How Low Will Lo Go?

When I am reincarnated, I want to come back as the person who writes headlines for stories about stocks. Here are some recent ones on tobacco stocks:

These Cigarette Stocks Are Smokin'
Cigarettes Still Burning Despite Strong Headwinds
For Some Smoking Dividend Yields, Look to Tobacco
Will Scrutiny Over Menthol Cigarettes Snuff Lorillard?
Reynolds American Emitting Warm Fuzzy Glow

Mike Santoli gave LO the thumbs up today. Their stock price has been depressed due to fear of FDA banning menthol cigarettes. Not sure if I will buy, my RAI holding has fared quite well.

Mechanical Update

As my readers know, I have been creating and tracking two mechanical portfolios since early 2008. The portfolios can be seen (Mechanical Top 30) and (Mechanical Top 50) or by clicking on links in left margin.

My mechanical portfolios very simply take new stocks in the past 52 weeks to the MFI screen (both the top 30 and top 50 screens). This approach has outperformed by a large extent since I started it in 2008. I think in part because it has you buy more stocks when things are volatile (the market is going nuts) and fewer stocks when the screens are more stagnant. They have been extremely stagnant of late with only two new stocks being added to each list in December and January. For perspective, 150 stocks were added in 2008. While about 80 were added in each 2009 and 2010. We do have a single new entrant this week, STRA. That is a stock I recently sold (luckily 20% higher). I will not be buying them.

Here is a snapshot of how the top 30 has performed:

Open: +0.7% over S&P
Closed: +16.8% over S&P 500
Overall: +12.4% over S&P 500.

For the average stock year to beat the S&P 500 by 12.4 points is impressive. That is an absolute gain of +32.1% per stock year.