RE: [CANSLIM] watchlist / portfolio philosophy

From: Karen White <karenwhite7@charter.net>
Subject: RE: [CANSLIM] watchlist / portfolio philosophy
Date: Fri, 18 Oct 2002 10:44:31 -0700
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Top of Thread: RE: [CANSLIM] watchlist / portfolio philosophy michael_niemotka@baxter.com
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Chris - thank you for that explanation.  Very helpful to me.. Printing it 
out for the old "Keep" binder. Karen

At 07:08 AM 10/18/2002 -0500, you wrote:
>Mike,
>
>What a really good question, one that we are all trying to improve on.
>
>I think you put on your watch list all the stocks that make your fundamental
>and technical cut, also using your minimum volume and price. This list can
>get well over 200. Then as a final cut, screen for only the groups moving up
>in rank or have moved up in rank and are stable. Group rank performance is a
>very important part of the equation. Hopefully this will put your list under
>200. At lunchtime I can quickly scan up to 200 stocks on Yahoo looking for
>stocks with big moves on big volume. I can then check the charts of these
>stocks to see if they have an acceptable chart pattern for purchase. I have
>found that this works better than trying to put together a shorter list of
>stocks that appear to be close to breaking out (within 5% or so) and missing
>something that you left off the shorter list because you didn't think it
>could move that far prior to looking through your larger list again.
>
>I disagree with WON on holding four to five positions. I think that 12 would
>give more flexibility. I believe each position needs to be at least $2000.
>I'm not saying that WON is wrong, but I work 40+ hours per week.  I have
>been burnt many times when a position I am holding is downgraded by one of
>the major brokerage firm. It's amazing how they can screw the little guy
>with no accountability. Each position is entered with equal dollar amounts.
>This allows a seven or eight percent loss to be offset with an equal, not
>higher gain.
>
>Now, to your sell question. This is the toughest part of the equation. It
>sounds like you're in about four stocks. It's difficult for all stocks to go
>up or down each day. If one of your stocks is hanging neutral today as you
>watch another one break out with huge volume, and you trade them, what if
>your stock (the one you just got rid of) is up big tomorrow and the newly
>purchased one is neutral? This is why I think more than four gives you some
>flexibility. With 12 positions you can sell a stock without reducing the
>portfolio by 25%. A few different things can be helpful here. Watch for sell
>signals in each stock you own every day. You don't have to wait for a seven
>to eight percent loss before selling. Won says the average of all losses
>should be five percent. If you find a good stock to invest in and your
>already fully invested buy it anyway. This puts you on margin and mentally
>gives you an incentive to choose and sell a poor performing stock within a
>couple of days. A couple of days of margin interest, even if it were every
>single week of the year, would be a very minimal expense. Take profits as
>you have them until you are up for the year and can afford to hold your
>better performing stocks longer. In his book WON says to take some 20%
>profits, and on one of his tapes he says to sell half of all positions
>reaching a 25% gain. I have noticed after reviewing the trades that I have
>placed, is that they all seem to stall or fall at about a 20 to 25% gain. I
>like to lighten the portfolio on Fridays. This can be done easily when you
>have more than four positions, as it doesn't take you out of the market too
>much. Very few Mondays start out with a jump. This gives you the weekend to
>think about the next week with some cash in your portfolio.
>Remember the market is always right. We are just trying to be correct as
>often as we can.
>
>-----Original Message-----
>From: owner-canslim@lists.xmission.com
>[mailto:owner-canslim@lists.xmission.com]On Behalf Of
>michael_niemotka@baxter.com
>Sent: Thursday, October 17, 2002 9:29 AM
>To: canslim@lists.xmission.com
>Subject: [CANSLIM] watchlist / portfolio philosophy
>All,
>
>At the risk of jinxing the latest breakout, I will ask this question, since
>it appears that M may finally be back, and that there are some sound stocks
>breaking out of nice bases, and sustaining the breakouts....
>
>That having been said, I was wonder how all of you manage your watchlist.
>Say for instance you have built a list of 20 (is that too few or too many)
>stocks that you are interested in.  You have noted the pivot points, and
>are waiting to see what happens.  On a day to day basis, as you read IBD,
>or get an idea from some other source on a stock, and after doing some
>research, you decide that it could be added to your list, do you delete the
>worst stock on your current list to make room for the new one?
>
>In addition to having your watch list, say you have positions in a couple
>of stocks, that you bought at the correct breakout, and to date a couple
>have gone up 10-20%, and a couple are down less that 8%, or flat. All of
>your capital is now in the equities.
>
>Now, one of the stocks on your watch list breaks out on great volume......
>Do you sell off the worst performer, to buy into the breakout,  I guess the
>underlying question is how long do you hold a stock that you feel is sound,
>and has shown no sell signs, but yet is performing flat, or less powerfully
>than some of the newest breakout,
>
>Thanks for any thoughts, let's hope this latest rally sticks!!!!
>
>Mike Niemotka , PE
>
>
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