Excellent commentary about FusionIQ in this weekend’s Barron’s:
Separating potential winners — and losers — from the herd.
MARKETS LIKE THIS DEMAND A CLOSER LOOK before you leap. Fortunately, there are plenty of online resources to guide you.
Some are oriented toward fundamental analysis, some toward technical signals, and some, like FusionIQ (www.fusioniqrank.com), incorporate both, and more.
A research and money-management firm, FusionIQ has just made its quantitative stock- and sector-screening system available to retail investors. A $40 monthly subscription buys you access to the kind of expensive, computer-based screening that quantitatively oriented investors, or “quants,” enjoy.
FusionIQ subscribes to the Pareto Principle, which states that 20% of stocks will be responsible for 80% of future gains. Its huge nightly data crunch separates potential winners (and losers) from the herd. Being invested across multiple sectors for the “long term” may qualify as diversification, but it doesn’t yield excess returns, explains CEO and longtime market analyst Barry Ritholtz.
“Buy-and-hold has been a jumbo money-loser this year,” argues Ritholtz, the subject of a recent Barron’sQ&A (“A Leading Bear Turns Bullish, Sort Of,” Dec. 8). “You can’t just sit around and say, ‘Bear Stearns and AIG are great companies, and I’m a long-term investor.’ ”
FUSIONIQ’S MODELS blend fundamental and technical metrics to determine the strength of some 8,000 publicly traded equities. They identify the most tradable issues and sectors with the lowest component of risk. FusionIQ also finds issues with unusual short-term strength or weakness, issuing Buy and Sell signals accordingly. In general, FusionIQ recommends subscribers hold a rolling portfolio of 15 to 20 issues for the intermediate term.
Beyond that, it identifies trading opportunities. FusionIQ models pinpoint highly ranked issues whose prices suddenly gap up 5% or more on high volume (and other conditions). They also issue alerts when analysts with good track records offer earnings forecasts outside peer estimates, and when short squeezes are in the offing — that is, when a highly shorted issue exhibits enough relative strength to force short sellers to cover their positions and boost the price further.
“We don’t care why stocks move,” says Ritholtz, “We just rely on our objective models to alert us to the opportunities.”
Awesome . . .
Calling All Number-Crunchers
Barron’s SATURDAY, DECEMBER 20, 2008