I'm currently in the process of re-evaluating both my watch list and my portfolio holdings. I'm constantly evaluating and re-evaluating positions, and as I feel things start to get out of hand I tend to do a 'clean up'. Right now is one of those times. Since that means I'm doing a lot of research on various stocks, I thought I might share some of my research here. Let me be up front, I use a 1-10 rating system, and I typically stay away from looking at bad stocks altogether, so you'll probably see me not have many ratings below 5 in here. In my system, if a stock receives a 5 rating, it means that I feel about equal to holding it as I would just staying in cash and putting my money in a money market account or short term CD/Bond. A 10 is a stock I will load up on, while a 1 is one I'll stay away from at all costs. I don't short sell, so I won't talk about that, although at some point I may add that to my toolbox, I don't feel comfortable shorting yet.
Also, this is a good chance to say STAY DIVERSIFIED! Even stocks I feel are a 10 will never take up more than 7-8% of my portfolio, and most stocks take up 4-5%. I tend to hold 20-25 stocks at a time for investment purposes, as I believe too many more than that and you just become a giant mutual fund and might as well buy S&P 500 index funds, and too few and you can't be diversified enough. Jim Cramer's books say you need at least 5 stocks to be diversified and he prefers 10, if anyone is curious on that.
Another reminder as well, that this blog is mainly for me to get my thoughts into writing, and is not meant as financial advice for anyone. Do your own homework please and don't blindly take my advice. I've only been at this since June, I do not consider myself a professional, and I'm certainly not qualified to give financial advice to others. This is for entertainment purposes only and as a means for me to discuss my opinions. If it gives people ideas, great, but if anyone goes out and immediately buys anything based on my recommendation or sells based on my thoughts without first doing their own homework, well to be blunt, they're probably stupid.
With all that out of the way, I'll probably be highlighting a few stocks per week as I update my watch list. I'll let you in to a lot of the things I do in my research, and perhaps give you ideas on what to look for in yours.
-Rizen
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6 comments:
I am currently watching the Apollo Group ... have you looked at that?
Rizen,
Can you explain what the phrase "trimming [into strength]" means?
I just started reading the finance blog, I noticed you like mastercard.
I do have some bad thoughts about this stock, if you read this and would like me to elaborate please email me ay poolguyinbklyn@aol.com
I added CKR to my watch list today .. give it a quick look.
Love the repositioning of Apple, super undervalued at the 86.x you upped at. Very nice, M-L set it to 100 today, and other's have it at 110. Your boy Cramer speculates 120, stay the course. Take care Riz.
i used to do high net worth investing in san francisco. i read your blog so i thought i would pass along some information to give a little something back.
i learned a very interesting investment strategy from alliance capital. the strategy is buying deep in the money call options which have an alpha close to 1. therefore, say you have a stock trading for 100, and you have a deep in the money call option with an alpha close to 1 trading at 50. because the alpha is close to 1 you are essentially getting returns dollar for dollar with the stock for half the price so your percent return is much higher. just a little something you might want to look into, assuming you are authorized to trade options.
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