A Few Quick Notes

I am not an economist (although to be fair, I am the son of an economist), so I do not fully understand Quantitative easing and all the repercussions (though I expect economists don't either). Wikipedia (Quantitative easing) gives a pretty negative view.

I do know that I will be listening and following David Tepper going forward as he called this rally spot-on (Fed Intervention Will Make 'Everything' Go Up: Tepper - CNBC) on October 1st. Since hios comments, my MFI portfolio is up a blazing 7.5%.

Ken Fisher Update

I mentioned a study by Ken Fisher regarding the performance of various types of stocks in certain economic environments when discussing the streakiness of MFI stocks. I went back and read the section of his book to recall what he said. He essentially broke stocks into 4 groups (in order): Large Growth, Small Growth, Large Value, and Small Value. He showed some statistics comparing each of those 4 groups with the difference in the yield curve (10 year rate vs 3 month rate). The argument was that as the curve flattened, you wanted to move along the spectrum towards Large Growth and when it widened, you want to be towards the small value spectrum. Well, looking at his table and where we are today, we are clearly at the very wide end of the spectrum... which implies it is time for small value to shine... that to me is the MFI universe.

Of course the gap has been wide all year, so the method has not been right for that recent stretch. You could argue that these are "unusual" times and that even with the wide yield curve, banks are extremely hesitant to lend.

I did buy PETS yesterday, as I continue to move to the higher yielding MFI stocks. The Chinese stocks in my portfolio continue to move up sharply. Here is how they have fared since 9/24:

China	9/24/10	10/14/10	Change
CHCG	0.23	0.29	26.1%
UTA	4.22	4.32	2.4%
CEU	3.81	5.22	37.0%
eesc	2.30	2.20	-4.3%
CMFO	5.12	5.86	14.5%
NEWN	5.17	6.35	22.8%
CCME	8.48	13.27	56.5%
Combined	3.91	5.01	28.1%

Top 50 Mechanical Portfolio Update

Here is an update of my open stocks in my mechanical tracking portfolio, which adds a stock if it is new to the top 50 screen in the past 52 weeks. Since January 2008 it has way over-performed, though some rough studies I have performed back to 2006 suggest it has been no better than random stock selections from MFI.

Symbol	Date	Original	Current	Dividend	S&P O	S&P D	Stock Chg	S&P Chg	Diff
ESI	10/30/09	90.35	65.92	-	103.56	2.20	-27.0%	16.0%	-43.0%
VRSK	10/30/09	27.43	28.40	-	103.56	2.20	3.5%	16.0%	-12.5%
APOL	11/6/09	55.99	49.50	-	107.13	2.20	-11.6%	12.1%	-23.7%
CBST	11/6/09	17.60	24.60	-	107.13	2.20	39.8%	12.1%	27.6%
SNTA	11/6/09	3.20	3.91	-	107.13	2.20	22.2%	12.1%	10.1%
IMMU	11/6/09	3.61	3.62	-	107.13	2.20	0.3%	12.1%	-11.9%
PBH	11/13/09	6.95	10.36	-	109.62	2.20	49.1%	9.6%	39.5%
IDCC	11/20/09	23.56	29.99	-	109.43	2.20	27.3%	9.8%	17.5%
PDLI	11/27/09	6.63	5.58	1.00	109.57	2.20	-0.8%	9.6%	-10.4%
CBPO	12/4/09	9.06	10.79	-	111.01	2.20	19.1%	8.2%	10.9%
XOMA	12/4/09	0.72	0.22	-	111.01	2.20	-69.7%	8.2%	-77.9%
Valv	12/31/09	5.15	6.20	-	111.44	1.61	20.4%	7.3%	13.1%
RAI	1/15/10	53.81	59.76	2.70	113.64	1.61	16.1%	5.2%	10.9%
TRMS	1/15/10	2.45	2.57	-	113.64	1.61	4.9%	5.2%	-0.3%
SAI	1/15/10	18.90	15.91	-	113.64	1.61	-15.8%	5.2%	-21.0%
NATH	1/28/10	14.70	16.59	-	108.57	1.61	12.9%	10.1%	2.8%
SMED	2/5/10	6.74	5.87	-	106.66	1.61	-12.9%	12.1%	-25.0%
SPMD	2/5/10	36.63	9.69	-	106.66	1.61	-73.5%	12.1%	-85.6%
UIS	2/5/10	34.25	30.21	-	106.66	1.61	-11.8%	12.1%	-23.9%
QKLS	2/12/10	5.69	5.36	-	108.04	1.61	-5.8%	10.6%	-16.4%
MGIC	2/12/10	1.78	2.54	-	108.04	1.61	42.7%	10.6%	32.1%
ESIC	2/19/10	2.07	2.84	-	111.14	1.61	37.2%	7.6%	29.6%
ODSY	2/19/10	17.89	27.50	-	111.14	1.61	53.7%	7.6%	46.2%
HRB	2/26/10	17.28	13.69	0.30	110.74	1.61	-19.0%	7.9%	-27.0%
TNDM	2/26/10	16.12	14.25	-	110.74	1.61	-11.6%	7.9%	-19.5%
DEXO	2/26/10	29.80	11.84	-	110.74	1.61	-60.3%	7.9%	-68.2%
AFAM	3/5/10	35.52	31.51	-	114.25	1.61	-11.3%	4.6%	-15.9%
DNB	3/5/10	69.95	75.29	0.70	114.25	1.61	8.6%	4.6%	4.0%
SNTS	3/5/10	4.87	3.09	-	114.25	1.61	-36.6%	4.6%	-41.2%
KIRK	3/12/10	20.11	13.43	-	115.46	1.61	-33.2%	3.5%	-36.7%
PRSC	3/12/10	14.18	17.95	-	115.46	1.61	26.6%	3.5%	23.1%
QDEL	3/25/10	13.73	12.38	-	116.58	1.13	-9.8%	2.1%	-12.0%
SVA	4/9/10	5.83	4.23	-	119.55	1.13	-27.4%	-0.4%	-27.0%
VALU	4/9/10	22.07	14.34	3.20	119.55	1.13	-20.5%	-0.4%	-20.1%
BDSI	4/16/10	4.12	3.55	-	119.36	1.13	-13.8%	-0.3%	-13.6%
LOV	4/23/10	3.45	3.08	-	121.81	1.13	-10.7%	-2.3%	-8.5%
MD	4/23/10	57.02	57.41	-	121.81	1.13	0.7%	-2.3%	2.9%
ABC	4/23/10	31.13	32.37	0.16	121.81	1.13	4.5%	-2.3%	6.8%
SNDK	4/30/10	39.84	39.94	-	121.81	1.13	0.3%	-2.3%	2.5%
OSK	4/30/10	38.62	30.83	-	121.81	1.13	-20.2%	-2.3%	-17.9%
GXDX	5/7/10	27.89	16.22	-	111.26	1.13	-41.8%	7.0%	-48.8%
IPXL	5/7/10	16.66	21.86	-	111.26	1.13	31.2%	7.0%	24.2%
SOHU	5/7/10	44.19	59.24	-	111.26	1.13	34.1%	7.0%	27.1%
CHOP	5/14/10	6.54	6.11	-	113.89	1.13	-6.6%	4.5%	-11.1%
LIWA	5/14/10	8.24	9.07	-	113.89	1.13	10.1%	4.5%	5.5%
FLL	5/14/10	3.10	3.57	-	113.89	1.13	15.2%	4.5%	10.6%
MRX	5/21/10	22.50	30.79	-	107.71	1.13	36.8%	10.5%	26.3%
zlcs	6/4/10	1.53	1.25	-	106.82	1.13	-18.3%	11.5%	-29.8%
DJCO	6/4/10	71.00	70.16	-	106.82	1.13	-1.2%	11.5%	-12.6%
TNAV	6/4/10	8.53	5.14	-	106.82	1.13	-39.7%	11.5%	-51.2%
JGBO	6/11/10	8.45	7.75	-	109.68	1.13	-8.3%	8.5%	-16.8%
DRWI	6/11/10	5.94	7.91	-	109.68	1.13	33.1%	8.5%	24.5%
SCEI	6/18/10	7.36	7.17	-	111.73	0.60	-2.6%	6.1%	-8.7%
SUPG	7/16/10	1.75	2.20	-	106.66	0.60	25.7%	11.1%	14.6%
PETS	7/23/10	16.09	16.57	-	110.41	0.60	3.0%	7.3%	-4.4%
COCO	7/30/10	9.39	6.02	-	112.41	0.60	-35.9%	5.4%	-41.3%
GRMN	7/30/10	28.96	31.40	-	112.41	0.60	8.4%	5.4%	3.0%
CSGS	7/30/10	19.09	19.21	-	112.41	0.60	0.6%	5.4%	-4.8%
CJJD	8/6/10	5.62	5.22	-	112.39	0.60	-7.1%	5.5%	-12.6%
FSYS	8/6/10	35.95	40.86	-	112.39	0.60	13.7%	5.5%	8.2%
CNXT	9/3/10	1.50	1.77	-	110.89	0.60	18.0%	6.9%	11.1%
CECO	9/3/10	18.66	20.18	-	110.89	0.60	8.1%	6.9%	1.3%
RST	9/3/10	17.51	21.34	-	110.89	0.60	21.9%	6.9%	15.0%
NEWN	9/3/10	6.17	6.35	-	110.89	0.60	2.9%	6.9%	-4.0%
MPAA	9/3/10	7.15	9.22	-	110.89	0.60	29.0%	6.9%	22.1%
GMAN	9/3/10	10.63	11.98	-	110.89	0.60	12.7%	6.9%	5.8%
CRME	9/24/10	6.10	6.33	-	114.82	0.60	3.8%	3.2%	0.5%
CMTL	9/24/10	26.48	30.00	-	114.82	0.60	13.3%	3.2%	10.1%
PSDV	10/1/10	4.46	4.94	-	114.61	-	10.8%	2.9%	7.9%
NEP	10/1/10	6.40	7.67	-	114.61	-	19.8%	2.9%	17.0%
GTIV	10/1/10	21.92	23.86	-	114.61	-	8.9%	2.9%	6.0%
LPS	10/8/10	26.39	28.05	-	116.54	-	6.3%	1.2%	5.1%
						Top 50 Portfolio
						Totals	17.1%	2.9%	14.2%
52.8% of stocks beat the S&P 500 Benchmark						Closed	22.4%	1.6%	20.8%
S&P C			117.92			Open	1.3%	6.6%	-5.3%
						Top 30 Portfolio
						Totals	19.7%	8.0%	11.8%
						Closed	26.1%	7.9%	18.2%
						Open	4.7%	8.0%	-3.3%