Every weekend I run Vectorvest searches and record the top five stocks from a variety of searches in a spreadsheet. In this same spreadsheet I record the two month returns for the stocks. I began recording the US stock selections on 11/30/2007 so I only have three sets of two-month returns.
For the three sets of two-month returns for the six Vectorvest searches the median return is -14.8%, the average is -14.2% and the standard deviation is 17.4%. If I remove the stocks that have RiskGrades greater than 300, the median is -12.7%, the average is -11.1% and the standard deviation is 15.8%. If I remove all stocks having a RiskGrade greater than 250, the median is -10.3%, the average is -6.6% and the standard deviation is 18.7%.
With regards to Canadian stocks, I only have 38 stocks for which I have recorded both the RiskGrade and the two-month return but the results are somewhat similar. For all the stocks, the median return is -3.8%, the average is -8.1% and the standard deviation is 15%. If I remove the stocks that have RiskGrades greater than 300, the median is -4.4%, the average is -7.3% and the standard deviation is 16.1%. If I remove all stocks having a RiskGrade greater than 250, the median is -2.7%, the average is -3.1% and the standard deviation is 17.2%.
About one month ago I would only buy stocks if the RiskGrade was less than 300 but I may change that to only buying stocks that have a RiskGrade less than 250. I want to see how stocks with a high RG react in an uptrending market. Perhaps the higher RG stocks will outperform the lower RG stocks in a bull market.
Looking at the 30 stocks that I currently own, only four have a RiskGrade greater than 250 and none are greater than 300. The overall RiskGrade for my stock holdings is 85.
2 comments:
So..what do u think of the vectorvest system...is it worth the subscription fee?
You can get a 5 week subscription for $9.99 which should be sufficient time to get a feel for the VectorVest software. You should be very careful when backtesting on the VV site because of survivorship issues. You can pick a strategy and backtest it starting in 2003 for example. If you allow pink sheet and bulletin board stocks in the search, you will get incredible returns which are not achievable by a long shot.
Their timing system isn't bad - it beats a buy and hold strategy.
If you choose to buy the 5 week trial subscription, I recommend that you also join the Yahoo discussion group for VectorVest and spend time reading posts over the past year. VectorVest can be very time-consuming if you are an active investor because you will always have new ideas that you want to backtest.
Most of the long time VectorVest users regard it as a toolbox - it can provide a list of stocks that you then research and decide whether or not to buy them. You cannot blindly take the list of stocks from a search and buy them without doing your homework.
I don't have enough history yet of combining VectorVest with RiskGrades to make a strong conclusion but it appears that, for some searches, selecting only those stocks with a low RiskGrade can provide very good results.
Post a Comment