I'm the type that eventually, I'd want to be able to find these stocks myself. I guess a more appropriate question to you is how you started finding these stocks yourself? I'm still a novice as it is, but when you send out a PPR e-mail, I want to know what quantitative factors went into that and also HOW you exactly found it.
A: We have screens we run throughout the day to keep our watch list fresh. Every stock on our watch list contains price alerts so we know when a stock hits a price point which may cause us to buy, pyramid, sell, or short it. We discuss this in our book and the FAQs here on the site. We use fundamental and technical considerations when screening thousands of stocks down to just a handful which get added to our watch list.
There is no precise answer as to exactly how we decide to buy a stock because much of it is based on experience and on each of our portfolio compositions at a given time. For example, we use systematic rules which we discuss in our FAQs on this site and in our book. Some of the rules are discussed in O'Neil's book. This at least enables one to focus on the best stocks out there.
In terms of when to buy, how much to buy, and when to pyramid or sell or short, that is based on experience and also on our own trading personalities. Thus, the composition of my portfolio may be quite different Gil's portfolio at any given time, simply because we bring different trading personalities to the same set of leading stocks. This naturally affects each of our decisions to buy, pyramid, sell, or short.
Q: How much money one can manage using your system? For example, Let's assume that I have 1 million dollars. Can I follow your MDM (Market Direction Model) signal without perturbing the market ? $1 million might be ok. Then how about $100 million. Can I simply buy ETFs in single day following your signals ? What is the threshold level ?
And if I am buying individual stocks, then can I follow your simulated portfolio in FTS (Follow The Stock) with $1 million? $100 million ?
In other words, what is the sort of the upper limit of money with which one can follow your system easily ?
A: You can follow the MDM signal without affecting the market even if you had hundreds of millions, or even billions. Markets are made in ETFs differently than stocks, thus you can buy a huge number of shares without affecting the price. ETFs will print shares to accommodate demand, as arbitrage is utilized, so you'll notice the price stays in line:
For individual stocks, we have a rule where we own no more than 10% of the 50-day average daily volume of a stock, and usually it is no more than 5%, simply because stocks have slippage, especially during weak moments in the market when everyone is trying to get out. So in terms of the simulated portfolio, if a stock averaged 1 million shares a day, we would hold no more than 50,000 to 100,000 shares of that stock.