Frank, your question is an excellent one, and actually "fairly" easy to answer. What I do is constantly evalualate where the best place for my money is, with the level of reward/risk that I want or expect.
Basically, this means exhaustive research on current positions, AND potential future positions. I have three portfolios. I have a trading portfolio which I use for short term trading. I rely on technical analysis, supported by fundamentals. I also have a core investment portfolio, where I'm investing more long term (but not necessarily a buy and forget), and rely primarily on fundamentals, with technical analysis as support. And I also have a brokerage "401k", where to date I have invested totally in a medium cap fund, PBHGX.
That being said, the three portfolios, all have much different criteria for entries and exits of positions. And I have no steadfast rules, like "once I get a 50% gain, I'm out". If I think, based on my research, I can can a better return with the same or lower risk of my current position, I'll act. A recent example is when I sold 90% of my CPQ at $108, on 5/30, I believe, to make SPCT a core position. This is the first time ever that I sold CPQ, and I have been adding CPQ positions since 1990. I still like CPQ. I think CPQ will hit 120-150 in the next 12-18 months. But I determined, I'd get a much better return with SPCT, and I acted.
I also concentrate my core investments in business sectors or companies, where I have good knowledge and good contacts. There is a lot of legal knowledge one can get, which helps reduce risk levels.
I hope I've helped, although my answer surely is not adequate to answer such a good question, where many books have been written in an attempt to answer it. Good Trading. LF |
