Fox Valley Investment Team
MEETING MINUTES

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10/4/11
We are very much in cash mode.

Nayson had the suggestion to look at our lower exit point to avoid having stocks that shoot up, then crash back down again for little/no gain.  Since brokers have automated trailing stops, we can look into putting in a trailing stop, and just letting a stock run.  We also tossed out the idea of rather than using the 200 day moving average to determine the stop for Long Term stocks, we could either see if we can find a 100 day moving average, or perhaps use a weighted average by combining the 50 & 200 day averages.

Using the automated trailing stop order seemed like the most viable.  Before we work on a program to crunch the numbers, I (Rick) volunteered to look at 5 or 10 of our better gains to see what would work. The idea being that we can't have a rule that would have caused us to sell off more than perhaps one these stocks early.

Does anyone know of a source for charts for companies that are no longer traded?  AROS, BARZ, EVI, SFSK, & IPS are all non-current stocks.  Of our stocks that gained over 30% (and I still have to look through charts for stocks that gained more, then tumbled down), the only ones that I can charts for are ALB & NOV.  Incidentally, NOV is a good case study, about half way up our run, it took a dip, then kept going.

 

7/26/11
We are still in cash mode.  The current trend is slightly down, so odds are invest mode won't happen till we break the previous (recent) high for the Dow and S&P500.
Contributions are now capped at 49%.  If  one member takes a distribution that would send another member over 49%, the treasurer will automatically redeem enough of that member's shares to bring them back to 49%.  Voting is still capped at 25%.

 

6/26/08
We're still in cash mode and are likely to stay that way for a while.

Most of the items in the suggestion box require research, and none of us ever seems to time to do a research project.  Since we really don't have all that much to do at most meetings, we are thinking of tackling the research on one or two of them next meeting.  
We looked at the list and the item that we would like to investigate the most is finding a better method of coming out of cash mode.  However, we decided to look at the volume on breakout and volume the day after breakout since these would be far more straight-forward.  We can get the volume numbers online and see how the ratio of the volume compared to the average volume (as found in our stock presentation) compares to our gain or loss.  
Jim can bring his laptop (with wireless connection) and I can bring two so we'll have at least three of us pulling numbers from online.  
We'll have to pick a meeting place with free wifi (like Panera).  I'll try to find someplace that is easy for us all to get to.  We figured that we'd go ahead and have the meeting last Tuesday of JULY, since this last meeting was a month late anyway.  

 

3/25/08
A good meal was had by all - thanks to Nayson for picking a great place to eat.
I didn't take any actual notes.  The discussion ranged to a variety of topics.
We are still in cash mode.

 

8/8/07
We looked at the charts of the recent losing stocks.  There was no big revelation. However it does seem that volatility & breakout volume can make a difference.
We talked about starting a long-term laggard rule to cash out long-term stocks that aren't performing very well.

 

11/30/06
Jim found a mistake in the trophy results.  As it turns out Jim lost the least amount this year.
Steve asked about switching web hosts.  The general consensus was that if it involved much of any effort that it wasn't worth saving a few bucks.
Jim brought in IBD's 20 rules.  One interesting one was #19: Watch for Big vs Small cap trends.
For next meeting we'll bring in the charts for this years stocks and do some post-analysis.  One 2-year and one zoomed in on hold period should work well.

 

10/3/06
Financial Report:  Everything looks good.  Since the web site lost our data a while back, Mark needs to check the financial data that's now there.
Market Report:  We are changing a rule for recovery from cash mode : No longer require checking the advance/decline line when recovering from cash mode after both the Dow and the S&P 500 break into new highs.  We're usually a little sluggish coming out of Cash Mode, and this was only checked after the other two recovered.  We can't find a source of this online, so we decided to drop it.  This means we are now in INVEST MODE!  
Next meeting is on 11/30 (THURSDAY).  We decided on moving a little west for a change and trying the Panera at 19 (Irving Park Road) and 59 (Sutton Rd) in Streamwood.  If anyone has any better suggestions, we should decide on it this month so that there is no question of last minute location changes.

 

2/28/06
We reviewed and approved the policy manual, with a few edits tossed in.  The word version of the policy manual will get page numbers.  

Jim brought up the need to check stocks that we own periodically.  According to our policy, the sell conditions for long term stocks include quarterly and annual earnings.  The web site is supposed to remind us weekly to check the long term conditions when appropriate, but the script must not be working.  

We also discussed whether using market capitalization instead of shares outstanding would benefit us.  Some time back we had done a scatter chart based on this and saw no difference.  
However, this did bring up two related issues.  
The first is that over the years, the preferred price range for stocks has stayed around the same, so with inflation comes more shares outstanding.  The stocks will split if the price goes too high.  The number of shares outstanding for our kind of stocks will tend to go up over the years.  
The second related item is that the FVIT rating might be affected by the trend to increase the number of outstanding shares over the years.  Next time we analyze the FVIT rating, we will break up the historical data into 5-year groups.  

We briefly discussed the need to do some research on using moving averages to exit cash mode.  
Another research project that needs to be resumed is looking at our historical data for short term stocks to see if they would have done better with long term approval (basically to see if we should just treat all stocks as if they had long term approval).  We will also look to see if there is any correlation between FVIT rating and long-term performance.  
We’re going to do some work to automate the treasurer’s spreadsheet.  
We had elections with the results: President: Rick Long, Treasurer: Mark Twaddle, Investment Officer: Steve Fulton.
The next meeting will be May 30, 2006

 

9/27/05
We are currently in "Warning" market mode.  If the Dow drops to 10,300, we enter "Cash" mode.  If it rises to 10,700, we return to "Invest" mode.  As always, there is no change in investment strategy until we go into "Cash" Mode.
We have modified the rule for purchasing further shares of a Long-Term holding (provided it goes into another base).  We now limit the purchase to no more than 40% (it used to be 50%).
We had some debate about whether to keep stocks that recover above the 200-day moving average.  We decided to keep things as they are - when a stock breaks the channel, it goes into Profit status.
We also talked about the possibility that the 200-day moving average from some sources might not be accurate.  Different sources clearly disagree.  For instance, at the time I’m writing this, Yahoo Finance claims that SPF has a 200-day MA of $40.93 while Big Charts claims $39.30.  Right now, we are somewhat at the mercy of those web sites that we can easily get the data from.

 

7/05
Sorry that I'm posting these minutes a couple of months after the meeting.  Our main item was the change in rules to allow people to contribute more than 25% (allowing a member to buy in up to 40%).  Voting will still be capped at 25%.
We discussed capping the amount of long-term stocks at a set percentage to free up cash for short term activity, but rejected it based partly because any method to drop shares when over the limit would be messy, and partly because long-terms are the most preferable.
The page containing historical trades should now be complete.  However, if you have some old sheets hanging around showing holdings from our early years and the gains we made on them, feel free to spot check what we have for accuracy.

 

3/28/05
I lost my notes from last meeting, but among other things, we had elections, but didn't remember to vote on them until after Steve left, so he got elected as Investment Officer right after he left.  Rick is President and Mark is Treasurer.

Steve will be out of town 4/18 for about a week.  Rick will be handling broker contact that week.
Nobody remembered to bring an IBD, but glancing at the Dow, it would look like we're still in Invest mode.

Nayson was wondering if we are actually checking our sell rules.  Nobody has been really looking at the highest weekly volume rule (for example).  Rick will check the charts for our current holdings to make sure none of them were incorectly   kept Hold status.  

Rick has been editing the manual.  He is going to reorganize some of the parts that are confusing and add flow charts to illustrate the process we use when a stock has Buy status.  The trophy rules seem to need a bit of editing also.

K-O are up for grabs.  Rather than reassign them, we are currently allowing anyone to research them if they are having trouble finding a decent stock in their letter range (I think Nayson had thought O was his and was coving it anyway).

Many of the items still in the suggestion box need some research done.  For those that have volunteers, their initials are at the end of the suggestion in parenthesis.  Rick will be occasionally pestering people about these over the comming weeks (and I'll also remind Mark to get the plate for the trophy done).

 

3/30/04
We looked at some preliminary scatter charts.  From the data we have since we started using stock cruncher, the EPS rank and the RS don't seem to have any correlation to performance.  In the case of the EPS Rank, this is most likely because the EPS chart we use and the EPS rank are more or less redundant.  RS probably doesn't correlate since we are using the RS when the stock was proposed (not when we bought) and we also always buy on a breakout, so it has some strength.
We also noticed on the volume chart that for very thinly traded stocks, performance was worse.
Lastly, Steve had a chart of stocks that fit all of the prefered requirements.  These stocks did quite well as a group.

One thing that isn't in the cruncher data, but we're currious about is how the breakout volume (compared to average volume) compares against our gain.

We had two visitors which prompted the discusion about our procedure to join.  Most of us had thought that coming to a meeting and doing a stock presentation would suffice, but the manual mentions two meetings.  That rule was made back when we met monthly.  We probably can relax that rule.  There would still need to be the usual 100% vote for any new member.

 

12/2/03
The new 10/20 week laggard rules are now unanimous.  We are in Invest Mode.
Jim pointed out that three of the four stocks we got stopped out of (whether for loss or break even) went on to have great gains.  As far as we can tell, that's just the way it worked out.   In one case, we might have been able to rebuy it after it based.
This raised the question of possibly doing some post analysis on stocks each year.  Look at all of the stocks and see if there is a pattern of what went right/wrong.  We have a lot of data that we've accumulated since we did any serious number crunching & our stock cruncher data is easy to work with.

The list of things we are thinking of looking at include:
Long Term approval - we vote on this and we aren't always consistent.  We may want to consider a technical-only approach for making a stock a long-term stock.  If it has a particularly strong run up, we may want to switch it to long-term status.  
One possible analysis would be checking how long it takes for stocks to hit their targets compared against their respective gains after 6 months or a year.
Even if we don't use a strictly technical LT approval, perhaps we should rethink our criteria.

IBD Info:  Ideally, we'd like to get away from any rating that is proprietary to IBD.  If, for instance, they change the formula, then that could impact us.  Besides, we can't grab the numbers from online.  We may want to consider doing "scatter charts" of the IBD numbers vs the gains on stocks.  Then dump or keep the ratings by what we find.  For instance, most of us ignore the Accumulated Distribution when we vote for a stock, we tend to ignore the Relative Strength when we buy, etc.  

We should be able to find a source on the web for older earnings.  Most stock submissions only go back about 3 years since that's what we find on Yahoo.

We may also want to consider an internal trailing stop for profit mode.  Sell mode does this automatically with the short stop losses, but if a stock stays in Profit mode, triggering the trailing stop would shift it to Sell mode.

 

9/30/03
We went over the findings of Steve's program which looked at market modes.  According to those findings, we may have been better off not using the market modes at all.  One suggestion may be to use our current rules to move out of invest mode, but to use the 50-day moving average for the markets to move back in (when the market crosses back above the 50-day MA, then go back to invest).

 

5/10/03
(I'm adding this WAY after the fact from what I have in my notes). Market Mode is currently Invest.  We are posting the 7th edition Policy Manual that was approved previously.   The suggestion box was reviewed and a number of old items are being taken off.

 

3/25/03
We caught up on business that was left over after the January meeting effectively got snowed out.  We voted on the 7th Edition Policy Manual which was approved with some changes.  I'll update the html copy of the manual. We had the elections for officers and the results were President - Rick, Treasurer - Mark, Investment Officer - Nayson.  Until Nayson lets us know otherwise, Jim and I will remain as the Broker & backup.

 

1/28/02
Only Mark and I made it through the snow to the meeting, although Nayson and Jim both phoned in.  We decided it might be best to simply hold elections through e-mail.  We also need to approve the new manual.  We looked at the end of year standings.  Incidentally, it looks like not only is Mark the trophy winner, but he also had the fewest presentations, so he has to pay for his own name plate.
I've been thinking about our system and doing some reading.  While I think we have a darn good system, I've got some ideas that I'm going to start pestering everyone about in e-mail.  I'm still formulating some of my thoughts, so more on that to come.....

 

8/6/02
 Busy meeting! I originally had planned on getting some feedback to the edits I've made to the policy manual, but as the list of items we needed to cover became so large, I decided to hold off.  Instead I'm going to take the existing HTML version of our manual and put everything we are dropping in one color and everything we are adding in another color and Steve will put this up on the web site.  That way it will be easy to see the changes and we can all look at it at our leisure.

 To start with, we are in invest mode.  We've agreed to use the follow-through day concept from O'Neil to identify the market bottom.  We also determined that we would go back into cash mode if the DOW dropped 2% from the previous low or if the long-term trend clearly turned down.  This should keep us from bouncing in and out of cash mode as the market starts to head up.

 In addition we formally approved the 50%-60% rule that boils down to when going into cash mode, we sell off until we reach 50% holdings, however if our holdings grow above the 50% mark, we won't sell anything off until we reach 60% (at which time we will sell back under 50%).

 Steve had raised the issue of possibly missing market mode transitions, which he's trying to solve by getting the web site to track market mode changes according to our rules.

 Broker status: As of the meeting we almost had Ameritrade straightened out (the account is fine now) and Datek seems in Limbo.  In the process of getting the Ameritrade account straightened out, we had them switch us from Ameritrade Plus to Ameritrade (which charges $8 for market orders, $13 for limits).  Datek charges $9.99 for all transactions, which would typically save us some money. Since Datek has been bought out by Ameritrade, we're not so sure that we should proceed on with the switch, especially if it might lock up our account for as long as it did this last time.  However, we currently do have some money and one stock with Datek so Jim's going to continue his efforts to get everything back into one account.

Jim had pulled CTHS off of the watch list due to it's dropping price and bad news.  As our Investment Officer/Broker Contact, he wouldn't have bought it anyway due to it's ailing relative strength.  Also, it only takes a 50% vote to sell a stock we own (and we are amending the policy manual to also remove from the stock list with a 50% vote since it would be silly to have to buy a stock to drop it).  We voted it off at the meeting. So he should have held off on buying it, but left it on the list until we all voted it off that evening (which would have had the exact same effect, but would have been a little more by the book).

We briefly discussed data sources.  I've commented before on the fact that I have two different sources for analysts estimates and they usually don't quite agree.  Also, your slightly senile president took the suggestion about possibly developing a method to use quarterly numbers as an OK to actually use quarterly numbers on the stock sheet.  We confirmed that since that data is more for long-term status and we aren't as sensitive to recent changes, that the more carefully audited annual reports are what we want to use.

We rejected the idea of having long-term stocks get laggard status.  As long as they stay in the channel, they are just fine.

There were a few of small editing changes for the manual that were pointed out & we are going to move some things that really belong in the suggestion box.

Let me know if I forgot anything (or just apend it yourself).

 

5/28/02
We were a little short on people this meeting, but the show went on:
The market mode is still OK, so we are still 100% investing.
One question that was raised in e-mail was whether we can have remote members.  Legally, once we have investors outside of the state, we fall under the scrutiny of the SEC, so we have always kept to the in-state requirements.  There are probably some additional complications for out-of-country membership.
The web site now allows us to enter in a dividend in the future, on the date of the dividend it automatically adds it in.
We went through some of the items in the suggestion box.  Anything that the three of us didn't completely agree on was shelved for later, I'll edit those items that were approved/rejected on the suggestions page(actually it looks like somebody else already did).  Although we still have a few undecided issues left, I'll probably start modifying the manual before next meeting.

 

3/26/02
* Steve has the final trophy cost, it was $164.60.  
* After getting stopped out of Analy Mortgage (NLY) due to a $0.60 dividend (on a $16 stock), we decided to adjust our numbers by the dividend in the future.  The question of whether to adjust all of the numbers by the dividend or just the buy price & recalculate the others from the new buy.  Adjusting the numbers by a flat amount is probably more accurate, but I believe for now we were going to see what was easiest to implement on the web site.
* I'm starting to go through the manual to update some of the more out-of date details.
* We decided that due to the fact that we use mostly limit orders, that Datek would be better than Ameritrade.  One piece of follow-up news: Ameritrade is intending on buying out Datek.
* Today, 4/17, we broke $30 per share!
* Next meeting is May 28th.  Same place? Does 6:30 work best for everyone?

 

3/17/02
I just wanted to test this out.  I don't have last time's meeting minutes handy, so I'll just remind everyone that the next meeting is Tuesday, March 26 at 6:00 at Fuddruckers at 1000 Rohling Rd, Addison 60101.  We will be discussing a few items we didn't cover last time, including looking at brokers, plus whether or not to adjust stops and targets by dividends, and whether we need to adjust the breakout price when new high keeps edging up..