For the next interview in the StockTickr Interview Series (RSS feed), I spoke with Bill Rempel, a value investor who blends technical and fundamental analysis and writes commentary on his site Absolutely NO DooDahs.

Bill spent time as an actuary and a product manager. He’s now building his account in hopes of trading for a living soon. Read on for more about Bill, how he combines technical and fundamental analysis, and how you shouldn’t believe your own BS.

StockTickr: Tell us a little about yourself, Bill.

Bill: My name is Bill Rempel, and I currently live as a transplant in a small “old money” town in Texas, about halfway between Houston and Austin. When I went back to college after a “break,” which I highly recommend because when you’re older, the deprogramming after college is easier, I got a degree in Mathematics and went to work for an insurance company as an actuarial analyst. Now I’ve got over ten years in the industry doing primarily pricing and product management work. I trade on the side, but when I get enough capital amassed to comfortably trade for a living, I will.

StockTickr: How did you get started trading stocks?

Bill: I started as a value investor, but as I looked around and saw so many different ways of making money out of the markets, I started trying to define and categorize what works and try to integrate more technical analysis into my investing. I’m trying to experiment and synthesize some less-active means of equity trading that can generate above-market returns over the long term.

StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?

Bill: No horror story here. Even before I had a scientific approach to position sizing based on volatility, I was never a “bet the farm” kinda guy. I took some big losses on “values” but since they were never more than one trade out of many, I was insulated.

StockTickr: Do you trade for a living now?

Bill: Not yet. Looking forward to it, though. I am not cut out for the corporate life, and I’d rather depend on myself for a living and have an income that allows for mobility and possibly expatriation. I need more capital before I can make that happen, though.

StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?

Bill: There is no one single way to skin a cat. Finding something that works doesn’t mean you’ve found the only thing that works.

StockTickr: What’s the most common, but easily correctable mistake you see traders making?

Bill: Getting emotional about it, taking it personally.

StockTickr: Describe your style of trading. How long do you typically hold stocks?

Bill: I am currently trading off of daily closing signals and holding for as long as the stock behaves the way I think it should, which could be days, weeks, or months. I’m holding 8-12 positions, mostly long but occasionally short, and I’m using a value screener setup with technical entries and exits. I’m also doing a Marketocracy experiment with buying 3-year highs, and sometimes using those picks in my personal portfolio.

StockTickr: What’s your exit strategy for winning and losing trades?

Bill: Right now it’s based on initial and trailing stops based on the average true range and the closing price. Every once in while I’ll pull money out of a flatlined trade when I think I see opportunity elsewhere.

StockTickr: You’ve mentioned that you use a blend of technical and fundamental analysis. Can you explain how you find the happy medium between the two methodologies?

Bill: There are five questions to define a system: what to trade, why this particular trade (the setup), how much to trade (position size), when to enter, and when to exit. I am most familiar with analysis of stocks and ETFs, so that’s one question down. I use value screeners for the setups and use technical techniques for the rest.

It stands to reason that if a value stock tends to keep falling after it first gets my attention, and tends to outperform the general market over a period of a year’s holding or more, then there are some trends that will likely be formed. So I’m trying to apply trend-following techniques to stocks on a value watch list.

StockTickr: What 3 books do you recommend traders read?

Bill: Oh, I hate that question, because pretty much every trading blog has the same books in their links - and pretty much every investing blog has the same books in their links. Could suggest some novels? Shibumi by Trevanian, probably the ultimate spy novel; King Rat by James Clavell, a great story of survival and, oddly enough, capitalism; and Infantry Soldier by W.E. Boyd, which is really non-fiction autobiography but reads like an amateurish novel, it’s a no-holds-barred look at the experience of a U.S. infantryman during the invasion of Germany at the end of W.W.II.

StockTickr: Other than your own, what are your 3 favorite sites?

Bill: Trader Mike, because he combines the mundane daily stuff with interesting links and provides a learning resource with valuable “how to” pieces; Naked Shorts has a great cynical and humorous take on market news; Gannon On Investing has a traditional value approach, the blog isn’t updated as frequently as I’d like, but he has a great directory of value blogs to read while you wait.

StockTickr: What is your typical R value per trade? i.e. what % of your portfolio do you risk with each trade?

Bill: Usually 1%, sometimes 0.5% if the ATR-based formula gives me a recommended position size that exceeds my available cash percentage.

StockTickr: What technical indicators could you not live without?

Bill: If I had to pick only one, it would be the Average True Range. I use it for position sizing and stop-setting. After that, moving averages, then PPO, RSI, and CMF. I have been finding myself mostly drawing trend and resistance lines based on price, more often than not, and using only the ATR for stops and trailing.

StockTickr: How do you think the market has changed over the last several years? How have you adapted?

Bill: I don’t think it has changed. The market is like history, it may never repeat exactly, but it always rhymes.

StockTickr: Do you backtest and if not, how do you instill belief in your system?

Bill: I have backtested the value screens extensively, using Value Line data, and did that before I ever started. The technical indicators haven’t been backtested, but they’re simple and time-proven. I also size the positions carefully to avoid being burned too badly.

StockTickr: What advice can you offer traders who are just starting out?

Bill: Open-mindedness, honesty (with yourself about why you do what you do - don’t believe your own bullshit!), and willingness to try different things.

StockTickr: What do you like best about trading?

Bill: That it’s an individual sport. I also like the possibility of doing it for a living and doing it from anywhere - a powerful combination.

StockTickr: When did you start your site and what prompted you to do so?

Bill: I started a blogspot blog in November 2005, tried a group thing that didn’t work out, and just last month moved for hopefully the last time to the current address. I wanted to create a record of my thoughts on investing and trading. Also, I found that I had places where I would talk about economics, places where I would talk about politics, and places where I would talk about investing and trading. Now I have a blog where I can do all those things.

StockTickr: Thanks, Bill!

Bill: Sure, Dave.

Stay tuned - there are several interviews on the way. You can subscribe to these interviews via RSS feed.

Previous interviews in the StockTickr Interview Series (RSS feed):

• Adam Warner
• TraderMike
• Roger Nusbaum
• Dave Johnson
• J.C., the NYSE Scalper
• Brian Shannon, AlphaTrends
• Jamie, Wall St. Warrior
• Howard Lindzon
• Kernan of TRADEthemove.com
• Richard Todd
• Trader-X
• Andy Swan
• Steve Nison of Candlestick Charts
• Dan Mirkin from Trade-Ideas
• Bruce Brotnov
• Eric Cahoon
• Ugly from Uglychart.com
• Alan Farley
• Declan Fallon
• Smita Sadana
• Bill Cara
• Van K. Tharp - Free autographed copies of Van’s book still available! Get yours now!
• Brett Steenbarger
• Eyal Maoz
• Gary B. Smith, the Chartman
• Nusair Bawla (alibawla on StockTickr)
• Dave Landry, Swing Trader
• Jeff White, the Stock Bandit

Do you have suggestions for other traders you’d like to see an interview with? Let us know!

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