Wayne A. Thorp, CFA is a vice president and senior financial analyst at AAII and editor of Computerized Investing. Follow him on Twitter at @AAII_CI.


Discussion

Anthony from Virginia posted over 2 years ago:

"Percentage Lag

The next column in Table 1 is percentage lag (% lag), which measures the degree to which the current share price lags the 52-week high price. It is calculated as follows:

(52-Week High Price – Current Price – $0.02) ÷ 52-Week High Price

To avoid the problem of dividing by zero if the current price and the 52-week high are both the same, Henning arbitrarily subtracts $0.02 from the current share price. Doing so, we discovered, also leads to the potential for a negative percentage lag value. Keep this in mind while performing your own analysis."

This is incorrect. The only way to have division by zero is if the 52-Week High Price is zero. The 0.02 factor is useless.


Richard l. from Illinois posted over 2 years ago:

That's true, Anthony, but it does avoid dividing by zero in the next step, Investment Value. I prefer to check for zero values, rather than add $.02.

I built a spreadsheet to do the Henning system's calculations to help me screen the Stock Superstar Recommendations and found NONE of them pass muster.

ALL the current Recommendations fail the very first test, "52-week Multiple", with Multiples under 2! I am surprised none of these supposedly "super" Recommendations even made it through the first screen in this system.

Dick


Wayne from Illinois posted over 2 years ago:

This is a trading system, whereas SSR is an investment strategy with a longer time horizon. Since we are taking a longer term view with SSR, price momentum is not a primary concern, unlike Henning, who is a short-term trader.


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