ETF's

[bryanmcn]

Are ETF's eligible for SSP stocks?

[Super Stock Picker]

Hi bryanmcn,

No, there are not. As we use the analysts' recommendations as our first level filter, they get excluded from our research.

[bryanmcn]

Is it a fair statement to say that there would be a lot more stocks in the SSP portfolios if the analysts were taken out of the equation?

[garilou]

Hi SSP,
Not too long ago, you wrote: (http://www.superstockpicker.com/forum/index.php?topic=620.0)

Definitively right not to listen to their opinion.

And then yo wrote:
 

We do take into consideration their coverage as it filters very small or very bad companies.

Now THIS is a filter you could take out of your system!
At least for most of your portfolios.
And especially as your very first level filter!
We saw what happened when Bryan sold FSY!

Because analysts recommendations are the most unreliable buy criteria, and I would say especially for very small and bad companies!

How do you select which analysts to take into account?
When I asked you that, you just replied:

Don't know a better free one than GlobeInvestor.

On Globe Investor, there is not a single analyst covering SPY.

I have seen so many recommending at the highest buy level, with extravagant estimates, and then when you read the small small print, you can find the interest of the analyst or the company they work for. And the more the price goes down, the louder the analyst recommendation!

And as for the ETS's, they are neither very small nor very bad companies. They are simply something else, but are traded like any other stock on the market.
Sure you get no analysts predictions, but sometimes, you get really good comments from financial commentators.

One interesting (and measurable) criterium for fundamentals could be the one used by VectorVest, that allows to  put a value even companies that have negative EPS.
And VectorVest is really not too bad in its fundamental analysis and buy / hold / sell recommendations: (I think they call it EY)
The formula is quite simple: 100*(EPS/last price), and could be introduced in a automated decision taking system.

Louise

PS No, I am not subscribed to VectorVest, they are too expensive, but you can get a few reports for free.

[garilou]

A follow-up on that question in my new topic:
PGF.UN - Analysts opinions 

Louise

[Super Stock Picker]

Is it a fair statement to say that there would be a lot more stocks in the SSP portfolios if the analysts were taken out of the equation?

At least, that would expand the universe of the stocks eligible to be in SSP.

And at the current times, we could expect to find good performers in the bearish ETFs so, yes, that would also mean more stocks in the portfolios.

Also, if we would do such a move, we would need to modify the rest of our filters because of the higher numbers of candidates coming in.

[Super Stock Picker]

Hi Louise,

Now THIS is a filter you could take out of your system!
At least for most of your portfolios.
And especially as your very first level filter!
We saw what happened when Bryan sold FSY!

Well, we really do not listen to their opinions, we only check if they are following a company or not (and if they rate the company as a sell, we don't want to go on board neither).

What happened to FSY is that the analyst has disappeared and the recommendation vanished.

If you look at what happen before June 08, we could say that this was a positive strategy.

The thing is that the way we detect the momentum would detect rubbish if we would consider too small companies. And for that filtering, looking at the existence of the analysts recommendation if a good way to achieve this.

[garilou]

Hi SSP!
Even if we are still off topic, (this is for Bryan  ), what you write:

What happened to FSY is that the analyst has disappeared and the recommendation vanished.

makes my point (and Bryan's too I guess) again!

Although in principle (and in fact) I do look for some analysts opinions.
But if ONE analyst covers a very small company, don't you think there is a chance that exactly the adverse effect could happen? In the case of FSY, was it only a buy rating, or were there also earning forecasts?

No better way for a "rubbish" company as to convince an analyst to give a good rating, one who can then disappear in the blues.

See my other reply in PGF.UN - Analysts opinions
In short, who was he, on what basis did you decide that he was reliable?

I think this has nothing to do with the pre or post June 08 to do.

Louise