Newsletter January 11, 2002
Newsletter January 11, 2002
Canadian Medical Laboratories is updated. This was my strongest and safest pick back in September and it’s now up about 25% since then. My latest analysis still says strong buy. But since then the price is up a bit more and so probably if I analyzed it right now I would say Buy rather than strong buy.
I expect a number of updates starting in about 2 to 4 weeks as 2001 year end results become available.
Performance: Performance of the picks is excellent click to see, up 18% in 2000 and another 14% in 2001
With another year over it’s time to look at performance. I have long been tracking (on the site) the performance based on my original rating (buy / sell) on every stock. That works okay but does not deal with the fact that ratings can change from Strong Buy to weak buy or even to sell.
To address this I have now added a tracking of the picks on an annual basis. I have tracked the (approximate) 1 year performance of all stocks that I had rated just prior to the start of year 2000. Similarly I tracked the 1 year performance of all stocks that I had rated just prior to the start of 2001. This simulates a strategy of what would happen if I had bought equal dollar amounts of all my Buy and Strong Buy picks at the nearest rating date just prior to the start of year 2000 and then rebalanced into the new Buy and Strong Buy picks as they were one year later just prior to the start of 2001.
The results were very encouraging. The Strong Buys and Buys outperformed the Sells and Strong Sells by a wide margin on average in both years. Even better, there were not really all that many cases where a Buy went down despite the poor market conditions in 2000 and 2001. In 2000 the Buys and Strong Buys were up an average 18% and in 2001 the Buys and Strong Buys were up an average 14%. Buying the Buys and Strong buys just prior to 2000 and then rebalancing to the new Buys and Strong Buys at end of 2000 would have returned a total 34% over the two years prior to trading charges but before dividends.
Click Performance to see the detailed results, view the graphs to see the strong consistency in performance.
Note that past performance does not necessarily indicate future performance in any way (My results could be just good luck).
What to Invest In?
If I were starting a portfolio at the moment I would consider firstly Canadian Medical Laboratories, Pason Systems and the two stocks that are identified in the research reports that I have offered for sale as research reports. Further down my list I would consider Sino-Forest (higher risk) Clemex (higher risk) Boardwalk, Canadian Utilities, CIBC, TD bank, Power Financial, and Precision Drilling. Of course all stocks are risky and I expressly am not suggesting that any individual buy these stocks since I do not know your situation or risk tolerance.
Did you ever notice that the earnings used by analysts even for historic years and quarters is often different from the reported net income? This can mean that different sources report different P/E ratios. You may also see commentators arguing over whether one should look at reported net income or instead look at some version of adjusted net income. The following article illustrates why accountants and stock analysts often have a fundamentally different view of earnings.
The following link is my short article on the topic of Dilution and Anti-Dilution. These occur when companies issue shares and options.
This newsletter is kept brief and usually only sent once each two weeks. I hope that you will all stay on the mailing list of this site. However, you can unsubscribe by simply replying with the word “unsubscribe”. I would appreciate knowing the reason.
Regards and thanks for your interest,