|On Intelligence Lists:
Q: I've seen an Intelligence List, and some of the columns are not obvious to me. Can you explain those?
We have colorized the above example as follows: Gold represents the proprietary information we create each market day; Green is a simple price quote; Blue is the collection of statistical/actuarial observations of how prior forecasts that are just like today's current forecast played out.
Column 6, Worst-Case Drawdowns:
The worst-case drawdown measures (when 1261 prior dates are available) where during the past 5 years in our history of analysis a company that was forecast previously at or very close to the current Range Index (a set of occurrences which you don't have access to, only we have that information) experienced its largest downturn during the 63 Market Days following those similar Range Index occurrences.
Column 9, % Payoff from Prior RI's:
Peter has been calculating this data for decades. With the history of forecasts, he can then verify the results of those forecasts.
So in the case of our EXAMPLE, column 12 tells us that out of a 1261 prior market day history on this issue, 174 of those days had a prospective upside to downside price change balance like what we see on this occasion. The average gain was 11.6% (Column 9). Of the 174 prior experiences, only 12 were not profitable as shown in Column 8, the equivalent success rate of 93 out of 100 times. When you combine an 11.6% gain with the average holding time of 30 Market Days (Column 10), a repeated series of such positions end to end would generate 152% AROR (Column 11).
Column 12, Sample Size:
The Sample Size shows (when 1261 prior history dates are available) how many times during the past 5 years in our history of analysis a company that was forecast previously at or very close to the current Range Index (a set of occurrences which you don't have access to, only we have that information).
Column 13, Credibility Ratio:
This is a straightforward ratio, dividing Column 9 by Column 5. What we have seen in past forecast outcomes is undeniable evidence of how well the Market Makers predicted the gains. A Cred Ratio of greater than 1 is common and would be very desirable, but we are satisfied that a value greater than .9 or even slightly less is enough for our needs.
Column 14, Reward:Risk Ratio:
This is another straightforward ratio, dividing Column 5 by the absolute value of Column 6. A larger value is better than a small value for this column. So for the EXAMPLE, we see a 3.2, which helps put it at the top of the list, but Column 15 offers one way of globally ranking the alternatives ...
Column 15, Odds-Weighted R:R Ratio:
Rosy prospects are good and all, but what have you done for me lately? This Figure of Merit begins with Column 14 and factors in to it the 93/100 Odds to reveal that not only are the Market Makers saying EXAMPLE looks like a worthwhile candidate for a long position, they were in fact right more than 90% of the last 174 times in the past 5 years that they said exactly the same thing as they are saying now. While indivdual preferences about risk or potential gains or odds will vary, this figure is intended to give them equal weight. Thus, EXAMPLE tops this Intelligence List.
Q: What's the average daily turnover on the list?
About 50%. Repeat items will not always have the same Odds-weighted score each day, and are very likely to change in their ranking as
compared to the rest of the list.
Q: In general, if I wait some arbitrary time, like 1 week, how many names on the list are likely to be different?
For 1 week, about 60% will be different on average.
Q: Should I set up some Stop-Loss orders when I use my Intelligence List?
Stop-loss orders are a VERY bad idea. You are basically telling your broker how to knock you off the position by driving the price down to that level. If you feel you must work a stop-loss strategy, do that ONLY in your own private records offline and only execute the exit strategy without any warning to your broker because you have reached your "pain limit". Read about how big-fund managers engage in the practice of "gunning for stops".
We recommend only 2 possible actions once you take the position: The price has reached the Sell Target value or greater, and is a complete winner, and you cash out with the expected gain.
You have waited 63 Market Days for the position to realize the forecasted gain, and will no longer WASTE TIME waiting for results. You might be at some small gain value or perhaps a loss, but you preserve the VALUE of YOUR capital's TIME.
Q: The list isn't easy to work with as an image; can I get something more user-friendly?
We will provide the list as a .CSV on request as a reward to loyalty when customers have bought at least 10 Lists; it will also have the tickers as a list you can paste into the Mapping Tools.
On Mapping and BTF Tools:
Q: Is it permissible to save a copy of the images I create when I use the tools?
We want you to save them for your convenience, and have them for review as needed afterward. Please remember the Terms of Service stipulates that you may not re-distribute the information without authorization in writing from a blockdesk.com administrator.
Q: Can you help explain some BTF and Mapping Tools strategies?
BTFs are your destination, but the road begins with Mapping. The VOL, R:R, and Odds/Payoff Maps use a comparitive approach to identify subjects for more direct scrutiny with a BTF. The Mapping tools are like a widely cast net, allowing you to compare everything on an equal footing using Market Maker sentiments and their proven track record of forecasting as the metric, and select the ones with greatest potential gain for closer inspection with a BTF.
If you already have a portfolio, use the Mapping Tools to keep a pulse on what issues may need attention. Ideally, a BTF works as the final stop in using our tools, because they contain much of the data found in the columns of the Intelligence List. The Mapping tools use two of the values from these columns, and help you quickly narrow in on the ones that show greatest potential for gains on their respective vectors, or identify issues that may be at risk of a drawdown, and perhaps should be targeted for re-allocation.
Old Warrior's proposition that an issue re-appearing on the Intelligence List or at least remaining a strong buy signal for a few days running has merit. So you are concerned about the cost involved... Let's check the math: you spend $50 on an Intelligence List, which comes with 90 BTF views included, and use 15 of them to keep track for 3 days in a row of the best 5 prospects that interest you, leaving 75 remaining BTFs as dry powder for the days to come.
Eventually after checking for the 3 days you decide 1 or 2 of the 5 are worth taking a long position. The rubber meets the road when you allocate the size of that position, because it will determine the absolute dollar amount of your gain should it pay off as expected; using the average gain of 12.8% for the top ten from the example Intelligence List shown above, a position of $1000 would yield a $128 profit in 38 market days, and yes, $50 is a sizeable vig on that. But on a $5000 position, you are now yielding $640; and with a $10,000 position, you are now up to $1280 of gain for a $50 set of tools and about 3 hours of time using them for a couple nights. And this is based on the average of the top ten, not 1 or 2 of the extreme outliers. If you take positions on 3 or 4 items from the list, you are also going to distribute the cost of the information across their respective gains, significantly improving the benefit of making a purchase of the List.
We believe that as you grow to recognize familiar issues where the Market Makers do very well again and again, you will find confidence in their forecasts, and be able to differentiate in the historical performance numbers like the Sample Size and Cred Ratio when their forecasts are more speculative and less well-proven, and avoid the more risky prospects.
Revised Dec 20, 2017