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Wednesday, August 6, 2014

Guru Puja

I often say that 'Luck favors prepared'.

Apparently this is loosely based on famous Seneca quote: "Luck is what happens when preparation meets opportunity". To the best of my knowledge,  Seneca the Youngest was the earliest recorded bond speculator in human history. While being an advisor to Roman Emperor Nero, he managed to force some 'big loans' on British allies of Rome, only to call them back at most 'opportune' time. Bond panic ensued, followed by revolt led by Queen Boudica, lest not forget almost 100,000 killed in uprising. In a year 62AD, Seneca became one of richest citizens of Rome.

'Guru' means 'teacher' in Sanskrit. I don't have one. Which makes me an 'Anatha', or 'the one without a teacher'.

I had many indirect teachers in a way of books and blogs, but after reading and studying for years, I still have many of same concerns. Especially so with modern day bloggers. I can say from personal experience, that its all but impossible to be an active trader/investors and also pursue a writing/publicity career at the same time. The people who know how to make money in the markets don't need AdSense income, unlike majority of financial blog writers who can't tell shit from shinola.  IMNSHO, reading blogs waists time, is a distraction, often source of misinformation or somebody's agenda, spreads fear (because it attracts muppets like flies), and generally full of bullshit. Plus they always trying to sell me something. I can sell myself, if I would want to... , but I refuse to become a scammer. I rather just to follow the money.

I learned to read stock charts to find 'breadcrumbs'- traces of  Big Money, often buying something alongside famous money managers (of course, that info comes out too late). The problem is - it happens not often enough. The idea of following approach is to position myself in the middle of their universe...

I have to admit, it's a bit of short-cut.

Programming note: this method is labeled 'GURU'.

GURU ETF from GlobalX tracks  Top Guru Holdings Index made by index gurus of Structured Solutions AG, Germany. They compile a list of 50 most invested stocks, reported by top hedge funds in their Form 13F. There is a lag in when these purchases are reported, and again for allocation into etf. Supposedly they lean towards managers with low portfolio turnover, so I assume that stocks are locked away for 6-18 months. It doesn't mean they always right, only that there is (or was) a large monetary bet with reasonable expectation of gain. Composition is rebalanced often, so I will check in the beginning of every month, around 5th. I think that a new positions will have a higher chance for success. I don't know how large the rotation really is, don't have any historical data, so will have to study in real time.

Finviz screen as of 8/5/2014 here (link).
 After taking out stocks I already have in System12 or elsewhere, and focusing only on issues above 50/200ma, I am left with only 11.

 The plan is to take any sound technical entry with stop-loss near by; and then half-out on any pop, to secure early gains. Don't care about any fundamentals or news, assuming that somebody already done that, or maybe there is something else at play. These stocks span the whole gamut of investing universe - variety of industries, from absurd P/E to no/E, from 32% SI in S to no shorts at all in ING, from 52 week high to yearly lows. GURU holdings are big stocks - most are over 10bil market cap, smallest is 1.6bil (CACI).

While Digging (post link) in April, I rounded up some local gurus.

Clever Eddy Elfenbein of CrossingWallStreet.com, proclaimed a 'best buy-and-hold blogger', with his Buy List. A collection of 20 stocks, set in a beginning of the year. He mentioned that not all should be held continuously. This fits with my efforts to trade opportunistically the very best, sound businesses.
Latest rundown: http://www.crossingwallstreet.com/archives/2014/08/cws-market-review-august-15-2014.html

Eddy Elfenbein Buy List (EEBL):

That man has been a fruitful source of great research ideas. One of his latest gems is a list of 52 'dull' stocks of well-run, profitable companies that get very little or no coverage by analysts and media. I have never heard about most of them, which makes me very very very curious.
Thanks, Eddy

Old Man Buffet
 Here is his top 2 dozen as of end 2013, from WFC 20% to MTB at 0.5% of portfolio:
Notable that BAC is not here, but actually its his 5th largest position (thru warrants and shit...).

Very Smart Robert Arnott of Research Affiliates and his RAFI family of indexes, providing yet another view of investment selection. Arnott Overlay (post link) in spring of this year turned out to be just a start of this cross-strategy project, in effort to 'follow the money'.

  ...Much to be discovered...

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