Goals, strategies, and guiding rules

 Using my own  goals, strategies, and guiding rules I am developing an investment portfolio based on my needs. And I am going to beat the average!

Goals
Whenever you first go into an investment adviser or first go into buy mutual funds they always sit down with you and ask what is your investment style, and what are your goals. I guess those are good things to ask, but I think they are almost irrelevant. A more poignant question would be from me to the investment adviser asking them about  their style.

And goals! Why on earth would an adviser need to ask about goals? Every single investor has one goal; to make more money, to end the year with more money than what they started the year with. Anyway that is my goal.

Strategy
My strategy works like this;
 I select a number of stocks that have potential, whether they be dividend paying slow growth steady Eddie stocks, or stocks with [what I think have] huge upside growth potential. This is my initial stock pool. Generally I select stocks for the pool, but if Joe my plumber has a hot stock tip, or anyone else, and they have a good track record [sometimes just 'not a bad track record], and it passes my scrutiny it goes into the pool. At the time of entry into the pool its value is recorded. From here, if it is generally increasing in value, usually by 5% [this includes dividends] it can be considered for the portfolio. From there, I apply my investment rules to the stocks and whittle the portfolio down to the stocks that are showing steady growth.


Here are the Guiding rules

Stock pool
1]   Generally, at he beginning of the investment year, select a pool of stocks using your personal criteria. For me these should be mainly blue chip dividend paying stocks with a small mix of high growth stocks.

2]   From the pool select stocks that show an increase of around 5% to create the portfolio.. This requirement can be fudged if the stock shows long term [1 year minimum] steady growth. Dividends count in this selection.


Within the stock portfolio

1]    As close as reasonably possible, buy equal dollar weight in your stocks.
2]   At any time, if any stock drops more than 20% sell all of it.
3]   Once a month review your stocks and;
       a]   any stock that has dropped
              down  5% sell 25%
              down 10%, sell 50%
              down 15% sell 75%
              down 20% sell all
       b]  any stock that has risen [and the portfolio has the money]
                up 5%, buy 25%
                up 10%, buy 50%
                up 15%,  buy 75%
                up 20% double your holding
4]  At the six month point review your stocks. If you want, sell 25% of stocks that have dropped. any amount.

5]   Never sell a winning stock unless you absolutely need the money and then only sell the amount you originally invested in it.

6]   Don't be afraid to changer or modify these rules if they are not working.