Hank, for 50% of my portfolio I look for high growth comapnies in high growth industries. I then examine the 10-K's and 10-Q's of target companies looking for any clues of financial weakness. Finally, I make sure that the P/E bears some reasonable relationship to the expected long-term growth rate. I only get out of these issues when I consider that the underlying growth story has changed. For example, I got into OXHP at about $57 and saw the price soar toa about $89 in about five months, but I began to read articles about how the company was experiencing problems with their A/P system, and the severe pricing pressure experienced by the rest of the HMO industry. Based on that intelligence, I decided to exit at $78. I especially like stocks that have fallen out of favor for no justifiable reason other than the exit of momentum players. So far this year this approach has more than doubled the return of the S&P 500. Current holdings include ASND, BKS, CA, CKR, CLE, DELL, ESV, MCAF, PSFT, RHI, TLAB and VRC. I also look for "undiscovered", small cap growth stocks. Three recent examples -- BTV, NICEY and RXT. I still hold NICEY.
The remainder of the portfolio consists of relatively strodgy back-bone stuff like IBM, TYC, T (together with about a dozen spin-offs), CHV, GM. This is stuff I don't sell, and use DRIP to add to my holdings.
Finally, I don't short, and the reason is straight-forward. I have no idea how to value equities.
Regards,
Paul |
