Return

 

The object of this page is to provide a guide and an idea of the philosophy of the portfolio we are going to construct. It is a balanced portfolio and should give us all enough confidence to hold on to the selected stocks unless they no longer meet the reasons for having selected the particular investment.

 

            A question to be addressed is: what to do and how to carry out on a monthly basis the research and evaluation of our investments. It is the founder’s idea that each Members or Groups of Members embrace an industry to cover, thereby addressing one industry per month. The Member (s) covering the industry will present their facts to the club. It will be the president’s duty to oversee and aid the Industry Group of Members and assure that everyone is sharing in his or her responsibilities. The following table is a likely scenario for investing in one industry at a time as well as for investing in one “level” before moving down toward MID CAP and SMALL CAPS. Let it be known that the universe of companies to study will be limited to the S&P 500 or the Nasdaq 100 so that we won’t stray into companies with lesser credentials.  In this example we’ll assume that LARGE CAP is a company that is greater than 20 billion, a MID CAP one between 2 and 20 Billion and finally a SMALL CAP is one under 2 billion.

 

 

 

How will we get to the point of knowing which companies in each industry to own in our Portfolio? In lieu of not having other inputs the suggested approach is to evaluate each company and its peers for each industry and take it to a vote of the Members.  This implies that Current Members will present facts about the respective industries and its more important companies.  

As for when will we sell any of these stocks is concerned, we intend on re-visiting the holdings at a years time or cycle for that matter and seeing if they still fit with the reasons we acknowledged at the time we bought them. At that time we can:

(a)   Continue to dollar cost into the stock

(b)   Leave that holding alone and invest future money in a different company within the same industry or

(c)    We can sell the holding and move on to a more appealing company if we so decide.

 

Can a stock be brought up in an emergency type situation? Yes if for any reason important fundamentals are changing causing to examine the stock in such haste.

 

Now, there is yet another question to be answered, namely, how to go about investing in the companies we have selected in each industry.

 

Suggested Procedure:

 

From the day we know which companies will represent each level (LARGE CAP first) we can track the their performance relative to one another, and since we are going to own them all down the road, we can jump on the one that is moving higher, followed the next month by the one that is down the most, then on the third month (depending on the cash we can collect) we can repeat this unbiased method of deciding which one to own next.  This mechanical procedure should free Members from having to make decisions by vote every month. This method should put to rest most ancieties.  We can use the time we saved for other business. The logic for investing in the stock that is moving is to capture that stock for the long term early enough in the cycle to benefit if it will become a success story. The logic for investing in the one that is down the most is a measure to not let escape a bargain stock that we will own down the road anyhow. There are also countered reasons for not investing in the one that moves first and for not investing in the one that is under performing the group also. However, I ran some trials and discovered that using both methods as opposed to buying the prevailing under performer or the prevailing best performing one, can arbitrate any risk of under performing the broad markets.

 

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