OHOD (46.83)

4 Comments – Post Your Own

#1) On May 12, 2009 at 9:34 PM, msftgev (95.20) wrote:

Hi I think this is an interesting concept. Only because you're diversifying  within the sectors. If one of the stocks fails you should be protected by the other two. If one of your sectors falls then you should by the other sectors.

I'm really not a fan of just picking 5 stocks in differrent sectors just to be divesified.

Could you list the sectors you've picked because looking at your picks I did'nt see 3 stocks from differrent sectors.

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#2) On May 12, 2009 at 9:55 PM, ChrisGraley (99.72) wrote:

Diversity is a good thing, but it gets over used by just about everyone in the financial industry. The reason your broker wants you to diversify is if you split your regular additions to your portfolio to 20 stocks he makes 20 times the commision than if you have just 1 stock. The talking heads on TV like to point to 20 picks that they made right when you call them on one that they made wrong and then they tell you if you diverisfied your portfoilo you wouldn't be complaining.

Don't get me wrong, diversity is OK, but more important than that is doing a lot of research on your stocks and picking only the ones that are extremely undervalued. That means you have to spend a lot of time before you pick a stock and you have to spend a lot of time constantly checking on the stock until you sell it.

The new investor that has bought 3 stocks, that he's researched enough to give you the important numbers for the company off the top of his head will beat the new investor that simply picked the front running companies in 20 different sectors every time. 

Just my humble opinion, and you shouldn't put too much faith in that, but I believe Warren Buffet has a similar opinion.

When your new, just concentrate as much effort as you can on picking winning stocks. Trust me, as you get better at picking individual stocks, your portfolio will work itself out. You'll also find that you're better at picking certain kinds of stocks and that's ok too, but you should keep trying to improve yourself at the stocks that you aren't good at picking to be well-rounded enough to handle all market conditions. (I suggest paper trading those until you figure it out, and this is a good place to paper trade.)

I wish you luck and hope you got something from this.

Chris

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#3) On May 13, 2009 at 12:03 AM, russiangambit (99.18) wrote:

These days stocks do tend to go up and down together. There is a high level of correlation between stocks. So, even though are diversified, you are not safe.

You need to aim to buy stocks at good value. I guess P/E is the easiest to use, even though it is so inaccurate I hate recommending it. These days you also need to see how much debt a company has. Ultimately, though, you need to have a clear idea of whjat the story is. Why do you think this paticular company will be a winner?

You also need to understand the industry the stock is in, - is  it commoditiy, cyclical, defensive, disrectionary etc. Each industry has its own factors for when it goes up or down.

I like you ABT pick, I am not familiar with other two. ICON looks like it has had a run up and is ready to retrace.

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#4) On May 13, 2009 at 8:46 PM, msftgev (95.20) wrote:

Hi again sorry I misunderstood, I realized my mistake after I posted. I Just thought that would be a interesting portfolio on paper. In real life I only invest in solid companies that I;ve fully researched. I pay little attention to diversification.

I'm not familiar enough with icon or knx to comment. But abbot labs is an outstanding pick.

Well thank you for the idea I'm still putting together the 3 stocks from 5 sectors watchlist.

Good luck to you and stay dilligent.  

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