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Archive for April, 2010

Stock Picks Update – April 2010

April 30th, 2010

It’s another end of the month. It’s time for an update of our stock picks for 2010. For those who don’t know, we participate in Canadian bloggers stock picks competition. Each participant has to choose 4 stocks in equal amount of dollars. We are not allowed to change our picks for the duration of 2010.

Here are the return of our stock picks year to date:

ASIA: –6.7%
CAGC: +18.32%
ITC: +7.18%
PEGA: -6.85%
Average return: +2.99%

For comparison, here are the return of popular benchmark, S&P 500 and Nasdaq 100.

S&P 500: +6.42%
Nasdaq 100: +8.46%

After beating S&P 500 and Nasdaq 100 in the last 2 months, we got hit pretty hard this month. We are now behind S&P 500 and Nasdaq 100. Firstly, we got hit by bad earning result from PEGA recently. The stocks dropped about 20% since earning report. Secondly, we also got hit very hard by CAGC after Jim Cramer recommended selling this stock.

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Posted in Stock Picks

ETF and Relative Strength Investing

April 29th, 2010

We wrote about Relative Strength Investing (RSI) a couple of weeks ago. We are currently developing a system that uses Relative Strength Investing to help us decide which sectors or countries leading the market. We will disclose the detail about this system in our future posting. What we can say now, it is our hobby project; and we are doing it in our spare time.

Today, we tried to run our RSI system against our ETF database. Here is the list of ETFs that are leading the market in the last 5 days.

1 day	TAN: +5.72% ICF: +4.6% RWR: +4.54%
2 day	ICF: +4.98% VNQ: +4.83% RWR: +4.74%
3 day	GDXJ: +2.65% XBI: +1.99% IHF: +1.84%
4 day	ICF: +2.4% RWR: +2.32% VNQ: +2.29%
1 week	GDXJ: +4.35% ICF: +3.96% VNQ: 3.64%

Note that we only choose ETFs with the following criteria:

average volume at least 100K daily
no leveraged ETF is included

As you can see, TAN is leading the market today with +5.72% increase. For those who don’t know, TAN is an ETF that invests in solar-cell related companies.

If we go back to 2 days range, we can see that ICF is leading the market with a total of +4.98% increase. ICF is an ETF that invests in large and liquid REIT (Real Estate Income Trust).

Based on a table like above, we can see which sectors or countries are leading the market. For example, we can easily identify that REIT dominates the market this week.

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Posted in Project

Tags: ETF investing relative rsi strength

Just for Fun – Birthday Probability

April 25th, 2010

It’s Sunday… it means it’s time for “Just for Fun”. Every Sunday, we publish a posting not related to finance or investment.

Now, let’s play a little bit with probability.

If there are 23 people in a room, what is the probability that two persons share the same birthday?

Can you believe that the probability is more than 50%? Yes… I am not kidding, the answer is 50.7%. How come? There are 365 days in a year and there are only 23 people in a room.

I was very surprise too…. Although I am not an expert in probability, I will try to explain how we get this number.

First, let’s start with a simple problem. We have 3 people in a room. What is the probability that two persons share the same birthday? Let’s take a date for the first person. The second person has probability of 1/365 to share the same birthday (we ignore leap year for simplicity). The third person also has the same probability, 1/365. We end up with 2/365.

Do we miss something? Indeed, yes. There is a probability that the second person shares the same birthday as the third person. Things are getting more complicated for 23 people.

How do we solve this problem then? We all know this formula from our class in high school:

P(two persons share the same birthday) = 1 – P(no two persons share the same birthday).

It’s easier to find the probability of no two person share the same birthday, isn’t it?

Back to our problem, let’s take a date for the first person from 23 people. The probability that the second person does not share the same birthday is 364/365. The probability of the third person is 363/365. The probability of the fourth person is 362/365, and so on. So we end up in the following equation:

P(two persons share the same birthday) = 1 – (364 / 365) * (363 / 365) * … * (343 / 365)

P(two persons share the same birthday) = 50.7%