One reason to use a formula-based approach for investing is that one's instincts are often wrong. I was looking the other day to see what my best stock has been since the start of May. Drumroll please. UIS! Up about 25% (though NUS may surpass that today).
Here is what I wrote about UIS near end of April (MFI Diary: AAPL and UIS):
Well, earnings season kicked off for me tonight. At first I thought I was one fer two, but now I am thinking I have two strikes. UIS was a mess. This is one crazy stock, and after I have owned for my promised year I will never own again. Their earning are extremely volatile and their balance sheet is a mess. I do not even think they would be solvent if they shut their doors today. I am not sure what possessed me to buy them Argh! They lost seventy seven cents on the quarter and skimming through the release, I did not see any thing resembling positive. This was the stock that spurted on last quarter's earnings from 17 to 24. It looks like they are about to make that a round trip.
I will point out that they have now gone back to the $24, so I suppose the play is to buy at $17 and sell at $24.
Another example (embarrassing I know) was TROX. I bought a bunch of them before earnings last fall. Earnings were disappointing and I immediately bailed and sold, taking a huge loss over a couple days (around 18%). I took a look and I sold at $14.80. They are now over $20 and their low over 52 weeks is $14.21. All you can do is learn from these expensive lessons.
Have a great day everyone.
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