Raw Materials Lists: April 1

By Brad Thomason, CPA

 

As we get closer to the launch of our new 15 & Out service, we’re going to start releasing what we call “raw materials” lists.  Here’s what we mean by that.

The process of selecting the stocks for our subscriber picks is based on going through a series of steps to eliminate the parts of the stock market that we don’t want.  The final picks are the distillation of what’s left at the end of that (rather long) process.

Click here for the 4/1/2011 Raw Materials List

The stocks that are part of a Raw Materials list are an intermediate step in that process.  In other words, they aren’t the actual picks themselves, but they represent the “short list” from which the actual picks would have been chosen had we been doing a live run for the date indicated.

So why are we doing this?  Well, a couple of reasons.

First of all, this is a good way to go ahead and give our readers a sense of the types of stocks that make it into the final phases of consideration.  You’ll see that the stocks on the list vary a good bit in terms of company size, and come from a wide variety of industries.  We think diversification is important, and this is a good way to show that the stocks we look at cover a broad range of economic drivers (vs what would be the case with just one or two hot industries…since hot industries have a way of cooling sooner or later).

Second, this is a good way to measure whether or not we’re taking our final picks from a good area of what’s available.  In the coming weeks we’ll track the price changes of the Raw Materials lists against the broader market.  If the stocks on the list perform well then that will provide some insight as to what we can expect from the distilled picks that end up going out to subscribers.

Now, just to be explicit:  We aren’t suggesting that you go out and buy these stocks.

You certainly can if you want to (check them out yourself, first), but that’s not the point of this exercise.

We’re simply sharing some of the information that is generated through our ongoing research and development activities.  We know that some of our readers have an interest in getting a better feel for what we’re working on, and we felt like this was a good way to give folks a way to follow along; to get a peek behind the curtain, if you will.

So check back in periodically so you can monitor how things are going, just as we monitor them ourselves.

And in the meantime, if you want to use our Raw Materials lists as a jumping off point for your own research ideas, be our guest.

Click here for the 4/1/2011 Raw Materials List

p.s.  We know that someone out there is going to try to reverse engineer what we’re doing.  Knock yourself out!  And if you come up with an automated way to get the same results, please let us know.  To date we are not aware of any “screening” applications that get to the same output that we do by using our process.  We’ve tried a lot of them (over a period of many years).  Some are not discerning enough, and others cut out lots of quality candidates for reasons that are too arbitrary to be useful.  Bottom line, even though this is more or less a rules-driven activity and we follow a fairly rigorous set of steps, we’ve never found a mechanical means to get all the way down to the end.  Good luck if you want to give it a try…

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