Adds/Deletes

We are removing ARO ADSK LRCX ZUMZ

We're adding AMK JCOM MANT

If you are purchasing all of the stocks, then you will need to sell four stocks, and buy three. If you are following the 1/4 or 1/2 method, please check the appropriate column to see what needs to be bought/sold.

List for October 1, 2006

TICKER	PRICE	1/4THR	1/2THR	1/4REC	1/2REC	NAME						VOLUME
CHS	21.53	25.30	33.33	BUY	BUY	Chico		3,427,570
COH	34.40	28.23	31.29	WATCH	WATCH	Coach Inc		3,345,660
NVT	26.11	31.76	39.80	BUY	BUY	NAVTEQ Corp		1,430,760
PLT	17.53	20.93	27.06	BUY	BUY	Plantronics Inc		680,711
RMD	40.25	39.02	42.30	WATCH	BUY	ResMed Inc		745,294
SRX	30.06	27.05	30.80	WATCH	BUY	SRA International		411,091
THO	41.17	37.20	43.78	WATCH	BUY	Thor Industries		716,277
TSS	22.83	19.33	20.89	WATCH	WATCH	Total System		161,898
WDC	18.10	14.61	17.98	WATCH	WATCH	Western Digital		3,345,400
AOB	6.08	4.81	5.76	WATCH	WATCH	American Oriental		576,252
AMK	12.30	10.31	12.23	WATCH	WATCH	American Technical		5,920
MED	8.68	8.06	12.43	WATCH	BUY	Medifast Inc		749,989
ASVI	14.91	19.58	24.73	BUY	BUY	A		452,449
ADBE	37.46	29.70	33.41	WATCH	WATCH	Adobe Systems		5,298,060
AEOS	43.83	26.04	32.62	WATCH	WATCH	American Eagle		2,771,090
AAPL	76.98	57.50	67.14	WATCH	WATCH	Apple Computer		30,056,100
CHRW	44.58	36.41	42.66	WATCH	WATCH	CH Robinson		1,223,500
CECO	22.49	23.85	30.10	BUY	BUY	Career Education		1,564,310
CTRN	34.51	30.28	39.47	WATCH	BUY	Citi Trends		266,883
CTXS	36.21	28.89	34.43	WATCH	WATCH	Citrix Systems		3,165,910
COGT	13.73	14.53	18.95	BUY	BUY	Cogent Inc		732,609
CTSH	74.01	50.85	59.45	WATCH	WATCH	Cognizant Technology		1,363,520
EXBD	89.91	84.60	94.06	WATCH	BUY	Corporate Executive		330,342
CRAI	47.66	43.36	46.50	WATCH	WATCH	CRA International		58,613.8
CUTR	26.59	23.31	30.28	WATCH	BUY	Cutera Inc		197,915
DAKT	20.69	15.49	20.70	WATCH	BUY	Daktronics Inc		905,963
DIOD	43.17	28.78	35.05	WATCH	WATCH	Diodes Inc		394,220
BOOM	32.42	24.50	30.73	WATCH	WATCH	Dynamic Materials		613,706
ENDP	32.55	24.45	27.83	WATCH	WATCH	Endo Pharmaceuticals		1,252,690
EXPD	44.58	34.74	42.60	WATCH	WATCH	Expeditors International		1,911,030
FAST	38.59	34.76	39.62	WATCH	BUY	Fastenal Co		1,111,290
FORD	5.12	9.62	15.21	BUY	BUY	Forward Industries		448,251
GRMN	48.78	33.93	40.87	WATCH	WATCH	Garmin Ltd		3,711,050
GILD	68.77	50.86	57.00	WATCH	WATCH	Gilead Sciences		3,686,300
GAIN	14.60	13.87	14.38	WATCH	WATCH	Gladstone Investment		77,895.4
GOOG	401.90	336.79	382.89	WATCH	WATCH	Google Inc		5,676,330
HANS	32.48	20.70	31.38	WATCH	WATCH	Hansen Natural		7,251,340
HWAY	44.60	41.49	45.98	WATCH	BUY	Healthways Inc		310,377
HITT	44.50	26.85	33.55	WATCH	WATCH	Hittite Microwave		373,503
ICUI	45.48	31.51	36.61	WATCH	WATCH	ICU Medical		101,145
JCOM	27.17	22.09	25.39	WATCH	WATCH	J2 Global		750,712
LHCG	22.32	16.47	19.24	WATCH	WATCH	LHC Group		140,717
LIFC	32.22	19.58	24.05	WATCH	WATCH	LifeCell Corp		843,522
MTEX	17.72	11.19	14.21	WATCH	WATCH	Mannatech Inc		188,037
MANT	33.01	28.09	31.64	WATCH	WATCH	ManTech International		121,074
MTXX	19.03	16.14	19.50	WATCH	BUY	Matrixx Initiatives		78,238.5
MFLX	25.37	30.30	42.61	BUY	BUY	Multi		589,994
NTAP	37.01	26.72	30.64	WATCH	WATCH	Network Appliance		4,505,880
NTRI	62.29	36.88	50.03	WATCH	WATCH	NutriSystem Inc		1,923,990
OFLX	20.32	16.06	19.42	WATCH	WATCH	OmegaFlex		16,290.8
OVTI	14.27	17.43	23.12	BUY	BUY	OmniVision Technologies		2,476,740
PTEN	23.76	26.00	30.16	BUY	BUY	Patterson		3,215,470
QCOM	36.35	37.82	42.88	BUY	BUY	QUALCOMM Inc		16,500,800
QSII	38.79	32.72	37.13	WATCH	WATCH	Quality Systems		290,517
RADN	12.24	12.02	13.96	WATCH	BUY	Radyne Corp		178,112
RECN	26.79	24.58	26.80	WATCH	BUY	Resources Connection		478,854
RIMG	22.42	21.63	25.73	WATCH	BUY	Rimage Corp		52,920
ELOS	23.10	25.08	32.36	BUY	BUY	Syneron Medical		302,448
TZOO	28.82	25.62	34.75	WATCH	BUY	Travelzoo Inc		637,069
TRLG	21.11	14.42	17.73	WATCH	WATCH	True Religion		410,780
UACL	25.97	22.73	27.68	WATCH	BUY	Universal Truckload		60,576.9
VLCM	22.54	24.03	29.82	BUY	BUY	Volcom Inc		401,885
WEBX	39.02	25.79	30.73	WATCH	WATCH	WebEx Communications		690,815
WBSN	21.61	22.11	26.36	BUY	BUY	Websense Inc		861,842
YHOO	25.28	29.37	34.13	BUY	BUY	Yahoo		22,728,600

Total 1/4buys=313.7
Total 1/2buys=824.02
Total all=2438.67
S&P=1,335.85;

Performance for September

So here are the results for how we did in September.

If you bought all of the stocks you would have made 106.56, or 4.4 percent.
If you bought the 1/2 you would be up 58.73 or 4.1 percent.
If you bought the 1/4 you would be up 7.21 or 2 percent.

The S&P 500 in the same period was up 24.84 or 1.9 percent.


So far it's looking pretty good. I'm a little suprised that the bottom 1/4 didn't really do better than the S&P 500, but if you bought all of the stock, or the ones in the 1/2, then you would have doubled the S&P for September.

Interestingly if you take all of the stocks and subtract the 1/2 stocks, you would have had a return of 47.83 or 4.7%.

List for September 1, 2006

TICKER	PRICE	1/4THR	1/2THR	1/4REC	1/2REC	NAME	VOLUME
ARO	25.79	21.79	25.53	WATCH	WATCH	AeropostaleInc	1,584,910
CHS	18.72	25.30	33.33	BUY	BUY	Chico	3,081,410
COH	30.91	28.23	31.29	WATCH	BUY	CoachInc	3,553,330
NVT	26.29	31.76	39.80	BUY	BUY	NAVTEQCorp	1,336,440
PLT	18.06	20.93	27.06	BUY	BUY	PlantronicsInc	804,274
RMD	40.98	39.02	42.30	WATCH	BUY	ResMedInc	549,076
SSD	26.23	30.06	35.20	BUY	BUY	SimpsonManufacturing	659,814
SRX	27.96	27.05	30.80	WATCH	BUY	SRAInternational	423,732
THO	41.61	37.20	43.78	WATCH	BUY	ThorIndustries	763,203
TSS	22.44	19.32	20.88	WATCH	WATCH	TotalSystem	131,895
WDC	18.94	14.61	17.98	WATCH	WATCH	WesternDigital	3,139,000
AOB	5.43	4.51	5.57	WATCH	BUY	AmericanOriental	607,565
MED	11.73	7.99	12.37	WATCH	BUY	MedifastInc	982,705
ASVI	15.38	19.63	24.77	BUY	BUY	AVSI	456,612
ADBE	32.33	29.70	33.41	WATCH	BUY	AdobeSystems	6,101,020
AEOS	40.17	24.66	29.88	WATCH	WATCH	AmericanEagle	2,489,980
AAPL	68.38	56.19	66.26	WATCH	WATCH	AppleComputer	29,065,200
ADSK	33.99	34.24	38.91	BUY	BUY	AutodeskInc	2,819,810
CHRW	46.04	36.15	42.49	WATCH	WATCH	CHRobinson	1,138,850
CECO	19.76	23.85	30.10	BUY	BUY	CareerEducation	1,312,280
CTRN	30.47	29.61	39.03	WATCH	BUY	CitiTrends	287,009
CTXS	30.441	28.89	34.43	WATCH	BUY	CitrixSystems	2,896,400
COGT	13.65	14.72	19.32	BUY	BUY	CogentInc	730,483
CTSH	69.74	49.69	57.12	WATCH	WATCH	CognizantTechnology	1,456,280
EXBD	86.97	84.49	93.98	WATCH	BUY	CorporateExecutive	321,244
CRAI	45.20	43.36	46.50	WATCH	BUY	CRAInternational	62,503
CUTR	24.00	23.31	30.28	WATCH	BUY	CuteraInc	357,785
DAKT	20.94	15.49	20.70	WATCH	WATCH	DaktronicsInc	943,771
DIOD	36.52	27.84	33.18	WATCH	WATCH	DiodesInc	350,311
BOOM	36.13	23.78	30.25	WATCH	WATCH	DynamicMaterials	752,129
ENDP	32.78	24.45	27.83	WATCH	WATCH	EndoPharmaceuticals	1,210,750
EXPD	40.85	34.45	42.41	WATCH	BUY	ExpeditorsInternational	2,132,310
FAST	36.63	33.97	39.09	WATCH	BUY	FastenalCo	1,228,020
FORD	5.20	10.48	16.94	BUY	BUY	ForwardIndustries	387,158
GRMN	46.96	33.93	40.87	WATCH	WATCH	GarminLtd	3,756,400
GILD	63.33	48.30	54.27	WATCH	WATCH	GileadSciences	3,792,660
GAIN	13.93	13.87	14.38	WATCH	BUY	GladstoneInvestment	62,016.7
GOOG	378.60	332.74	380.19	WATCH	BUY	GoogleInc	5,750,720
HANS	27.49	20.60	31.30	WATCH	BUY	HansenNatural	7,922,780
HWAY	49.92	41.49	45.98	WATCH	WATCH	HealthwaysInc	333,402
HITT	43.85	26.39	33.02	WATCH	WATCH	HittiteMicrowave	312,644
ICUI	44.02	31.05	35.70	WATCH	WATCH	ICUMedical	99,592.4
LRCX	42.03	34.71	41.05	WATCH	WATCH	LAMResearch	3,023,540
LHCG	23.70	16.47	19.24	WATCH	WATCH	LHCGroup	111,232
LIFC	30.02	19.48	23.86	WATCH	WATCH	LifeCellCorp	851,545
MTEX	14.96	11.19	14.21	WATCH	WATCH	MannatechInc	184,658
MTXX	17.11	16.12	19.48	WATCH	BUY	MatrixxInitiatives	80,260.6
MFLX	22.79	30.30	42.61	BUY	BUY	Multi	599,276
NTAP	34.38	26.50	30.50	WATCH	WATCH	NetworkAppliance	4,570,830
NTRI	49.95	34.83	48.66	WATCH	WATCH	NutriSystemInc	1,908,810
OFLX	24.85	15.85	19.00	WATCH	WATCH	OmegaFlex	18,518.2
OVTI	15.39	17.43	23.12	BUY	BUY	OmniVisionTechnologies	2,745,660
PTEN	27.89	26.50	30.50	WATCH	BUY	Patterson	3,016,950
QCOM	38.35	37.82	42.88	WATCH	BUY	QUALCOMMInc	17,351,300
QSII	41.18	32.72	37.13	WATCH	WATCH	QualitySystems	413,021
RADN	12.40	12.02	13.96	WATCH	BUY	RadyneCorp	215,327
RECN	24.61	24.64	26.93	BUY	BUY	ResourcesConnection	447,312
RIMG	23.07	21.63	25.73	WATCH	BUY	RimageCorp	66,248.5
ELOS	23.60	25.08	32.36	BUY	BUY	SyneronMedical	365,971
TZOO	29.75	25.62	34.75	WATCH	BUY	TravelzooInc	674,471
TRLG	20.40	14.42	17.73	WATCH	WATCH	TrueReligion	423,579
UACL	28.72	21.91	27.13	WATCH	WATCH	UniversalTruckload	59,213.6
URBN	15.44	18.68	23.71	BUY	BUY	UrbanOutfitters	3,132,470
VLCM	23.70	24.03	29.82	BUY	BUY	VolcomInc	363,327
WEBX	35.86	25.04	29.23	WATCH	WATCH	WebExCommunications	653,929
WBSN	20.40	22.11	26.36	BUY	BUY	WebsenseInc	831,289
YHOO	29.49	29.60	34.28	BUY	BUY	Yahoo	19,449,000
ZUMZ	21.92	20.10	26.35	WATCH	BUY	Zumiez	547,077

Total1/4buys=352.7
Total1/2buys=1428.721
Totalall=2440.721
S&P=1,311.01

Goals

The goal of this exercise is to find a low risk method of investing in stocks that have a decent potential for growth. All of these stock picks will have strong financials that should represent well run companies that can withstand downturns in their industry or the economy.

Conservatively run companies are great investments for limited downside (loss) but if the stock never goes up in value, from a risk standpoint you'd probably be better off in bonds or money market funds. Therefore, we also need to find which of the strongest companies have potential for growth. Hopefully this will translate into stocks that increase in value.

Value investing typically has a long term investment strategy, so we will attempt to do the same. I'm envisioning a 6-18 month holding period for each stock, but keeping in the back of my mind that 5 years is ideal. This should help us avoid situations where we panic.

Also, one advantage of long-term investing is that it reduces churn (which only benefits brokers) and tax events (which only benefits the IRS.)

I will be submitting my picks on the first of each month, and I will be presenting several variants of my methodology, in an effort to see which offers the greatest return.

We will also be tracking our performance against the S&P 500 since that seems to be the standard that most people like to use. If we can't beat the S&P consistently, then this method is pointless.

I will try to work in a little technical analysis, so that I can better time the purchasing of stock. Since I will be vetting all of these stocks with a value investing approach, and looking to hold long-term, I will be avoiding much of the risk of technical analysis. However, if a stock is trending down, I would probably be better off waiting until the trend ends, before buying. (I figure if I like ARO at $21, but it's trending down, I can improve my return by waiting a month until it's at $19.)