvesting

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    WW is up almost 6% today - I think there is really good support for this stock, because the market is constantly chasing that next "good stock"; given the recent raft of analyst upgrades and PT raises, and the fact that what drove WW down 11% was noise (Novo Nordisk releasing a new anti obesity injection), I'm glad I bought back in - $2500 worth at 33.54 - perhaps I should have bought more; next earnings call is 4th November. Maybe the market might sell off some more because it's October?

    SFIX also looks to be having great support at the high 17 mark - let's hope this holds. The earnings call truly wasn't bad, but in fact very good. Will the market digest and understand this eventually?
     
  16. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

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    Aren't WW and MED the same industry? I like MED's dividend, 3% for a good growth stock..
     
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  17. SensibleInvesting

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    Yes they are - the difference between Med and WW is that Med is direct selling. Given that wellness is growing faster than any other consumer discretionary, I'm ok with being slightly overweight the wellness industry (no pun intended)
     
  18. SensibleInvesting

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    It was a good night in the markets last night. WW is back to ~$36 levels, and SFIX buy volumes have eaten up the panic sell volumes - I'm looking forward to next week!
     
  19. Onepoint272

    Onepoint272 Well-Known Member

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  20. SensibleInvesting

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    What charting software do you use? It looks legit detailed!
     

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