And we have another winner …

OK, so the presidential campaign is over now — whatever side you were on, that’s a reason to celebrate. I will be delighted to not see any campaign ads for the next year, though I’m sure CBS, Fox, Disney, GE and all the owners of local TV stations are shedding a few tears as they see that revenue stream drying up.

But something even more important has happened: here at Gumshoe headquarters we have another winner — I can now announce that the second winner for the Stock Gumshoe contest that began just about three weeks ago is …

John Pruitt, who suggested a technical trade in Petrohawk for a short term rally.

And man, was he ever right. Not only that, but he picked the exact bottom, and he also managed to pick a stock that finished strong, with a nice gain on election day of better than 5%.

Here’s what John proposed back on October 11:

“Petrohawk Energy – HK. Closed Friday [October 10] @ $9.74, down from an alltime high of $54.49 July 2nd. This is a technical trade. Friday gave a doji candlestick, with stochastic well below 25% and the close one standard deviation below the 20-day MA. Natural gas closed at $6.52. While I realize natural gas inventories grew in the last reporting period, we are going into fall and winter. HK is ideally positioned to rebound from what I think was an overshoot to the downside, probably caused by 401-k and mutual fund selling. A rebound rally should be in the offing.”

Interestingly enough, the top five picks would probably have all been pretty big surprises to most people three weeks ago — two energy companies, a stem cell biotech firm, former market darling Crox, and agriculture giant ADM. They all gained better than 50% in those short weeks, and I think the folks who picked them deserve at least a dollop of bragging rights. John gets $50, which I’ll send to him shortly.

And, for curiosity’s sake, I can tell you that of about 150 entrants, roughly 60 matched or outperformed the S&P 500’s return of 13.5% during the time period covered in this contest. And on average, if we had invested an equal amount in each of the stocks we would have come out with a positive return, but underperfomed the index.

And the winner of the first part of the contest? WWE returned just under 4% — a bit worse than the average pick and much worse than the index. Still an interesting stock, though not a very volatile one.

So what’s our lesson here, other than the fact that a stock contest of a few week’s duration doesn’t mean much, and there’s a good chance it will be won by a short-term technical trader, or someone who happens to be lucky? Everyone’s lesson will be different — but personally, I’m thinking that if almost everything is undervalued by most metrics, and investors suddenly shake off some of their fear and start to think about fundamentals … you could do a heck of a lot worse than buying an index fund.

Hope you all got some sleep last night, and that the election has brought smiles and no gnashing teeth out there in Gumshoe Land … I’ll raise my glass and offer a toast, to a nice year-end rally that makes our tax loss selling feel less painful!

I’ll try to do something like this again before too long — it was great to hear all the ideas from my fabulous readers — so if you have an idea for the next contest, feel free to share!

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. Congratulations to John Pruitt, and to Gumshoe, for an interesting contest. Very interesting results!

   [Reply]

   Posted by EYOUNG | November 5, 2008, 2:50 pm

2. Travis — how about The Motley Fools tease “the three kings of cloud computing “

   [Reply]

   Posted by jimarb | November 5, 2008, 4:54 pm

3. Travis,,,,what are the other five stocks that were in your finalist group? I got HK, ADM and CROX…
   What was the stem cell company and the two energy companies?
   Do we have other stocks that should be included?
   Perhaps we need to put together an Obama stock list, although the alternative energy plays and others did very poorly today! Check FSLR!

   [Reply]

   

   Bc2602 Reply:
   November 6th, 2008 at 10:32 am

   If you do, add AVAV and MDRX

   [Reply]

   Posted by advantedges | November 5, 2008, 5:40 pm

4. do you trake the stealth investor very intresting take on under valued small capminers

   [Reply]

   Posted by mark | November 10, 2008, 11:20 pm