Stingy Investor

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patmanz
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Stingy Investor

Post by patmanz »

Anyone buying Stingy Stocks ?

http://www.ndir.com/SI/articles/0110.shtml

The rationale behind the stock screening seem very solid but it is almost too good to be true !

I am pondering the idea of purchasing the soon-to-be 2011 selection in my RRSP and hold them for a year :)

Anyone ?
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Re: Stingy Investor ?

Post by FinEcon »

Not following the list verbatim per se, but have been buying stocks which meet many of the criterion used by Norm for years. If you are planning on actually following Norm's list to the letter, you would be nuts not to pay for the subscription to the newsletter. The time delay will very frequently cause what I call the Rothery effect, i.e by the time you see the list for free on SI or in CMS magazine, they have already been scooped up by subscribers. IMO you need a minimum 25-30k to play this game, particularly if you are going to do both American and Canadian issues. Some years, the lists can be rather long.

http://www.google.ca/finance?q=TSE%3AHLF
click on 1yr
bet ya can't guess when Norms recommendation came out in print
bet ya can't guess when subscribers bought
this effect can be very powerful on thinly traded small firms (I picked Highliner for that reason)
Show me the incentive and I will show you the outcome

--Charlie Munger
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Re: Stingy Investor ?

Post by Spiff »

Hum, the method linked uses stocks in the S&P500. Rather different liquidity-wise from HLF.
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Re: Stingy Investor ?

Post by FinEcon »

Spiff wrote:Hum, the method linked uses stocks in the S&P500. Rather different liquidity-wise from HLF.
1. A member of the S&P500
2. Debt-to-Equity Ratio less than or equal to 0.5
3. Current Ratio of more than 2
4. Interest Coverage of more than 2
5. Some Cash Flow from Operations
6. Some Earnings
7. Price to Sales ratio of less than 1

There's the Stingy criteria. HLF likely met all but one of them mid-late last year and the one it didn't meet is arbitrary (could just as easily be the TSX). In fact, the same screens are run against the TSX as well but if IIRC, Norm is less likely to give those away free as often. Probably has something to do with compensation for his time, expertise and effort. Your post brings up a good point tho, one needs to read and follow the disclaimer posted with the screens each year. I certainly never buy from a quant screens alone.
Show me the incentive and I will show you the outcome

--Charlie Munger
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Re: Stingy Investor ?

Post by Spiff »

FinEcon wrote:http://www.google.ca/finance?q=TSE%3AHLF
bet ya can't guess when Norms recommendation came out in print
bet ya can't guess when subscribers bought
I'm game, which list was this from and when was it printed? :)
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Re: Stingy Investor ?

Post by patmanz »

FinEcon wrote:f you are planning on actually following Norm's list to the letter, you would be nuts not to pay for the subscription to the newsletter.
You mean the THE ROTHERY REPORT ?

I think he also list them in the Canadian MoneySaver, also juggling with the idea of subscribing to both...

Could buy a few of his US picks in january and hold them through the year and see where it goes, the track record speak for itself
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Re: Stingy Investor ?

Post by Spiff »

patmanz wrote:I think he also list them in the Canadian MoneySaver, also juggling with the idea of subscribing to both...
You should ask for a combo deal. :) (IIRC, the MoneySaver is fairly frugal. Something just over $20/yr? I've enjoyed it in the past.)
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Re: Stingy Investor ?

Post by Taggart »

patmanz wrote:

Could buy a few of his US picks in january and hold them through the year and see where it goes, the track record speak for itself
Since the "average" holding period for a Ben Graham type investor seems to be in the three to five year period, I doubt that holding for a year is going to tell you much of anything. The process is slow and boring, even more so than dividend growth investing, which is why I think most investors who try it, eventually drop out to find something more exciting. It doesn't matter how good a stock picker you are, you're still going to hit the value traps, which doesn't help to keep you on board either.
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Re: Stingy Investor ?

Post by FinEcon »

Spiff wrote:
FinEcon wrote:http://www.google.ca/finance?q=TSE%3AHLF
bet ya can't guess when Norms recommendation came out in print
bet ya can't guess when subscribers bought
I'm game, which list was this from and when was it printed? :)
Ahhh ya bastard, had to make me break out Google: http://www.ndir.com/SI/articles/MS1209.shtml

Norm has so many lists and screens I can never keep them straight. Note the quant criteria for the list isn't specifically mentioned on that page, whihc IMO is better because then you're forced to go look at the financials yourself. HLF is an issue I remember because I was watching it for a long time then as soon as it hit Norm's (public) list it ran up way outta my price range. Happens a fair bit, there's not that much depth to the pool in Canada. :beer:
Show me the incentive and I will show you the outcome

--Charlie Munger
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augustabound
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Re: Stingy Investor ?

Post by augustabound »

Taggart wrote: Since the "average" holding period for a Ben Graham type investor seems to be in the three to five year period, I doubt that holding for a year is going to tell you much of anything.
I know Graham advocated a 50% gain or two years, I just can't remember if it was The Intelligent Investor era, or later in his life when he changed his "successful criteria".
"Whenever I'm about to do something I think, would an idiot do that? And if they would, I do not do that thing." - Dwight K. Schrute
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Re: Stingy Investor ?

Post by Taggart »

augustabound wrote:
Taggart wrote: Since the "average" holding period for a Ben Graham type investor seems to be in the three to five year period, I doubt that holding for a year is going to tell you much of anything.
I know Graham advocated a 50% gain or two years, I just can't remember if it was The Intelligent Investor era, or later in his life when he changed his "successful criteria".
Ahhh c'mon Augustabound. I've seen your postings long enough to know that you can do better than that. :) You're of course referring to this classic here via Norm Rothery.
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Re: Stingy Investor ?

Post by augustabound »

Actually, I have Security Analysis, The Intelligent Investor and about a dozen articles and websites on the go WRT Graham. (Including Norm's of course).

I think I've had some Graham overload the last month or so. Almost too much info at once considering some of the websites put their own spin on Graham criteria.
Some claim to have run Graham screens, yet only show low P/E and dividend yield in relation to the AAA bond and try to quote it out of I.I.
Norm's annual September Issue of Moneysaver, is the only true screen I've seen.

Sorry, rant over. 8)

I hadn't seen that article from CB, but I remember reading from one of the later Graham articles his rule on selling. What I don't remember is, did he have a rule for selling a loser?
"Whenever I'm about to do something I think, would an idiot do that? And if they would, I do not do that thing." - Dwight K. Schrute
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Re: Stingy Investor ?

Post by kenwood »

I tried setting up a screen on TDW but couldn't figure out what ratio to use for #4 interest coverage. The screen returned 60+ stocks on the TSX, which I think maybe too many? Does anyone have a more accurate screening tool that I can try?
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Re: Stingy Investor ?

Post by augustabound »

The screener at ADVFN is great for me. I have a few saved screens, one of which is the stingy screen. I have it set for S&P stocks and it returned 12 today.
http://ca.advfn.com/p.php?pid=cafilterx&cb=1287433861
It takes some getting used to setting the parameters, but all the info is there.
"Whenever I'm about to do something I think, would an idiot do that? And if they would, I do not do that thing." - Dwight K. Schrute
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Re: Stingy Investor ?

Post by augustabound »

OK, just did a quick stingy screen for TSX and it showed 45 names.
"Whenever I'm about to do something I think, would an idiot do that? And if they would, I do not do that thing." - Dwight K. Schrute
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Re: Stingy Investor ?

Post by kenwood »

Thanks for the info re advfn. I signed up for a free account but was unable to set criteria filters - it only let me add columns to the page. Can you tell me which ratios you used for interest coverage? I will try to find the same on tdw.
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Re: Stingy Investor ?

Post by augustabound »

kenwood wrote:it only let me add columns to the page. Can you tell me which ratios you used for interest coverage?
To set criteria you need to click on one of the numbers in the column.
So after you start your screen, click the drop down menu marked "Deeper analysis" and the second choice is current ratio, click on it. When the page loads my first company is Van Houtte with a current ratio of 1.6. You need to click the 1.6, then the page loads to set your parameters. Click the box marked "Exclude Current ratio less than" and input 2 and click submit. That will bring up all companies with a current ratio of 2 or more.

For interest coverage it's also in the deeper analysis drop down menu. It's about 10 selections down.

ADVFN takes some getting used to, but it has by far the most choices and allows you to save your screens too, not bad for a free screen.
"Whenever I'm about to do something I think, would an idiot do that? And if they would, I do not do that thing." - Dwight K. Schrute
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Re: Stingy Investor ?

Post by kenwood »

augustabound wrote:
kenwood wrote:it only let me add columns to the page. Can you tell me which ratios you used for interest coverage?
To set criteria you need to click on one of the numbers in the column.
So after you start your screen, click the drop down menu marked "Deeper analysis" and the second choice is current ratio, click on it. When the page loads my first company is Van Houtte with a current ratio of 1.6. You need to click the 1.6, then the page loads to set your parameters. Click the box marked "Exclude Current ratio less than" and input 2 and click submit. That will bring up all companies with a current ratio of 2 or more.

For interest coverage it's also in the deeper analysis drop down menu. It's about 10 selections down.

ADVFN takes some getting used to, but it has by far the most choices and allows you to save your screens too, not bad for a free screen.
Thanks for the help. :thumbsup:
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Re: Stingy Investor ?

Post by NormR »

FinEcon wrote:The time delay will very frequently cause what I call the Rothery effect, i.e by the time you see the list for free on SI or in CMS magazine, they have already been scooped up by subscribers.
Sigh, I suspect this is starting to cause problems. So, by way of clarification ...

Subscribers don't get access to the articles before the magazines do. So, a subscription is not a ticket to front-running. Indeed, I also abstain from buying highly ranked stocks before publication.

We may provide stock lists on publication and the articles are usually posted after a month or two. We also provide updates at other times in the year. For instance, subscribers got a full Graham update in September and will get another one in December.

(As an aside, the HLF example happens to be coincidental. The article in question appeared well in advance of the gain. So, readers had ample opportunity to buy and profit.)
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Re: Stingy Investor ?

Post by FinEcon »

Thanks for weighing in Norm. I have a few questions and a comment or two.
NormR wrote: Subscribers don't get access to the articles before the magazines do. So, a subscription is not a ticket to front-running. Indeed, I also abstain from buying highly ranked stocks before publication.
I hope I wasn't taken as implying there is/was any unethical behavior in your part. ISTM, it's more like leading the horses to water they would not have ever known about if it weren't for Uncle Norm. With respect to time delays, the information in a newsletter or magazine is quite public and quite stale. A newsletter is the same to a lesser degree. A email newsletter is the same to an even lesser degree. All are rendered obsolete in the information asymmetry game by program trading. At least, ISTM, this is what efficient market adherents would argue. Anyhow, a person who receives screens on a frequent basis will always have more up to date info than the one who picks up CSM at the library a few weeks after publication.
NormR wrote: We may provide stock lists on publication and the articles are usually posted after a month or two. We also provide updates at other times in the year. For instance, subscribers got a full Graham update in September and will get another one in December.
.....
(As an aside, the HLF example happens to be coincidental. The article in question appeared well in advance of the gain. So, readers had ample opportunity to buy and profit.)
It is very likely I have it in my head that this has happened more times than it actually has, human beings being great at finding patterns where none exist. My main non-point here was to simply complain about (my possibly incorrect belief that) other market participants finding about issues I am already following (yet have not purchased) because of your work. Similar criteria, small universe in Canada, it has to happen that way. Have you ever considered offering a screens only option via email. There may be a bigger market than it would seem for that. I am an uber-cheap SOB but that would pique my interest where a full blown newsletter often does not.
Show me the incentive and I will show you the outcome

--Charlie Munger
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Re: Stingy Investor ?

Post by patmanz »

I have been wondering...

Are stingy stocks the same as graham stocks ?
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Re: Stingy Investor ?

Post by Spiff »

doh
Last edited by Spiff on 18 Nov 2010 22:43, edited 1 time in total.
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Re: Stingy Investor ?

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doh
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Re: Stingy Investor ?

Post by NormR »

FinEcon wrote:It is very likely I have it in my head that this has happened more times than it actually has, human beings being great at finding patterns where none exist. My main non-point here was to simply complain about (my possibly incorrect belief that) other market participants finding about issues I am already following (yet have not purchased) because of your work.


It can happen, I recently suffered a similar experience. I had recommend a nice stock and was thinking about buying more when it suddenly gained ~50% when another letter recommended it. Oh well.
FinEcon wrote:Have you ever considered offering a screens only option via email. There may be a bigger market than it would seem for that. I am an uber-cheap SOB but that would pique my interest where a full blown newsletter often does not.
There are a few in our free weekly email letter.
patmanz wrote:I have been wondering... Are stingy stocks the same as graham stocks ?
No, different criteria are used. Both are value screens but one leans toward low P/S while the other(s) to low P/E and low P/B stocks.
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Re: Stingy Investor ?

Post by Shakespeare »

Oops, he said. :lol:
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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