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Politics : Formerly About Applied Materials

AMAT 269.55

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3:59 PM EST

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To: Gottfried who wrote (46021)	4/29/2001 9:12:49 PM
From: Jerome	Read Replies (1) of 70976

I try to do that with some long positions and have done it with most of my profitable OSX stocks. I found that I would hold a stock that had a profit, but often would not buy it at that price. So I have to ask myself "If I wouldn't buy it, why hold it?" Very good point.In the same line of thinking I feel that one should look at their entire portfolio on a quarterly basic and ask themselves, "If all my holding were cash would I be buying the same stocks back?" We all hate to sell things at a loss, but it should be done, if the outlook of the company has changed greatly since the purchase of the stock. The second problem is buying a stock at about 25 and six months later its at 28 with no sign of it moving higher. Psychologically we pat ourselves on the back for picking a winner, and after a long period of time we come to realize that its dead money.Not only that, the less volatile the stock becomes the more the option premium shrinks. I suspect that inertia is more deadly to a portfolio's growth then the actual stock picks. Here is a basic exercise that I do as option expiration Friday gets near and I have a good idea how cash will be freed uo by call outs and portfolio changes. Add up the value of your portfolio (we all do this on a daily basis) and set a reasonable objective of where you want to be next month as options expire. Then ask yourself , "how am I going to get there?" The answer usually is most of the portfolio can stay, but the deadwood has to go. And if the deadwood has to go, the next questions is how can I get out of it with the least amount of damage? Here reviewing the trading charts for the past 5 to ten days will give you a good idea what limit price to enter for the sell. Jerome

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