Discontinued Strategies
Workshop (1/8/01-5/4/01)

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Discontinued Strategies
Brief history
"Brief History" is right! The Workshop Portfolio died aborning. Two weeks after its first trades, the portfolio was suspended and the entire Workshop area temporarily blocked at the request of the financial information company Value Line. Value Line objected to the fact some of our mechanical stock selection processes allowed a reader to infer that Value Line had ranked a particular stock number 1 for Timeliness. (Timeliness is a proprietary stock ranking that attempts to predict how well individual stocks will do in the next 6 to 12 months.)

The Workshop Portfolio was a demonstration of "mechanical investing," an investing strategy that uses stock screens (based on financial data) to create portfolios of stocks that are purchased on a set schedule without any intervening human judgment. Many of the strategies in the Workshop Portfolio used a high Timeliness ranking as a preliminary stock screen criteria. Since the criteria for each strategy were clearly set forth, the fact that a certain stock met the criteria for a particular stock screen revealed that stock's Timeliness rating.

Value Line considered the identification of stocks in this way as a breach of our contract with them. We can see their point, although we think one can make a "fair use" case for the way we were using that information. At any rate, we respected their right to ask that we no longer reveal any Timeliness ratings. Unfortunately, that meant that we could no longer discuss why we bought the stocks for the Workshop Portfolio, which pretty much killed its usefulness as a teaching tool. So the portfolio was discontinued.

What went wrong
We relied on the verbal assurance of a Value Line employee that as long as we weren't publishing the full list of all Timeliness stocks we could continue to publish the results of the stock screens that we ran. In retrospect, we probably should have asked for this in writing.

Lessons learned
We learned a whole lot about the value of community involvement and collaborative thinking from the community of readers who developed, challenged, tested, and refined the Workshop strategies. Those efforts continue on the Mechanical Investing and Foolish Workshop discussion boards. We also learned that it's not always easier to ask forgiveness than to ask permission.

Useful information:

  • Final Foolish Workshop Article
  • Foolish Workshop Archives
  • Foolish Workshop Discussion Board
  • Mechanical Investing Discussion Board

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