RESTRUCTING

Investment Analysis Clubs Saul’s Investing Discussions
1

Probably a lot of you were in my position when you first discovered Saul’s Investing Discussions. I would appreciate any feed back on my proposed plan of action and any tips you have. Thank you.

I joined MF in 2010. I went long on stocks. If David G recommended it and I “felt good” about it, I bought it. And held. I was working then and had little time to analyze my portfolio. Generally everything went up. With a few exceptions of course. According to Schwab, the annualized ROR on my portfolio since inception is 17.5 % as of today. All I did was buy what was recommended. Kind of investing on autopilot. My ROR would have been a bit better if I hadn’t went off rec a few times.

At 12/31/18, I had 62 long positions in stocks and another 31 open option positions. I knew this was too much but didn’t know how to address it. I retired in April of 2018 and was looking for a change.

Somehow I stumbled on Saul’s Investing Discussions. WOW. Just what I was looking for. I read everything in Saul’s knowledgebase. Then re-read it a couple of more times. Then read a number of the posts.So, here’s my plan for reducing my portfolio and adding some new positions. I also have an issue (it’s been a good issue obviously) in I’m way over weight in APPL and NFLX. That’s on the back burner for now. I’m fully invested so new positions will be funded by sales of older positions.

  1. I had some easy decisions and quickly sold 10 positions.

  2. I calculated ROR since inception on the remaining stocks. If ROR was greater than 200%, that was a 5 star (11 stocks), ROR greater than 150%, that was a 3 star (1 stock) and ROR greater than 100% was a 2 star (9 stocks). These 21 “stars” plus 9 others are “HOLD” for now.

  3. The remaining 21 are “SELL”, which I plan to do this year. Some outright and some through writing covered calls. Since I’ve basically been buy and hold, I’m finding it’s hard to pull the trigger on the SELLS.

  4. I will keep all 21 of the “stars” this year. They will basically be on autopilot. Meaning I won’t ignore them but won’t keep a chart or try to read everything on them. This group includes APPL, AMZN,BKNG, CGNX, FB, NEE, NFLX, NKE, PYPL, YUM and YUMC. Next year I will look at trimming this group down.

  5. The remaining 9 on “HOLD” include; AEE, BERKB, IQ, JD, MTCH, SQ, TSLA, TWLO, ZS. The latter two were just purchased this year.

  6. By the end of the year I will have to decide when to sell the remaining other stocks on HOLD.

  7. My ultimate goal is to be down to 12 to 15 positions by year end 2020.

Any thoughts, advice, criticism will be gladly accepted.

John

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We typically don’t talk about portfolio advice here much, but I believe this point is instructive.

2. I calculated ROR since inception on the remaining stocks. If ROR was greater than 200%, that was a 5 star (11 stocks), ROR greater than 150%, that was a 3 star (1 stock) and ROR greater than 100% was a 2 star (9 stocks). These 21 “stars” plus 9 others are “HOLD” for now.

This is completely backward looking. Sure, if stocks have performed poorly, there is probably a reason. But just because they’ve done well doesn’t mean they will continue to. To invest Saul’s way, you need to have a deeper knowledge of where the companies are at present.

I think a smarter approach would be to start with your largest allocations and really figure out if you want to keep them, and how much you want to allocate to them. The tiny positions don’t matter: ignore them or sell them or get to them later. You really want to get a handle on where the bulk of your money is sitting right now, and that’s your largest allocations.

Take a look at each company’s most recent quarter (or few quarters) reported, and try to write them up for the board and we’ll give feedback. Something like this:

https://discussion.fool.com/pluralsight-ps-4q18-34136114.aspx

Good luck.

Bear

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