Beating /not beating market

So I checked out my stocks YTD performance and 17 of 26 are beating the market year to date.

Saul, in your shoes, would you dump all your stocks that are lagging the market in this case? (I may or may not want to trim). How would you look at a stock that is not a star in your port? It seems your port is a port of all stars only and you cut the slower players from the team. Is that right?

I may want to trim a little. But it’s hard to say how.

I want to learn to look at PE and earnings stuff next. So cool.

Karen

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Saul, in your shoes, would you dump all your stocks that are lagging the market in this case? (I may or may not want to trim). How would you look at a stock that is not a star in your port? It seems your port is a port of all stars only and you cut the slower players from the team. Is that right?

Good question Karen, and one that I can answer with conviction.

  1. I would not dump anything based on what the stock PRICE is doing. I certainly wouldn’t compare it to the market, as I generally don’t focus at all on what the market is doing. (I just started including the S&P in my analysis since MF uses it so much as a benchmark).

  2. You’ll notice that, in my end of the month analysis, I talked about what percent of my total portfolio a stock is, what its PE is, what its earnings growth had been, but not a word about what its price had done. I look at what the company itself is doing to make my decisions, not the stock price. For example: BOFI is below where it was a year ago (when it had shot way up unreasonably). Should I sell it because “it is lagging the market?” Of course not. In fact it’s my second biggest position. All the news from the company is good and better than good.

  3. I’d strongly advise going to the FAQ/Knowledgebase (post #6412) and scroll down to Prospecting for an individual company, to Portfolio Management, and to Selling, to get some good ideas about how I do it, but in general I’d trim if the position is too big for comfort, and sell if I’ve lost confidence in the company because of poor results or a change in thesis. You’ll get much, MUCH, more help from the FAQ/Knowledgebase.

Saul

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Hi Saul, thanks, and that is the logical answer, because some stocks will lull over time, they have to. I will go back to the knowledge base, thanks for pointing out those sections. I’m looking forward to digging into PE and earnings growth of the companies I have.

Karen