Good morning,

I was clearing all my unused files and I chanced upon an excel file of the stocks screened by KUTE sometime ago in July 2009 before passing through the 2nd and 3rd stage of KUTE funnel. These are the stocks;

You can see from the raw unedited spreadsheet that of the 10 stocks that were screened for their fundamentals, 60% of the selected stocks are in the money compared with the 40% declines. These stocks are selected only for its fundamentals and have not pass through the more stringent rounds of reading the financials and technical. For the period of only 4 months, the return is 13.36%. If these stocks are bought with CFD at the leverage of 10 times, the returns will be amazing.

These returns support my belief that fundamentally sound companies’ share prices should increase over time. From both the positive returns of the 6 companies and negative returns in the same period for the other 4 companies, I learned that it is prudent to invest in all the selected stocks and target only the portfolio return if my strategy is to buy and hold. Since there are 4 companies with declined stock price, the buy and hold theory rewards investors for assuming systematic risk and not company specific risk. Investing in a basket of stocks is good for investors with longer investment horizon and is too busy to manage their own stock trades. For the many traders the buy and hold strategy is neither exciting nor fulfilling. Our goal is to achieve better returns than the buy and hold strategy. With the right system for stocks filtering and rules for entry, exit and money management, the chances of beating the portfolio return is much higher. KUTE has so far served me well for daily trading and my returns have far exceeded the 13.36% returns.

The US market declined last night with DJIA losing 0.91% to close the session at 10,197.47 and S&P logged its worst performance by percentage this month to close at 1,087.24, down -1.03%. Nasdaq was down 0.83% at 2,149.02. NYSE had 78% declines against 20% advances and Nasdaq was 73% declines against 23% advances. The declines were caused by stronger dollar weighing on commodity based shares and a guarded outlook from Wal-Mart Stores spurred worries about the strength of US consumer spending. NOV was down 3.14% to close lower at $44.17 and MIR lost 1.34% to close at $14.77. MGLN lost 1.38% to close at $34.42 and TAP lost 1.3% to close at $45.54. PTEN lost 4.21% to close at $15.93.

I can only hope that my friend had read the previous day’s blog that I did not re-enter to buy NOV and he did likewise. Have a great day today.

Francies Cheng
BBus MAppliedFinance