One of the themes of this blog is trying to help do-it-yourselfers become a little more knowledgeable about how markets work and to share my process for portfolio construction. This can be as simple or complicated as anyone wants to make it. I try to make the starting points for sector and country weights very simple on this site and more importantly in my practice. The final step, for me, of picking stocks is probably the most complex part of my process but its not cryptic nor is it rocket science.
This brings me to comments from Gary Kaminski, today's guest host on Squawk Box. He went on and on about how to add value you have to be on the road all the time and meet with managements. It was a lengthy "pitch" for whatever it is he does; separate account management mutual fund management or both I imagine.
This is just flat out not the case. Whether you are top down or bottoms up, any implication like Gary's, that a do-it-yourselfer can't pick stocks ticks me off plenty. Anyone out there have an oil stock that is up a lot that they did not visit? I have a few of them. Anyone own Target (TGT)? I have owned it for clients for a long time, its up about 30% in the last year. TGT is hardly complex. How about Intel (not a name I own for clients)? It is up about 30% since its low last fall.
That a do-it-yourselfer might own a couple of oil stocks, TGT and INTC is not really a stretch is it? Stock picking is not easy nor is it for everyone but it is not as difficult as Gary makes it out to be either, not by a long shot. I just hope he did not derail anyone from managing their own money.
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2 comments:
Excellent article
I agree with it from experience and sentiment.
Roger,
As the great "do-it-yourselfer" around here, at least in my "trading account" I think that amateurs can build portfolios and can pick stocks successfully.
I find that the Morningstar.com website, especially the "5-Yr Restated" financials is particularly helpful. Some "pearls" from my approach: look for consistent earnings and revenue growth with a good latest quarter, look for positive and growing free cash flow, and a balance sheet with more assets than liabilities.
There, that wasn't that hard :).
I also like to start by scanning the top % gainers for stocks on the move today. That is when I buy a stock, I like something good to be happening to it the same day I make a purchase!
I have some idiosyncratic methods of managing my portfolio but the basic idea of unloading your losing stocks quickly and selling your winning stocks slowly is an important strategy for all investors.
Bob
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