Feature Archives

Buying a Computer

Trends in the computing industry and issues to consider before purchasing a new computer or upgrading your current system.


Analyzing, selecting and trading exchange-traded funds

Investor Sentiment

Using investor sentiment to indentify tops and bottoms in the market.

Market Breadth & Timing

Market breadth and momentum indicators to gauge the market's overall direction.

Mutual Fund Screening & Analysis

Screening for and analyzing mutual funds.

Online Discount Brokers

In-depth reviews of online discount brokers and their tools, features and flaws.

Portfolio Management

Constructing a portfolio of investments and the issues involved, including risk management.

Software Reviews

In-depth reviews of some of the most popular investment-related software.

Stock Screening & Analysis

Using quantitative stock screening filters to identify possible investment and analyzing individual stocks.

Stock Valuation

Determining the "true worth" of a company.

Technical Analysis & Charting

Using technical indicators and charts to help time your buy and sell decisions.

Tax Preparation

Using computerized tools and resources to prepare and file your personal income taxes.
Computerized Investing > July/August 2008

Trading Rule #1 Stocks

| | | COMMENTS (3) | A A   Reset

by Wayne A. Thorp

In the September/October 2007 issue of CI, we introduced Phil Town’s Rule #1 approach to picking stocks, which involves selecting “wonderful” companies at attractive prices. A summary of Town’s methodology is provided in Table 1 and you can find the original Rule #1 article on-line at the Computerized Investing Web site (www.computerizedinvesting.com).

We also developed a stock screen based on the steps Town outlined in his book, “Rule #1” (2006, Crown Publishers), and clarifying statements he subsequently has made at his blog (www.philtown.com).

...To continue reading this article you must be a Computerized Investing Subscriber.

Gain exclusive access to this article and all of the benefits and investment education a Computerized Investing subscription offers.

SUBSCRIBE TODAY for just $24.
Log in
Already a CI subscriber? Login to read the rest of this article.

A subscription to Computerized Investing includes a monthly email and access to the CI Website, all of which aim to benefit your investing skills with respect to computers and the Internet.



Peter from NH posted over 6 years ago:

I find it interesting that checking in on the 8 companies passing the screen run using Mr Town's rules back in 2007 (as reported in the Sept/Oct 2007 CI Issue) that 5 of the 8 are virtually out of business and the other 3 are trading not that much higher than they were 4 years ago?

John from CO posted over 6 years ago:

The formula for %K is either not clear or incorrect specifically, the term

"lowest low over last n period
highest high price in last n periods"

Use of parentheses when operatining on terms such as this help prevent occurrences like this.

Vernon from FL posted over 6 years ago:

John - if it helps, here is the definition from Ambibroker user's manual:

Stochastic Slow
Stochastic is an oscillator that measures the position of a stock or security compared with its recent trading range indicating overbought or oversold conditions.

It displays current day price at a percentage relative to the security’s trading range (high/low) over the specified period of time.

In a Slow Stochastic, the highs and lows are averaged over a slowing period. The default is usually 3 for slow and 1 (no slowing) for fast. The line can then be smoothed using an exponential moving average, Weighted, or simple moving average %D. Confirming Buy/sell signals can be read at intersections of the %D with the %K as well.

The Stochastic Oscillator always ranges between 0% and 100%. A reading of 0% shows that the security's close was the lowest price that the security has traded during the preceding x-time periods. A reading of 100% shows that the security's close was the highest price that the security has traded during the preceding x-time periods. When the closing price is near the top of the recent trading range (above 80%), the security is in an overbought condition and may signal for a possible correction. Oversold condition exists at a point below %20. Prices close near the top of the range during uptrends and near the bottom of the range during downtrends.

You need to log in as a registered AAII user before commenting.
Create an account

Log In