Feedback and the BSP

by Paul Larson
([email protected])

Chicago, IL. (Sept. 9, 1998) -- When I scribed this column a week ago, I asked for some feedback as to what Fools across the land would like to see posted here on a daily basis. One theme that seemed to run throughout the torrent of e-mails I received was the desire to see the workshop rankings continue. I am happy to report that in the week since I wrote that column, the database and rankings have indeed been updated. In case you haven't seen the revised numbers, here are the links to the data:

Workshop Rankings | Current Database

I have been assured that even in this transitional period for the workshop that these pieces of data will be posted as they have in the past. That is, they will be updated on a weekly basis with Friday being the day they are most often refreshed. The point here is that if you were worried that the data was going to disappear when Robert left for greener pastures, worry not.

One of the other pieces of feedback I received was a mixed response to Louis and I delving into a bit more detail into two companies we closely follow, American Woodwork <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMWD)") else Response.Write("(Nasdaq: AMWD)") end if %> and Anchor Gaming <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLOT)") else Response.Write("(Nasdaq: SLOT)") end if %>, respectively. Some people seemed to like the small injection of fundamental analysis into the workshop, while other mechanical purists were quite adamant about sticking to "just the numbers."

If there's one thing that became clear to me, it is that the old cliche is true. You can't please everyone. Nevertheless, we will do our best to serve as many as we can going forward here in the Workshop.

Moving on, one of the mechanical models I find most interesting is the "Beating the S&P" (BSP) model. As a fan of the classic Foolish Four technique, I find the idea of expanding the selection universe outside of the Dow Industrial 30 to be quite an intriguing one. Companies that are under consideration in this screen are large enough and tend to have a sufficient track record that they are not "flakes" that might show up on some of the other screens that deal with small caps.

The idea behind BSP is similar to that of the Beating the Dow techniques. You simply screen for the top ten yielding stocks in the BSP30 (more on that in a moment) and then rank them from the lowest to highest absolute stock price. Throwing out the lowest priced stock of the high yielders, you then take the stocks that are in positions two through six. The so-called "BSP4+1" has, as of last Friday, yielded annual returns of 19.2% since 1987 versus 15.8% for the Standard & Poor's 500.

As one might have guessed, there is an initial screen that companies are to be selected from, but contrary to what the name implies, it's not the 500 stocks in the S&P 500. The "BSP30" to be screened are essentially companies that are the largest in the nation, are not in the Dow 30, pay a dividend, and are not utilities. There are some other tricks to selecting the stocks that make the initial BSP30, which I recommend checking into before diving into this method with real money.

The author of this method is a familiar name around Folly -- Ethan Haskel. Ethan has been hanging around the Fool for several years and is generally quite knowledgeable about mechanical screens. He is also in the midst of building a web page that explains in greater detail the BSP method. Among other things, Ethan has posted on his page exactly how to choose the BSP30 for your first screen. Ethan also currently runs a mailing list, free of charge, updating interested Fools about the BSP method. Just drop him a line at [email protected] if you want to receive his BSP updates.

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database

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