KY,
Since the beginning of this year I found myself asking essentially the same questions as you.
FWIW:
1. First, CSCO has set a bench mark for my portfolio performance a "higher standard". CSCO has done this over a number of years not just a 12 month time frame, and that counts for a lot. CSCO is now "The Standard" by which I evaluate all other purchases.
2.Before buying shares in another enterprise, it sort of has to pass my "CSCO Test". If you think about it from a corporate perspective CSCO becomes my "internal rate of return" or Corporate "hurdle rate". I try to review this from both a quantitative perspective (e.g. growth rate, margins, net profit...) and Qualitative Perspective (Industry strength, management strength, ability to recruit and maintain employees etc.). If you haven't read "Common Stocks and Uncommon Profits" by Philip Fisher, I highly recommend it. If I'm not strongly convinced that the new enterprise has much greater risk/return characteristics than CSCO, I keep looking.
3. When I really like another great growth candidate (e.g. NTAP). I buy shares of that company using margin on dips. I then sell some CSCO to to eliminate or maintain my comfortable margin level.
4. As my CSCO position dwindles, it is being replaced by enterprises that I have a high degree of confidence in, because the company passed my sort of CSCO screening test.
5. One other thing I do, if there is a significant market correction and all technology stocks get pounded,I usually use margin and load up on good bit of CSCO. After it recovers, I sell it and put the short-term profit into another smaller great growth prospect. By using the margin to buy CSCO, I'm able to say to myself "if it doesn't bounce right back, don't worry I'm holding CSCO". But what I'm really thinking is how can safely raise cash to buy more shares of my best growth prospects.
6. I equate number of shares with reaching my "critical mass" goals. I'm constantly asking myself "how can I get more shares in my greatest prospects"?
Hope this helps,
SL2 |
