Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.
Late this afternoon, my shares of WMS Industries (WMS) reached the first targeted sale point with a 30% appreciation over my initial purchase. Only owning 83 shares (a reduced size position due to my recent strategy of replacing stocks in the minimum of 5 positions with smaller purchases), I sold 1/7th of my holding or 11 shares at $26.21. I had purchased my 83 shares just a month ago on 10/28/08 at a cost basis of $20.12. Thus, I had a gain of $6.09 or 30.3% since purchase.
My portfolio management strategy is to respond to sales of holdings within my account with specified actions. In this case, holding 5 positions, well under my maximum of 20, a sale at reaching an appreciation target generates a buy signal. That is, I now have a proverbial 'permission slip' to be adding a new holding to the account. Certainly, I need to review potential purchases to make sure they meet my own criteria for inclusion in my portfolio, but it is exciting to once more get some sort of positive signal about the market from my own portfolio!
In terms of sizing the new position, since I shall be adding a new holding on 'good news', and not just because one of my minimum of 5 holdings needed to be replaced, my size for the new position will be 125% of the average of the other 5 holdings currently. When the opportunity arises to purchase that holding, I shall be getting my calculator out and determining the number of shares to purchase.
I hope all of this strategizing out loud helps all of you in thinking about how you manage your own accounts. I know it helps me.
If you have any questions or comments, please feel free to leave them on the blog or email me at email@example.com.
Yours in investing,