re: ask king louie a2q 4 n2w
THese are answers to questions post by N2W on another forum that may help make sense of some of the method in my madness ?
Hi N2W, I'll try to answer your questions but wont give them as much effort as they probably deserve as my past tips on this forum should attest to my credibility....well the FA ones anyway :-)
-- how you discovered these "latest trawl" of stocks?
&
-- what analysis you undertook to determine them as a buy?
How about I just give you the recipe for making gold??? only joking...sort of :-)
I start by running advanced FA search queries on Aspect (how owned by Huntley’s but used by a number of broking houses and public in general) This usually narrows the field to about 70-80 stocks and from their I sus their charts and apply my own rating system not to dissimilar to the popular CGVI that gets thrown around here from time to time and often brings up the goods. Mine goes into a few more of the financials but is still fairly generic as it is to only narrow the field to about 20 stocks.
I'm then looking at the business/management/ holders/sector and any thing else that usually doesn't matter too much cause once they make the short list I know that things are pretty sweet and it's just a matter of looking at the most likely movers and shakers over the next few years.
-- how long do you hold a stock?
How long is a piece of string?
I am fairly risk averse and if one of my holdings looks like it's going pair shaped I will use a chart to see what sort of pull back it usually has and off load if it looks sustained and may look to get back in again, eg AVV, out after bad report and now represents decent value again. Had If the stock is a blue and it goes out of favor like my KCG holding did then I'm out of there as blue's usually take a little longer to recover. If it's illiquid I may not have a chance to get out and if the fundamentals are good it will recover well enough as has been the case with SHV and it's few pull backs since $1.60.
-- when do you determine it a sell?
(see above)...and when the fundamentals change and I need the cash to take advantage of other undervalued stocks. I don't mind a stock running above it's historical PE and once they are discovered by the rest of the market they usually do, but the next earnings report might see them back inline with their historical average. Regardless, people are prepared to pay extra for an out-performer but when that bad report comes in make sure you are one of the first to jump ship as they sink fast. I don't hesitate as I can move the money somewhere else. I jumped from FUN and AVV in a minute after good runs ( and briefly held ady :-)..I do not recommend this kind of play for fundamentalists, it's hart attack material but a bit of fun LOL!)
-- how much has your current portfolio outperformed the market over the last few years?
I put together a PEL (protected equity loan) to park some money for a while and had a choice of about 70-80 blue chips to choose from. I usually try to avoid blues as they don't run as hard. I ran my filters across the 70 and at the end of June (28th-ish) I bought BSL, FCL, FOA (as a T/O Target, toss up between that and NFD but FOA's FA looked better and ironically NFD was targeted first, thought bugger but now ok with it LOL!) LEI. MAP, and ORI) after 6 months I was up 39%, the market was up 23% for the year and the best performing fundy was up 41% and the second best about 39.5%....FOR THE YEAR LOL! (Ref-Fin Review about 5 weeks ago) Ironically, one of them had 3 of my stocks and the other had the other 3 in their portfolio....that's big brother stuff???
But as I said my mid to small caps usually perform better.
For the record, you can make a lot of money by picking as little as 1 good stock out of 10 as long as you are selling the non performers. That is, if you used a 10% stop loss on the 9 losers and let your winner run you are ahead after it's run 100% (assuming you invest the same amount on each) I am a little better than that and hopefully you are to :-)
-- has your analysis and portfolio construction added value?
