Hello friends! Boy was THAT a sell-off in the market today! I hit two more stops on both LSCP and PARL, two of my recent purchases that now are down 8% or more and are history. Even if I do think they are great companies, my strategy comes first!
Checking my email, I was pleased to see an excellent comment from Gus who wrote:
Thanks for providing your approach to profiting in stocks. I pass by here on occasions but have decided to make it a habit and try to learn to see what you see in the stocks you select. Your method is as good as any stock pickers service and it's free. I have several questions for you which are:
Yahoo's PEG is a 5 year PEG. So much will change in 5 years so, how can it be much of any indicator of value?
Recently, you profiled several stocks and then bought LSCP for your portfolio. What carries the most weight for your final decision?
Is there a limit to the amount a stock gains on breakout that would prevent you from buying?
WAG broke out on volume today. How would you evaluate it and why did you not profile it tonight?
Thanks for the blog and providing a place for us to learn. May you have a happy and prosperous New Year.
First of all, thank you for your kind words and coming and visiting. As I always remind all of my readers here, I AM an amateur investor (no kidding!), and even if I have some interesting ideas (I hope), please consult with your professional investment advisors to double-check everything I write here!
First, you make an excellent comment about Yahoo PEG ratios. Quite frankly, I haven't been giving that much thought because the PEG is just one small part of my whole evaluation of a stock. I like a low PEG but is it truly meaningful being 5 years out? I hope so. But if not, I don't think it is a waste to review it. Perhaps if you can find a better source for 12 month or 24 month PEGS which might be more reliable, I certainly would consider that. It is, I guess, just that Yahoo is so convenient.
Next, you ask another good observation about how I ended up with LSCP (and now have sold that stocks!), as opposed to any of the many other stocks I review. Again, I am truly very arbitrary when it comes down to a final selection if there are a few different ones I am considering. Generally, I like to find a stock to buy (when my portfolio signals me to add a position), on the same day I make the sale. Why? It is just something I do I guess. And among those stocks, I try to buy the company that might have the most sustainable earnings growth. I find myself biased towards halth technology and retail companies. I guess I feel I can understand those businesses. But I have ventured farther off the path with companies as diverse as Egg companies (CALM), perfume companies (PARL), and even military defense contractors (DRS).
Generally, I am not afraid to add a stock because I know I am quite prepared to "pull the plug" if a stock drops 8%. You also asked about stocks breaking-out, and if there was too much of a stock rise to discourage me from buying. Not really. Again, I am impressed by strong gains, not intimidated!
Finally, you asked about WAG. I didn't list WAG because I have already done so. I believe in August, 2003, and if you like, you can go to my "Stock Picks 2003" portion of the blog and find the actual posting. I have considered relisting stocks each day....but then I find my own time constraints often bumping into my grand ideas!
Thanks again for writing! I shall work hard to continue to hold your confidence.