Lipstick and Perfume

Joel Greenblatt's comments about how people under perform the overall MFI results because of our tendencies to pick stocks that we perceive as "safer" have me thinking.  My portfolio/tranches have been doing well, but I am always willing to try to do better.

How do you overcome your own tendencies?  How do you zig when your brain is telling you to zag?  One approach (I suppose) would be to simply pick random stocks from the list.  Another approach would be to take a poll and then pick the ones that the fewest people pick.  I have been trying to look for predictors, such as short ratios and percentage under 50 day moving average as indicators of out-of-favor MFI stocks.

I suppose another approach is to trust myself.  I could "rank" the 50 stocks currently on the list and then pick five randomly from the bottom 15.  Pretty sad statement, but might be interesting to try.

I could just pick some metric and take the five stocks that do best on that metric.  Let us go with that one for now as it seems relatively easy.  Now to brainstorm some metrics:

1. The stocks the most under 50 DMA.
2. The stocks with highest short ratio.
3. The stocks with the highest dividend ratios.
4. The five stocks with the lowest market caps (100m +)
5. The five stocks with the highest income growth quarter (current) over average quarter.
6. The five stocks that have been in my tracking portfolios the fewest times in past year.

Ok, that seems like a decent start.  What would I pick today?

Under 50 Day Moving Average

•  ENZN
• SWHC
• USMO
• CPIX
• VCLK

Highest Short Ratio

•  INTX
• VCI
• CACI
• CPIX
• DHX

Lowest Market Caps

•  GNI
• AWRE
• INTX
• TNAV
• CRTX

Highest Dividend Ratios

•  GNI
• MSB
• INTX
• PDLI
• LO

Highest Income Growth

• AGX
• PDLI
• CRTX
• RGR
• IQNT

 Fewest Times on List

• CRTX
• BCOR
• VCLK
• IQNT
• AWRE

 Hm, not sure if I answered anything here!