______________________________________________________________________________

Issue No. 53 – November 21, 2005 Prescott, Arizona Systems@WiserTrader.com

______________________________________________________________________________

1.0 Trading

      A relationship has been developed between five stock valuations needed to minimize the probability of loss and ratios to their industry averages.

1.1 Stock Valuations and Industry Averages

      The past year has shown that stock prices behave in sometimes surprising ways to valuation metrics.  The response to each metric changes with the character of the market and is sensitive to the industry involved.  When combining several metrics into a single filter, one can try to determine ranges that result in the greatest gains, gains above a certain percentage value or the minimum probability of loss.

      Table 1 compares absolute valuation metrics needed to minimize the probability of loss with ratios to their industry average.  While price response to absolute values in the table may vary widely over time, price response to ratios to industry averages should vary less, being sensitive to differences between industries.

Table 1

Valuation Metrics to Minimize the Probability of Loss

Valuation Metric	Stock Value That Reduced Risk of Loss	Corresponding Ratio of Stock Value to Industry Value
Price to Earnings (PE)	(7) 10 to 15	0.5 to 0.75 (1)
Price to Book (PB)	< 1	0.5 to 0.75 (1)
Price to Sales (PS)	< 0.5 (1)	0.5 to 0.75 (1)
Return on Equity (ROE)	10 to 20	2 to 3
Price to Free Cash Flow (P-FCF)	< 5 (10)	(0.5) 0.75 to 1

© 2005 WiserTrader.com, LLC. Members of wisertrader.com are neither licensed brokers nor licensed advisors.   Trades discussed represent recommendations made by the editor for the wisertrader.com portfolio.  The newsletter and web site are for information only and should not be considered as personal advice.   While it is believed that the posted information is factual, mistakes can be made in transcription.  Investors should trade stocks only after verifying all information and consulting with a licensed broker or adviser.  WiserTrader.commarkets third party trading systems but has no other affiliation with trading system companies.

      In this study the minimum probability of loss was chosen for two reasons.  One is that when losses are minimized, profits tend to take care of themselves.  The second is that filters that focus on gains are often so exclusive that no stocks pass the screens.   In fact the value ranges in Table 1 may need to be expanded using the numbers in parenthesis in order to find any stocks that pass the screens.

      Without expanding the ranges and applying absolute values for the filter to year ago market data, only one stock passed the screen, Smith Motor Xpress (NASDAQ: SMXC).  The stock priced at $7.75 gained 50% over the past year after a maximum intermediate decline of 24%.  

      With the expanded absolute value filter (using values in parenthesis), 14 stocks passed the screen and the average gain after 1 year without a stop loss was 29%.  Using, for this case, an optimum 35% stop loss the average gain was 31.9%. 

      Again without expanding the ranges and applying industry relative values for the filter to year ago market data, only one stock passed that screen, as well, Astro-Med, Inc (NASDAQ: ALOT).  The stock priced at $10.71 gained 29% over the past year after a maximum intermediate decline of 1%.

      With the expanded industry relative filter (using values in parenthesis), 9 stocks passed the screen and the average gain after 1 year without a stop loss was 29.8%.  For this case it is interesting to note that the best stop loss setting of 40% resulted in an average profit of only 29.4%

      This exercise is forcing me to reevaluate the use of stop losses when it comes to value stock investing.  Before drawing too many conclusions from the above results a commitment should be made to continuously monitor the performance of the filters both on year ago data and on current stock selections.  The character of the one year price gain histograms, from which the filters were developed, should also be periodically monitored on a quarterly basis.

2.0 Market Analysis

      Slightly bullish sentiment continues for the fourth straight weekly gain for the S&P500 index.  Inflation data was neutral, housing was softer than expected, retail sales were good, earnings were good and a raft of stock buy backs and acquisitions left the market with an overall positive bias.

      Key industry ETF’s in Table 2A are Biotech and Semiconductors which confirm the NASDAQ.  Transportation confirms the Dow Jones Industrial Average according to Dow Theory.   Banking and Financials are confirming indicators for the S&P 500.  Gold and Real Estate are respective indicators for the inverse health of the currency and the capacity for consumer spending. 

Table 2A

Indices, Key Industry ETF’s and Sector SPDR’s

	1 month	1 wk ago	2 wks ago	3 wks ago	4 wks ago
Dow Jones Industrials	5.4%	0.8%	1.5%	1.2%	1.8%
NASDAQ	7.0%	1.1%	1.5%	3.8%	0.4%
S & P 500	5.8%	1.1%	1.2%	1.8%	1.6%
Russell 2000	6.2%	0.8%	1.3%	3.6%	0.4%
GLD, Gold	4.2%	3.5%	2.8%	-3.6%	1.5%
RKH, Banking	6.3%	-0.6%	3.7%	0.4%	2.6%
IYT, Transportation	14.7%	1.7%	3.8%	5.4%	3.0%
SMH, Semiconductors	5.0%	1.4%	2.0%	5.9%	-4.1%
BBH, Biotechnology	13.5%	2.0%	2.3%	6.0%	2.6%
IYR, Real Estate	7.0%	1.2%	4.4%	-1.2%	2.5%
OIH, Oil	9.9%	4.9%	-4.7%	3.2%	6.5%
XLE, Energy	6.6%	3.3%	-4.1%	2.5%	4.9%
XLU, Utilities	2.7%	1.7%	-0.8%	-0.5%	2.3%
XLB, Materials	10.5%	2.4%	2.7%	1.3%	3.6%
XLI, Industrial	6.9%	2.5%	1.5%	1.5%	1.2%
XLK, Technology	6.8%	1.9%	1.2%	3.4%	0.2%
XLV, Healthcare	3.4%	0.6%	1.4%	1.3%	0.1%
XLF, Financials	8.0%	0.3%	3.2%	1.1%	3.2%
XLP, Consumer Staples	2.3%	-0.4%	1.4%	0.4%	0.9%
XLY, Consumer Discretionary	6.0%	0.5%	1.4%	3.9%	0.1%

            Market sentiment is shown in Table 2B.

Sentiment Indicator	Current	Last Week	2 Weeks Ago	Complacent	Cautious
VIX **	11.1	11.6	13.2	< 20	> 50
VXN ***	14.4	14.2	15.2	< 30	> 70
Put/Call Ratio	0.458	0.590	0.510	< 0.6	> 0.7
%Bulls - %Bears	30.2%	25.9%	19.6%	> 29%	< 20%
**   Below 20 day SMA = Buy signal. *** Below 20 day SMA = Buy signal.

      Figure 1 compares index tracking stocks for the major averages with key ETF’s and Sector SPDR’s.

FIGURE 1

Table 2C

Market Summary

 Major Indices 
 For the Past Week:
 Dow Jones     +0.8%
 NASDAQ        +1.1%
 S&P500 Index  +1.1%
 Russell 2000  +0.8%
 
 30 Year Bond 4.692%
 10 Year Note 4.502%
 
 Leading Industries
 For the Past Week:
 Oil Equipment & Services 
 Oil Equipment, Services & Dis 
 Platinum & Precious Metals 
 Containers & Packaging 
 Internet 
 Home Construction 
 Gold Mining 
 Railroads 
 Nonferrous Metals 
 Furnishings      
 
 Lagging Industries
 For the Past Week:
 Tobacco 
 Medical Supplies 
 Coal 
 Toys 
 Leisure Goods 
 Aluminum 
 Media Agencies 
 Food Products 
 Food Producers 
 Apparel Retailers      
 Leading Industries
 For the Past Month:
 Platinum & Precious Metals 
 Transportation Services 
 Trucking 
 Internet 
 Business Training & EmploymenT 
 Heavy Construction 
 Tires 
 Industrial Transportation 
 Reinsurance 
 Delivery Services   
 
 Lagging Industries
 For the Past Month:
 Coal 
 Travel & Tourism 
 Consumer Electronics 
 Tobacco 
 Food Products 
 Food Producers 
 Pharmaceuticals 
 Automobiles 
 Pipelines 
 Defense        
 
 Crude Oil $57.21
 
 Gold for the past 30 days:
 USD    +4.73%
 CAD    +5.98%
 CHF    +6.32%
 GBP    +7.44%
 EUR    +6.58%
 JPY    +7.93%

3.0 Procedure

      The following watch lists contain stock candidates for consideration.  They are not necessarily trades.  Categories include check lists for insider buying and cash rich companies, as well as, filters that employ stock picking methods used by master traders. 

      Current stock rankings are based on the degree to which stocks are overbought or over sold based on the Williams %R for the past two trading days.  Two columns are labeled “%R1” and “%R2” with “%R2” indicating the Williams %R for the most recent trading day.  Of course, values more negative than -80 are oversold and those less negative than -20 are overbought.

      A column labeled “Weekly % Gain” was added to show the inverse relationship between price action over the past week and the Williams %R. 

      One should keep in mind that oversold stocks are not necessarily ready to move upward.  They could very well be in a condition of continuous decline.  The lists are meant to serve as a starting point for further due diligence. 

      The “Reference” is the date that a stock passed the indicated filter and was first added to or returned to the list.  The “% Change” is how the price has changed since the reference date.  Stocks that are down 10% or more after being listed are removed.  The “% from Max” is the percentage the price has declined from the maximum price reached since the reference date.  Stocks that are down 8% from their highs after being listed are flagged in yellow.  Stocks that are down 15% from their highs after being listed are removed.  More information on filters is available on the web site.

      A performance summary of filtering techniques for check lists and master trader selection methods is given in Table 3A.  

Table 3A

Stock Filter Summary

Filter	Avg. % Change Since Listed	Avg. % Change Friday	Past Month	Past Week	2 weeks Ago	3 Weeks Ago	4 Weeks Ago
Net Insider Buying	7.8%	1.6%	3.8%	1.8%	1.0%	3.7%	-1.9%
Cash Rich Companies	25.2%	0.1%	14.8%	-0.9%	7.0%	0.5%	7.2%
Growth Momentum Stocks	8.5%	0.0%	10.1%	1.7%	1.8%	3.6%	2.6%
Lynch Stocks	17.8%	0.2%	4.0%	0.8%	1.3%	1.8%	0.0%
Buffett Stocks	17.8%	0.2%	8.8%	0.9%	1.5%	4.7%	1.5%
Graham Stocks	7.7%	0.3%	3.1%	0.4%	-0.1%	1.1%	1.7%
Templeton Stocks	5.8%	0.3%	5.3%	1.1%	1.1%	2.1%	0.9%
Zweig Stocks	11.3%	0.3%	11.0%	2.3%	1.3%	5.4%	1.8%
Average	12.7%	0.4%	7.6%	1.0%	1.9%	2.9%	1.7%

Key

Passed Recent Filter

Price declined by half of stop loss setting

Oversold  based on  Williams %R  (%R2 is most recent)

Overbought based on Williams %R  (%R2 is most recent)

      Companies that have experienced net insider buying within the past 6 months of 5% or more of issued stock are listed in Table 3B.  These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration.  This list is a mixture of stocks that are optionable and those that are not.

Table 3B

Net Insider Buying Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
TRMA	10/28/05	2.4%	Trico Marine Services Inc	Energy	Oil Well Services & Equipment	-3.6%	0.9%	-79	-69
CLRT	11/18/05	0.0%	Clarient, Inc.	Technology	Scientific & Technical Instruments	0.0%	8.8%	-58	-65
MBRX	10/14/05	6.9%	Metabasis Therapeutics, Inc.	Health Care	Biotechnology & Drugs	-7.0%	-7.0%	-77	-52
REDE	09/02/05	24.0%	RedEnvelope, Inc.	Services	Retail (Catalog & Mail Order)	-2.3%	0.2%	-39	-35
MEAD	09/30/05	-1.5%	Meade Instruments Corp.	Technology	Scientific & Technical Instruments	-5.8%	3.1%	-53	-34
MTRX	10/14/05	-0.3%	Matrix Service Company	Capital Goods	Construction Services	-10.8%	1.3%	-67	-27
ISO	10/07/05	21.4%	ISCO International, Inc.	Technology	Semiconductors	-2.9%	0.0%	-57	-20
VSTA	10/21/05	-3.1%	VistaCare, Inc.	Health Care	Healthcare Facilities	-5.3%	-0.2%	-37	-18
AVRX	11/18/05	0.0%	Avalon Pharmaceuticals, Inc.	Health Care	Major Drugs	0.0%	9.6%	-8	-8
PCTY	09/16/05	28.3%	Party City Corporation	Services	Retail (Specialty Non-Apparel)	0.0%	0.8%	-9	-6

      Companies with net cash positions that comprise at least 40% of their share price are listed in Table 3C.   These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration.  Again this list is a mixture of stocks that are optionable and those that are not.

Table 3C

Capital Rich Companies Check List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
WSC	07/01/05	-1.3%	Wesco Financial Corporation	Conglomerates	Conglomerates	-1.3%	-1.3%	-56	-35
WZEN	10/07/05	51.7%	Webzen Inc. (ADR)	Technology	Computer Services	-3.5%	-0.4%	-22	-27

      For the screen in Table 3D, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30.  

Table 3D

Growth Momentum Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
VTIV	11/11/05	-1.4%	Ventiv Health, Inc.	Services	Business Services	-2.3%	-1.4%	-36	-77
HCC	10/21/05	17.2%	HCC Insurance Holdings, Inc.	Financial	Insurance (Property & Casualty)	-3.0%	-2.5%	-8	-64
ET	10/21/05	7.3%	E*TRADE FINANCIAL Corporation	Financial	Investment Services	-1.2%	-0.8%	-38	-35
CHE	05/06/05	22.2%	Chemed Corporation	Services	Business Services	-2.6%	1.0%	-56	-32
AMTD	10/28/05	9.9%	Ameritrade Holding Corp.	Financial	Investment Services	-1.4%	1.1%	-1	-24
BEN	11/04/05	4.8%	Franklin Resources	Financial	Investment Services	-0.4%	0.5%	-2	-24
BHP	09/09/05	1.4%	BHP Billiton Limited (ADR)	Basic Materials	Metal Mining	-6.5%	1.8%	-2	-15
UNH	04/15/05	30.7%	UnitedHealth Group Inc.	Financial	Insurance (Accident & Health)	0.0%	2.2%	0	-15
BJS	11/04/05	1.1%	BJ Services Company	Energy	Oil Well Services & Equipment	0.0%	5.4%	-30	-13
CTX	11/18/05	0.0%	Centex Corporation	Capital Goods	Construction Services	0.0%	6.7%	-2	-12
LM	08/12/05	10.4%	Legg Mason, Inc.	Financial	Investment Services	-0.1%	3.7%	-3	-10
ENDP	11/18/05	0.0%	Endo Pharmaceuticals	Health Care	Biotechnology & Drugs	0.0%	3.6%	-3	-5
SYT	04/08/05	3.7%	Syngenta AG (ADR)	Basic Materials	Chemical Manufacturing	-1.0%	2.6%	-31	-4
OSK	03/12/05	11.3%	Oshkosh Truck Corporation	Consumer Cyclical	Auto & Truck Manufacturers	0.0%	0.5%	-23	-1

      For the Peter Lynch screen in Table 3E, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30.  

Table 3E

Peter Lynch Value Watch List

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
PKX	04/29/05	11.4%	POSCO (ADR)	Basic Materials	Iron & Steel	-11.2%	-3.9%	-46	-77
KOF	04/29/05	10.4%	Coca-Cola FEMSA, S.A. (ADR)	Consumer Non-Cyclical	Beverages (Non-Alcoholic)	-12.0%	-1.7%	-84	-74
BTI	08/12/05	12.7%	British American Tobacco (ADR)	Consumer Non-Cyclical	Tobacco	-2.1%	-1.5%	-55	-52
TMX	06/03/05	14.4%	Telefonos de Mexico, S.A. (ADR)	Services	Communications Services	-1.4%	1.1%	-28	-30
SKM	02/07/05	0.8%	SK Telecom Co., Ltd. (ADR)	Services	Communications Services	-12.2%	-0.3%	-3	-17
CHL	03/18/05	43.3%	China Mobile (Hong Kong) Limited (ADR)	Services	Communications Services	-2.5%	3.4%	0	-4
TM	12/13/04	31.5%	Toyota Motor Corporation (ADR)	Consumer Cyclical	Auto & Truck Manufacturers	0.0%	8.4%	-4	-2

      The filter for Warren Buffet style stock picking in Table 3F is for the intermediate to long term.  Two requirements were added.  One was to include only optionable stocks in order to find LEAPS opportunities.  The other requirement was to include only those stocks having a PE of 17 or less.

Table 3F

Warren Buffett Value Watch List

Ranked According to the Most Oversold Using the Williams %R

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
FNF	10/21/05	3.9%	Fidelity National Financial	Financial	Insurance (Property & Casualty)	-3.9%	-3.1%	-78	-76
NUE	04/15/05	29.8%	Nucor Corporation	Basic Materials	Iron & Steel	-2.3%	-2.3%	-8	-50
CECO	09/30/05	-1.2%	Career Education Corp.	Services	Schools	-2.8%	-1.2%	-36	-45
ABFS	04/29/05	33.2%	Arkansas Best Corporation	Transportation	Trucking	-1.4%	-1.4%	-30	-42
MIK	10/14/05	9.2%	Michaels Stores, Inc.	Services	Retail (Specialty Non-Apparel)	-2.1%	-0.7%	-40	-40
RCII	10/21/05	18.5%	Rent-A-Center, Inc	Services	Rental & Leasing	-0.5%	0.6%	-29	-40
ASH	10/28/05	2.8%	Ashland Inc.	Capital Goods	Construction Services	-0.7%	1.6%	-46	-40
PGR	12/27/04	43.8%	The Progressive Corp.	Financial	Insurance (Property & Casualty)	-1.3%	0.1%	-16	-38
LNCR	12/27/04	4.6%	Lincare Holdings Inc.	Health Care	Healthcare Facilities	-4.2%	0.7%	-41	-30
EASI	09/09/05	22.4%	Engineered Support System	Capital Goods	Misc. Capital Goods	-0.1%	1.2%	-8	-19
RS	04/15/05	62.3%	Reliance Steel & Aluminum	Basic Materials	Misc. Fabricated Products	-1.1%	1.2%	0	-18
THO	04/15/05	29.4%	Thor Industries, Inc.	Capital Goods	Mobile Homes & RVs	-3.6%	5.2%	-32	-17
HDI	10/14/05	8.8%	Harley-Davidson, Inc.	Consumer Cyclical	Recreational Products	0.0%	0.3%	-1	-16
ACS	04/29/05	18.9%	Affiliated Computer Services, Inc.	Technology	Computer Services	0.0%	2.8%	-7	-15
DHI	10/21/05	12.3%	D.R. Horton Inc.	Capital Goods	Construction Services	-0.4%	6.9%	-8	-13
DSPG	02/07/05	5.5%	DSP Group, Inc.	Technology	Communications Equipment	-0.8%	1.1%	-27	-9
NKE	09/23/05	7.9%	NIKE, Inc.	Consumer Cyclical	Footwear	-0.3%	0.9%	-44	-2
RI	09/02/05	8.3%	Ruby Tuesday, Inc.	Services	Restaurants	-1.0%	2.2%	-58	-1

      Stocks from Benjamin Graham’s style of utility investing are listed in Table 3G.  A requirement was added to include only those stocks having a PE of 17 or less.  

Table 3G

Benjamin Graham Utility Watch List

Ranked According to the Most Oversold Using the Williams %R

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
WPS	02/07/05	4.6%	WPS Resources Corp	Utilities	Electric Utilities	-9.5%	-3.1%	-86	-87
CPK	05/06/05	20.1%	Chesapeake Utilities	Utilities	Natural Gas Utilities	-11.2%	-1.1%	-96	-82
SRE	01/10/05	17.1%	Sempra Energy	Utilities	Natural Gas Utilities	-10.8%	-2.1%	-68	-79
ATG	10/21/05	8.4%	AGL Resources Inc.	Utilities	Natural Gas Utilities	-1.4%	-0.6%	-71	-55
OKE	11/11/05	2.4%	ONEOK, Inc.	Utilities	Natural Gas Utilities	0.0%	2.4%	-74	-35
KEP	01/10/05	34.9%	Korea Electric Power Corporation (ADR)	Utilities	Electric Utilities	-9.1%	2.1%	-10	-24
UU	06/10/05	-5.4%	United Utilities PLC (ADR)	Utilities	Electric Utilities	-7.5%	0.0%	-9	-22
ATO	04/01/05	-1.9%	Atmos Energy Corporation	Utilities	Natural Gas Utilities	-11.3%	0.7%	-62	-16
CV	10/14/05	7.0%	Central Vermont Public Services Corp.	Utilities	Electric Utilities	-0.8%	2.3%	-4	-16
PGN	01/10/05	0.5%	Progress Energy, Inc.	Utilities	Electric Utilities	-3.2%	1.7%	-24	-7
PNW	01/10/05	-2.9%	Pinnacle West Capital	Utilities	Electric Utilities	-9.8%	1.9%	-6	-7

      Optionable stocks from John Templeton’s style of investing are listed in Table 3H.  

Table 3H

John Templeton Watch List

Ranked According to the Most Oversold Using the Williams %R

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
CHD	11/18/05	0.0%	Church & Dwight Co., Inc.	Consumer Non-Cyclical	Personal & Household Products	0.0%	-3.7%	-75	-81
AMSG	10/14/05	3.0%	AmSurg Corp.	Health Care	Healthcare Facilities	-2.7%	-2.1%	-40	-51
CAKE	10/21/05	1.4%	The Cheesecake Factory Incorporated	Services	Restaurants	-3.8%	-1.3%	-71	-45
JNJ	05/27/05	-7.2%	Johnson & Johnson	Health Care	Major Drugs	-7.2%	2.7%	-12	-37
KRON	10/28/05	8.3%	Kronos Incorporated	Technology	Software & Programming	0.0%	3.3%	-10	-26
MTB	05/27/05	6.6%	M&T Bank Corporation	Financial	Regional Banks	-2.2%	-0.9%	-35	-24
SNV	05/27/05	-3.9%	Synovus Financial Corp.	Financial	Regional Banks	-6.1%	-0.5%	-11	-24
DGX	08/19/05	-1.6%	Quest Diagnostics Incorporated	Health Care	Healthcare Facilities	-4.5%	-0.1%	-14	-22
EASI	06/03/05	17.3%	Engineered Support System	Capital Goods	Misc. Capital Goods	-0.1%	1.2%	-8	-19
HHS	10/28/05	3.4%	Harte-Hanks, Inc.	Services	Printing & Publishing	-0.2%	-0.2%	-23	-13
SFG	05/27/05	37.7%	StanCorp Financial Group, Inc.	Financial	Insurance (Life)	0.0%	5.9%	-3	-10
LOW	11/18/05	0.0%	Lowe's Companies, Inc.	Services	Retail (Home Improvement)	0.0%	6.4%	-7	-3
WSM	09/02/05	9.4%	Williams-Sonoma, Inc.	Services	Retail (Specialty Non-Apparel)	0.0%	1.9%	-29	-2
CPS	05/27/05	7.1%	ChoicePoint Inc.	Services	Business Services	-1.8%	2.3%	0	0

      Optionable stocks from Martin Zweig’s style of investing are listed in Table 3I.  

Table 3I

Martin Zweig Watch List

Ranked According to the Most Oversold Using the Williams %R

Stock	Reference	% Chg	Company	Sector	Industry	% from Max	Weekly % Gain	%R1	%R2
COP	10/28/05	-1.6%	ConocoPhillips	Energy	Oil & Gas - Integrated	-8.7%	-2.0%	-87	-86
ZIGO	11/11/05	-4.3%	Zygo Corporation	Technology	Semiconductors	-4.3%	-4.3%	-76	-84
CERS	11/18/05	0.0%	Cerus Corporation	Health Care	Biotechnology & Drugs	0.0%	0.4%	-57	-57
POOL	06/10/05	12.7%	SCP Pool Corporation	Consumer Cyclical	Recreational Products	-2.2%	-2.2%	-44	-52
CMTL	07/01/05	21.9%	Comtech Telecomm. Corp.	Technology	Communications Equipment	-5.8%	0.2%	-6	-38
CAE	06/10/05	21.3%	Cascade Corporation	Capital Goods	Misc. Capital Goods	-0.5%	-0.1%	-13	-24
BEN	10/28/05	10.3%	Franklin Resources	Financial	Investment Services	-0.4%	0.5%	-2	-24
MCO	07/29/05	22.9%	Moody's Corporation	Services	Business Services	-0.4%	4.0%	-2	-18
ESI	11/04/05	5.0%	ITT Educational Services	Services	Schools	-0.6%	-0.2%	-10	-18
SUN	11/04/05	4.3%	Sunoco, Inc.	Energy	Oil & Gas Operations	-0.3%	3.5%	-12	-16
DHI	11/18/05	0.0%	D.R. Horton Inc.	Capital Goods	Construction Services	0.0%	6.9%	-8	-13
CTX	10/28/05	16.2%	Centex Corporation	Capital Goods	Construction Services	0.0%	6.7%	-2	-12
CDIS	11/04/05	4.3%	Cal Dive International, Inc.	Energy	Oil Well Services & Equipment	0.0%	9.8%	-2	-11
SFY	10/14/05	7.4%	Swift Energy Company	Energy	Oil & Gas Operations	-0.4%	3.7%	-17	-10
CRDN	08/19/05	46.9%	Ceradyne, Inc.	Capital Goods	Aerospace and Defense	0.0%	0.2%	-25	-9
SM	10/21/05	11.5%	St. Mary Land & Exploration Co.	Energy	Oil & Gas Operations	-0.5%	6.0%	-22	-8
EXP	10/28/05	12.8%	Eagle Materials, Inc.	Capital Goods	Construction - Raw Materials	-0.2%	5.4%	-39	-2

4.0 Trading Results

      This section highlights performance of options trades.  Only a summary is provided here to save space.  Detailed lists of closed trades can be found on the portfolio page of the website.

Options Trading

Options Trading Estimation Model - Minimum Suggested Initial Capital is $3,000
Number of trades in 2005 =	69	69	69	(1.5 trades per week)
Number of contracts per trade  =	1	2	3
Avg. Premium Cost per trade =	$622.43	$1,244.87	$1,867.30
Total Premiums =	$42,948.00	$85,896.00	$128,844.00
Gross Profit =	$3,826.85	$7,653.69	$11,480.54	(9.4%)
Broker Commission (Etrade) =	-$1,551.12	-$1,723.62	-$1,896.12
Subscription Cost to date =	-$660.00	-$660.00	-$660.00
Net Profit After Expenses =	$1,615.73	$5,270.07	$8,924.42	(Avg. holding period 7.8 days)

5.0 Conclusion

Net Growth of Total Capital in 2005

Options Advisory (trading 2 contracts)     Aggressive, 20% of risk capital per trade     Moderate, 15% of risk capital per trade     Conservative, 10% of risk capital per trade

+ 86.2% + 64.6% + 43.1%

Major Indices Year to Date 11/19/05
DOW	-0.2%
NASDAQ	+2.4%
S&P500	+3.0%
Russell 2000	+3.2%

Appendix - Investment Conference Schedule

        Below are links to conference registration sites where you can sign up.  

• 11-27-05 San Francisco, CA "Gold and Precious Metals Conference"
  Both professional and sophisticated private investors meet with the world's leaders in gold, silver, precious metals, copper and oil and gas exploration and production. The Natural Resource industry's newest opportunities are presented, together with educational seminars, executive panels and investment workshops led by top finance specialists, economic analysts and newsletter editors. Admission is complimentary with pre-registration.

• 01-30-06 Miami, Florida "IIR’s 19th Annual Private Placements Industry Forum" is the pre-eminent gathering for the latest developments in originating, buying and structuring private debt placements. Join us in sunny Miami, Florida in January as the industry’s leading decision makers discuss new market trends, including: project finance, cross border deals and the impact of pre-designated investor counsel. Plus, enjoy over 6 hours of networking opportunities including our two hour Rooftop Dessert and Cordial Suite. Don’t delay, register for the Institute for International Research's 19th Annual Private Placements Industry Forum today!

• 02-07-06 Cape Town, South Africa "Investing in African Mining Conference" Africa's most important mining event and the world's leading gathering of global policy makers and international finance, the Mining INDABA has raised billions of dollars and introduced the international investment community to mining interests throughout Africa.  The Mining Indaba has become an institution throughout Africa, attracting over 2,000 delegates from fifty countries and hosting over 100 exhibitors.

 American Association of Individual Investors Local Chapter Meetings:

November 22	Philadelphia	Noel Archard, CFA Principal, Vanguard VIPERs, The Vanguard Group "Exchange-Traded Funds (ETFs): A New Potent Force in Investing"
November 29	New Jersey	John E. Deysher President and Portfolio Manager, Pinnacle Value Fund "What's New in Small-Cap Investing"
November 30	Long Island	Lance Wallach, CLU, CHFC, CIMC VEBA, Estate & Financial Planning Speaker "How to Use Annuities and Insurance to Earn Positive Stock Market Returns"
December 1	San Diego	Kelley Wright Editor, Investment Quality Trends "Dividends Don’t Lie"
December 5	Denver	Jon Jares, CFA Co-Manager, Dreyfus Founders Balanced Fund "Market Debate 2006: Which Way for Stocks?"
December 7	Connecticut	Barbara Marcin Portfolio Manager, The Gabelli Blue Chip Value Fund "Dividends: Critical to Building Wealth"
December 7	Dayton	John C. Bowling Chairman, Bowling Portfolio Management LLC "How You Can Use New Discoveries About Investing and Investor Psychology to Beat the Stock Market"
December 7	Columbus	Joseph P. Schaefer, CPA President, Schaefer & Associates, Inc. CPAs "Tax Legislation Update and Year-End Planning"
December 7	New York City	Richard Bernstein Chief U.S. Strategist and Chief Quantitative Strategist, Merrill Lynch "A Contrarian’s View of the Market"
December 10	Washington DC Metro	Michael W. Thompson Director of Business & Client Services, Worden Brothers, Inc. "Simple Strategies for Stock Selection"
December 10	Phoenix	Karen Sinchak-Higby President, Sinchak and Associates "The 21st Century Trust"
December 13	Florida West Coast	Steve Wheeler and David Johnson Directors, Navitrader, Inc. "How to Add a New Level of Discipline to Your Investing and Trading"
December 14	Central Florida	John W. Schott, M.D. Psychiatrist and Portfolio Manager "Mind Over Money"
January 4	Columbus	Marilyn Huheey, MD Doctor, Teacher, Life Member of AAII "The Big AHA in Medicine"
January 11	St. Louis	Chuck Butler President, EverBank World Markets "Currencies as an Essential Investment Asset Class"
January 14	Phoenix	Leonard Davenport Chief Portfolio Manager, Fraser Management Contrarians "Forces of Nature in the Investment Process: A Contrarian Approach"
January 14	Los Angeles	David C. Wright Managing Director, Sierra Investment Management, Inc. "Investment Trends and Outlook" Tom Petruno Senior Markets Editor, Los Angeles Times "2006: The New Year’s Outlook for the Domestic and International Markets and Economies"
January 17	Southeast Florida	Carl M. Birkelbach Founder, Chairman & CEO, Birkelbach Management Company and Birkelbach Investment Securities "The 5-Point Guide to Investment Success"
February 11	Phoenix	Sheldon Jacobs Editor, No-Load Fund Investor "Hard Choices for Difficult Times"
February 15	Columbus	Barry James President, The James Advantage Funds "2006 Economic Outlook"
March 11	Phoenix	Don Phillips Managing Director, Morningstar "Mutual Funds"
April 8	Phoenix	Dr. Leonard Goodall University of Las Vegas "Asset Allocation"

Conference Search

• By Date, Category, Country and Organizer
  
• By Topic and Region
  
• Financial reporting and corporate news - "Corporate News Announcements"