Learn Investing Secrets

Consequently, when Equis International (the makers of Metastock 8.0) announced "an all-new type of exploration that emulates running system tests over an entire database of securities", I could hardly wait to get the Metastock 8.0 release.

While waiting to receiving my copy of Metastock 8.0 I began building trading systems. This is what appeared to be only real difference between Metastock 7.22 and Metastock 8.0.

After fiddling around with the Metastock 8.0 Enhanced System Tester for a few hours, and testing my 20 systems, I reached the verdict that I wasted my money on the new version of Metastock 8.0.

If you are like many other traders, you have been eagerly waiting for the release of Metastock 8.0 for one reason, and one reason only, the reportedly redeveloped system tester. Metastock`s one major flaw has orderly been its lack of back testing capabilities, though previous versions of Metastock are head and shoulders in excess of the competition on other fronts.

But whatever criteria you use to trade with, be it moving averages, cross sticks, fibonacci retracements, or any other trading system, you`re going to need to back test it. Everyone needs to thoroughly back test, or simulate, their trading system in ways that can match the conditions you will be trading in. It`s something all serious traders do.

Consequently, when Equis International (the makers of Metastock 8.0) published "an all-new type of exploration that emulates running system tests over an entire database of securities", I could hardly wait to get the Metastock 8.0 release.

While waiting to receiving my copy of Metastock 8.0 I began combination trading systems. By the time my copy of Metastock 8.0 finally arrived, I had circa 20 systems ready for testing, and couldn`t wait to try them out.

However, when I loaded up the software, I was in for a surprise. It looked like nothing had changed. I thought maybe Equis International had kept the same interface and besides in greater flexibility and some more features, but hind searching in every nook and cranny, I found next to nothing that was new. It looked the same and, except for a couple of small changes, it was the same!

Then I came to the System tester - now named the "Enhanced System Tester". This was my major reason for upgrading from version 7.22. This is what appeared to be only real difference midst Metastock 7.22 and Metastock 8.0.

After fiddling enveloping with the Metastock 8.0 Enhanced System Tester for a few hours, and testing my 20 systems, I reached the verdict that I wasted my money on the new version of Metastock 8.0. Despite the supposed improvements to the Enhanced System Tester it, like it`s predecessor, left a lot to be desired.

Even though the Metastock 8.0 Enhanced System Tester tests multiple securities in one batch, it treats each security independently of the others. Therefore, when Metastock 8.0 tests the first security, it uses your predefined float and takes the trade over the test period selected. Once that is completed, it repeats the same process for the second security, using the same initial float, with no reference to the first security.

In the end, you receive the same result that you would have if you simply tested each security individually and additional the results together. Not only is this process dreadfully slow, but the entire reason for testing your system is side-stepped. When your finished all the explorations, the performance of your trading system is still unknown!

The moral of the story is that if you or ever own Metastock 7, don`t worry somewhere about upgrading to Metastock 8.0. Simply stick with the version you have and keep your fingers crossed that Equis International gets it right for Metastock 9.0.

Someone who reads the blog sent me this email:

Geoff,

I see you tweeted about CAW again.  What about that company attracts you?  I don't see that it is particularly undervalued and I am trying to understand what I am missing.

Sardar Biglari bought into the company. He will now have 2 board seats.

10-year average EBIT is about $5.75 million. So, the long-term average earnings would be about 50 cents a share after tax. Cash and securities is about $1.67. The stock trades around $6. That's maybe a little less than 10 times earnings (after breaking out the cash).

Here's the types of business they are in.

• Dietary Supplement: 33%
• Skin Care: 30%
• Oral Care: 20%
• Nail Care: 10%

Free cash flow tends to be equal to or greater than reported earnings. Cap-ex is virtually zero.

High management pay relative to the company's size hides how profitable the business is.

For example, David Edell and Ira Berman made $2.88 million in 2009. This is against - like we said - an average EBIT of about $5.75 million. So, we're talking more like $8 million+ in EBIT before these two get paid. Other executives are paid more what you'd expect the top folks at this kind of public company would normally make: $300,000 to $500,000.

I checked out the company's products at a local drugstore. Though there will always be lawsuits, I thought it was a decent space to compete in. In the past, I'd researched a couple companies with similar business models. They had better brands. But CCA Industries was much cheaper.

Given the circumstances, I felt Biglari's activism would lead to good things. 

It's coattail investing.

Talk to Geoff about CCA Industries (CAW) and Sardar Biglari

More Articles: