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Politics : High Tolerance Plasticity
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To: upanddown who wrote (8288)9/20/2001 1:54:36 PM
From: Telemarker  Read Replies (2) of 23153
 
Sorry John, forgot about the research part.

Once I've decided upon a sector or business type that is attractive to me (this will in part depend on valuations) it's really a matter of determining relative valuation within the group. My research isn't terribly detailed as I'm basically a "basket player". Keep my position sizes relatively small so as not to get nailed by a company-specific disaster.

In the yield area, I'm looking for reasonable consistency of earnings over last 2-5 years. Not looking for earnings growth, but the potential for such is definitely a positive. Even a slight downtrend is acceptable (if the price is right). Most important to me is cash flow and ample free cash flow to support generous dividend. So I'm looking mainly at price to cash flow ratio and dividend coverage ratios. Look at SEC filings mainly to detect large problems - litigation, etc. Also, a good track record of dividend increases is good to see.

No hard and fast rules or formulas. Comfortable trusting my judgement with the above information in hand. As long as I remain comfortable with a sector, I'll rotate my holdings based upon relative valuations. When things start to get more expensive in that sector and appealing choices thus more limited, my exposure starts to naturally drop.

Regads,
T
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