Whether it’s margin calls, hedge fund redemptions, mutual fund redemptions, or preparations for CDS settlement - doesn’t matter.

Here’s an example for those that might think this selloff has much to do with the fundamentals of the underlying economies.

Does anybody really think that the economic prospects for Brazilian companies improved tenfold in five years?

Does anybody really think that the Brazilian companies’ long-term economic prospects were cut by 90% in the last six months?

This is another one that’s setting up for a fantastic discretionary buy+hold, along with emerging markets in general and junk debt, the kind of stuff the good-lookin’, good-cookin’ Wifeykins might just pop in her self-directed IRA and forget about for year or three.

The forced selling will pass, just a matter of time. I plan on being around after it’s done, how about you? Sticking to plan, which for me is mechanical system trading.

Why “The Neutered Stag?” In a fit of political correctness over a decade ago, they trimmed their logo’s … equipment. Apparently someone found it offensive. Oh, bother.

The news flow suggests speculation caused by off-the-cuff comments from Harry Reid. Maybe.

I do know that, of the top 16 U.S. life insurers, The Hartford Financial Group (HIG) had the largest total reported realized losses ($1,220,000,000) as of March 31, 2008. Second on that list was Prudential, followed by Metlife Inc, then Allstate. That was March; this is now. That $1.2 billion included life operations only and also included $650,000,000 in impacts of adopting SFAS 157 plus $208,000,000 losses from asset sales/maturities and “other.” Bet you there’s a ton of action in the CDS market for HIG tomorrow. Not to mention the other three on the list.

Metlife Inc. and Prudential “lead the league” in derivative losses, according to that 03/31/08 list.

Interestingly, American Financial Group didn’t look too bad on that list of U.S. life insurance operations, probably because their problems were elsewhere.

No positions, as I’m trading mechanically and on EOD data, but these guys might present opportunities for the nimble - although I don’t know their status re: the “no short” list.

This month’s column is about Tracking Error in Double-Inverse ETFs; it might be useful and is probably real timely. Keep in mind that current commentary at MarketThoughts is for subscribers only, although anyone can read the forum.

Some older (and now free!) commentary of mine over there includes:

Some Different Looks at the Yield Curve

A Second Look at the Yield Curve

A Simple Small-Cap Value Screen

Revisiting a Small-Cap Value Screen

I hope you enjoy them!

On the date these articles were posted, the SPY, an ETF tracking the S&P 500 index, closed at 120.09. I’m inclined to bet that a portfolio of these 40 stocks will significantly UNDERperform the passive, buy+hold SPY approach. My own, admittedly anecdotal, experience is that mainstream financial media long-term lists such as these are filled with recently strong relative performers that become atrocious relative future performers.

10 Large-Cap Stocks from Kiplinger.com.

You can rest easy knowing these companies will deliver consistent returns over the long haul.

Here they are, with their Monday, September 15, 2008 closing prices.

Procter & Gamble (PG) 72.14
Electronic Arts (ERTS) 43.30
First Solar (FSLR) 202.97
Gildead Sciences (GILD) 47.83
Google (GOOG) 433.86
Monsanto (MON) 105.04
Norfolk Southern (NSC) 65.87
T. Rowe Price (TROW) 53.98
Schlumberger (SLB) 82.95
Visa (V) 69.38

10 Mid-Cap Stocks from USNews.com.

It’s here that you’ll catch fast-growing companies with newly established track records before they become tomorrow’s household names.

Here they are, again with their September 15, 2008 closing prices.

Stericycle (SRCL) 59.92
FTI Consulting (FCN) 67.20
Waters Corp. (WAT) 60.19
ITC Holdings (ITC) 57.78
Northeast Utilities (NU) 26.01
Tiffany & Co. (TIF) 39.91
Flir Systems (FLIR) 33.29
Teledyne (TDY) 58.26
Dick’s Sporting Goods (DKS) 21.66
Jacobs Engineering Group (JEC) 58.05

10 Small-Cap Stocks from Minyanville.com.

Finding small cap stocks with the potential to blossom into some of tomorrow’s household names has been a passion of mine for the last twenty years, and there are many different themes that have me believing the time to invest in smaller cap names is upon us.

While it seems many of these “long haul stocks” lists are classically “actuarial” in approach, that is, taking the most recent few data points and extrapolating a long-term trend out of them, this list in particular is egregious, as it’s focused on the “green” trend. As such, I see his list as a ten-year bet on a current investment fad continuing to outperform the broader market, and more so than any other list, I don’t expect these to be a mixed bag - in ten years, they’re pretty much all gonna be great or all gonna be awful, and my money would be on awful. Keep in mind this list is supposed to be a ten-year buy and hold … and I plan on comparing them to an indexed approach.

Here are their Monday closes.

Calgon Carbon (CCC) 17.79
Clean Harbors (CLHB) 72.28
American Ecology (ECOL) 28.34
Team Inc. (TISI) 36.20
Tetra Tech (TTEK) 26.85
EnergySolutions (ES) 15.15
USEC (USU) 4.80
Clean Energy Fuels (CLNE) 16.87
Energy Recovery (ERII) 7.30
Darling International (DAR) 11.77

10 International Stocks from MarketWatch.com.

If it’s good enough for Warren Buffett, it should be good enough for you. Or at least it should be if you are looking for an international stock that you can buy and hold for the long term, say from the time you get out of college till you retire.

Their Monday, September 15, 2008 closing prices.

Jardine Matheson Holdings (JMHLY) 28.00
Sanofi-Aventis (SNY) 34.98
Nestle (NSRGY) 44.20
Philips Electronics (PHG) 29.26
Total SA (TOT) 60.94
Anglo American Plc (AAUK) 20.72
Teva Pharmaceutical Industries Ltd. (TEVA) 45.80
Nokia Corp. (NOK) 20.08
GlaxoSmithKline PLC (GSK) 43.84
Potash Corp. of Saskatchewan Inc. (POT) 154.10

In Summary

I expect the above lists to significantly UNDERperform a passive, indexing approach over the next ten years, so I wanted to “capture the moment” and post the lists with prices. I suggest that you follow the links and read the authors’ rationalizations for their picks, and perhaps do some good old-fashioned Googling for past lists of the “stocks for the long term” ilk. It should be entertaining browsing, to say the least!

The GARP acronym stands for “growth at a reasonable price.” In order to weed out the list, I insist on a high level of growth in this screen, and actual acceleration in earnings and revenue growth. The screen now looks like this:

Exchange: Non OTC,
P/E (TTM Intraday): Less than or Equal to 20,
EPS Gwth. (Last Qtr. vs. Same Qtr. Prior Yr): Greater than or Equal to 20,
EPS Growth (TTM vs. Prior TTM): Greater than or Equal to 20,
EPS Growth: 3-Yr Hist.: Greater than or Equal to 20,
Rev. Growth (Last TTM vs. Prior TTM): Greater than or Equal to 20,
Rev. Gwth. (Last Qtr. vs. Same Qtr. Prior Yr): Greater than or Equal to 20,
Market Cap.: Greater than or Equal to 100

After running the screen, I eliminate any that don’t show higher growth (earnings and revenues) in the recent periods.

These are the current passers. I am not trying to relate them to previous passers; I am not updating the watchlist with individual stocks at this time, see this note for why.

Almost Family Inc (AFAM)
American Capital Str (ACAS)
Andersons, Inc. (ANDE)
Archer Daniels Mdlnd (ADM)
Bridge Capital Holdi (BBNK)
Coca Cola Femsa S.A. (KOF)
Companhia Vale Ads (RIO)
Moody’S Corp (MCO)
Natl Presto Ind (NPK)
Prologis Sbi (PLD)
Universal Insurance (UVE)

The strategy I am testing (back and forward) would buy and hold these stocks every four weeks, not rebalancing any carryovers, and holding the twelve with the highest price momentum, in the odd event that more than twelve qualified. Only eleven qualify at present. The testing doesn’t include use of a stop loss.

The Quant “MixTape” screen ranks every stock in the screener by percentile in each variable, and then combines the average score for a composite score. I added Market Cap to this screen in order to focus on larger, more liquid issues in testing, and it is now part of the score. The screen now looks like this:

Exchange: Non OTC,
Price Perf. (Last 52 Wk): Highest 60%,
Earnings Yield (EPS/Price Per Share): Highest 60%,
Price/Book Ratio: Lowest 60%,
EPS Growth (Last TTM vs. Prior TTM): Highest 60%,
EPS Growth: 3-Yr Hist.: Highest 60%,
EPS Gwth. (Proj. Next Yr vs. This Yr): Highest 60%,
EPS Growth (Proj. 5 Yr): Highest 60%,
Rev. Growth (Last TTM vs. Prior TTM): Highest 60%,
Ret. on Equity (TTM): Highest 60%,
Vol. (90-Day Avg.) : Highest 60%,
Market Cap.: Greater than or Equal to $100.0M

These are the current passers. I am not trying to relate them to previous passers; I am not updating the watchlist with individual stocks at this time, see this note for why.

A A R Cp (AIR)
Advanta Corp. (ADVNB)
Allis-Chalmers Enrgy (ALY)
Arris Group Inc (ARRS)
Baldor Elct Co (BEZ)
Comcast Corporation (CMCSA)
CVS Caremark Cp (CVS)
Ensco Intl Inc (ESV)
Esterline Tech Cp (ESL)
Euronet Worldwide, I (EEFT)
Exfo Electro-Optical (EXFO)
G-III Apparel Group, (GIII)
Grupo Aeroportuario (ASR)
Gulf Island Fabricat (GIFI)
Healthspring Inc. (HS)
Helix Energy Solutns (HLX)
Hudson City Bancorp, (HCBK)
Insight Enterprises, (NSIT)
James River Group, I (JRVR)
Key Energy Svcs Inc (KEG)
Phillips Van Heusen (PVH)
Pride Intl Inc (PDE)
Republic Airways Hol (RJET)
RF Micro Devices, In (RFMD)
Rowan Cos Inc (RDC)
Sciele Pharma, Inc. (SCRX)
Spectrum Control, In (SPEC)
SRS Labs, Inc. (SRSL)
Triumph Group Inc (TGI)
Universal American F (UHCO)

The strategy I am testing (back and forward) would buy and hold these stocks every four weeks, not rebalancing any carryovers, and holding the thirty with the highest score, or cash for any positions that didn’t fill in the odd event that less than thirty qualified. The testing doesn’t include use of a stop loss.

I shamelessly lifted this “High Relative Value” screen from elsewhere. It grabs stocks that are cheap in their industry, near 52-week highs, and are experiencing recent increases in volume. The screen now looks like this:

Exchange: Non OTC,
Market Cap.: Greater than or Equal to $100.0M ,
P/E (TTM Intraday): Lowest 40% for industry,
Price/Cash Flow Ratio: Lowest 40% for industry,
Vol. (Avg. 10-Day / Avg. 90-Day): Highest 40%,
% Chg. 52 Wk High: Less than or Equal to 10%

These are the current passers. I am not trying to relate them to previous passers; I am not updating the watchlist with individual stocks at this time, see this note for why.

Abraxas Petroleum Co (ABP)
American Physicians (AMPH)
Baytex Energy Tst Tr (BTE)
BT Group Plc Ads (BT)
Everest Re Grp Ltd (RE)
Helix Energy Solutns (HLX)
Marlin Business Serv (MRLN)
Mercantile Bancorp I (MBR)
Oil Dri Cp Of Americ (ODC)
Pepsi Bottling Grp (PBG)
Platinum Underwritrs (PTP)
Skywest, Inc. (SKYW)
St Mary Land Expl (SM)
Ternium S.A. Ads (TX)
Unibanco Brasilrs Sa (UBB)
Virco Manufacturing (VIRC)
Vivo Participacoe Sa (VIV)

The strategy I am testing (back and forward) would buy and hold these stocks every four weeks, not rebalancing any carryovers, and holding the nineteen with the highest volume ratio, in the odd event that more than nineteen qualified. Only seventeen qualify at present. The testing doesn’t include use of a stop loss.

Another shameless lift is this “P/S I Luv You” screen. It grabs stocks that are near 52-week highs, have good momentum, strong earnings growth, and have low Price/Sales ratios. The screen now looks like this:

Exchange: Non OTC,
Market Cap.: Greater than or Equal to $100.0M ,
Price Perf. (Last 52 Wk): Greater than or Equal to 25%,
Price/Sales Ratio: Lowest 40%,
EPS Gwth. (Last Qtr. vs. Same Qtr. Prior Yr): Highest 40%,
% Chg. 52 Wk High: Less than or Equal to 10%

These are the current passers. I am not trying to relate them to previous passers; I am not updating the watchlist with individual stocks at this time, see this note for why.

Andersons, Inc. (ANDE)
Anixter Intl Inc (AXE)
Avnet Inc (AVT)
Baker (Michael) Corp (BKR)
Bunge Ltd (BG)
Commercial Metals Co (CMC)
Eastman Kodak Co (EK)
Einstein Noah Restau (BAGL)
Formula Systems (FORTY)
Inx Inc. (INXI)
Lyondell Chem Co (LYO)
Medcohealth Solutns (MHS)
Oil Dri Cp Of Americ (ODC)
Pepsi Bottling Grp (PBG)
Semco Energy Inc (SEN)
Suncom Wireles Hld A (TPC)
Susser Holdings Corp (SUSS)
Virco Manufacturing (VIRC)
VSE Corporation (VSEC)

The strategy I am testing (back and forward) would buy and hold these stocks every four weeks, not rebalancing any carryovers, and holding the nineteen with the lowest P/S ratio. Many more qualified, so I took the nineteen and I am showing them in alpha sort. The testing doesn’t include use of a stop loss.

The above are test strategies: my real money is on the line with positions as noted in the watchlist, which you can see at any time.