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.

In the midst of this market 'meltdown', it is still business as usual on this blog.  My portfolio investment strategy is kicking in as it has been for the last several weeks.  As stocks decline, if they reach sale points they are sold and not replaced.  I am now down to 9 positions and could conceivably drop to 5 positions (my minimum) well below the maximum of 5 positions.

I have attempted to accomplish several things on this blog simultaneously.  For one, I have been listing many investment 'ideas' that I would find suitable for purchase.  In addition, I have outlined my own ideas of portfolio management with targeted buys and sales and utilizing portfolio-generated signals to determine when to be buying or selling positions.  Finally, I have been working hard in the name of transparency to share with you my thoughts on my own actual holdings.  Now with my participation on Covestor, you all can monitor my activities virtually real-time without my needing even to blog.  

On December 23, 2007, I reviewed my holding in IHS (IHS).  Going alphabetically through my shortened list of holdings, brings me to Morningstar (MORN).  Besides utilizing Morningstar.com for much of my own research in this blog, I also own a small position in my trading account!  I currently own 103 shares of Morningstar (MORN) which were purchased 11/22/05 at a cost basis of $32.57.  Morningstar closed at $62.20 on January 18, 2008, for an unrealized gain of $29.63 or 91.0% since purchase.

I have sold portions of Morningstar four times already.  I sold 33 shares on 2/16/06 at a price of $42.94, representing a gain of $10.37 or 31.8%.  Next I sold 27 shares of MORN at $51.91 on 2/22/07 for a gain of $19.34 or 59.4%, 20 shares of MORN were sold on 8/6/07 at $62.06, representing a gain of $29.49 or 90.5% since purchase.  Finally, I sold 17 shares of MORN on 10/10/07 at a price of $71.25, representing a gain of $38.68 or 118.8% since purchase.

These sales demonstrate my current strategy of selling portions of a holding (currently 1/7th of my remaining shares) at targeted sale points of 30, 60, 90, and 120% appreciation points.

What does the chart look like?

Let's take a look at the "point & figure" chart on Morningstar (MORN) from StockCharts.com:

As you can see Morningstar (MORN) has come under considerable selling pressure since the first of the year as the stock dipped from a high of $85 in December, 2007, to its current price of $62.20.  I think the sales of portions of Morningstar may well make more sense now in the face of the correction we are facing!  The stock appears from this view to be well above the support area in terms of the long-term stock performance.

When do I plan to sell Morningstar next?

As you probably know, I have two points at which I sell a stock.  On the upside I sell 1/7th of my remaining shares as a stock advances to targeted appreciation levels which I have arbitrarily set at 30, 60, 90, 120, then 180, 240, 300, 360, then 450% etc. appreciation points.  Since I have already sold a portion of Morningstar four times with the last sale at the 120% level, my next level of sale would be 1/7th of my remaining shares at a 180% level of appreciation.  This works out to 103/7 or 14 shares if the stock should appreciate to 2.80 x $32.57 = $91.20.  

On the downside, unless there is some fundamental negative news that leads me to sell my shares, my sale point is at 1/2 of the highest appreciation sale level.  For MORN, since I sold some shares four times, with the last being at the 120% appreciation level, my sale target is at a 60% appreciation level which works out to 1.6 x $32.57 = $52.11.  If Morningstar should decline another $10 from here, I shall be selling all of my remaining shares regardless of my overall outlook on the company.

How did they do in the latest quarter?

On November 1, 2007, Morningstar (MORN) reported 3rd quarter 2007 results.  For the quarter ended September 30, 2007, revenue came in at $111.9 million up 36.7% from the prior year's result of $81.8 million.   Consolidated operating income came in at $31.4 million up 53% from last year's $20.5 million.  Net income was $19.9 million in the quarter or $.41/share compared with $13.5 million or $.29/diluted share in the same quarter last year.

The company beat expectations of $.39/share but came in slightly light on revenue which had been expected to come in at $112.5 million according to analysts polled by Thomson Financial. 

How about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on MORN, we can see an almost perfect report with steady revenue growth, steady earnings growth (except for a dip in 2003), fairly stable shares (about an 18% increase in shares between 2002 and 2006 during which time revenue climbed almost 200%, and earnings increased almost 1000%). 

What do I think?

Well I like Morningstar a lot.  I use the service in the blog and own shares.  But I am prepared to sell if the stock should decline to a sale point as I have established.  The latest quarter was great, and longer-term the company looks solid.  Technically, the stock has shown recent weakness along with the market.  Thus, even though the fundamentals are strong, the best I can do--

MORNINGSTAR (MORN) IS RATED A HOLD

Thanks so much for stopping by and visiting my blog!  If you have any comments or questions, please feel free to leave them on the website, or email me at bobsadviceforstocks@lycos.com.

Be sure and visit my Covestor Page, my SocialPicks Page, and my Podcast Page!

Bob 

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. 

Generally, I like to review my past stock picks in this place on the weekend.  But I didn't 'pick' any stocks during the week of July 17th.  So there is no review to be made today!  

If I get a chance, I shall try to do a 'portfolio review' which I like to do about every three weekends looking at each of my holdings in my Trading Account.

If you get a chance, be sure and visit my Covestor Page where my trading account is reviewed and analyzed, my SocialPicks Page where my stock picks from the last year are monitored, and my Podcast Page where I have 'shows' about some of the many stocks I write up here on the blog.

Regards and have a great weekend.

Bob 

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.

This afternoon, when the selling pressure became more severe, my Precision Castparts stock, which was actually moving higher originally, turned lower and hit a sale point and was sold.   I sold my 64 shares of PCP at $108.79.  I had actually purchased these share on 10/24/06 at $69.05 so realized a gain of $39.74/share or 57.6% on these shares since purchase. 

You might be asking the why of my sale.  Why did I sell the stock NOW when the stock was ahead by 57.6% since purchase?  

In fact, this sale was dictated by my own trading portfolio management system.  That is,  since I had sold shares four times previously at approximately 30, 60, 90 and 120% appreciation points, on the downside my sale price had been moved up to 1/2 of my highest appreciation sale or 1/2 of 120% = 60%.  Breaching this 60% appreciation level, I went ahead and sold my own shares.

With this sale on 'bad news' I am once again 'sitting on my hands' and my own portfolio is now down to 9 positions.  My 'system' is working, albeit slowly, to move me gradually out of equities and into cash as the market correction and possible bear market develops.

Since the latest quarterly report was strong, and the Morningstar.com report is also quite strong, I am reluctant to move the rating to a "sell", however, with my own sale of shares on what I would call technical reasons, I am reducing my rating of this stock:

PRECISION CASTPARTS (PCP) IS RATED A HOLD

Thanks so much for stopping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  Furthermore, stop by and visit my Covestor Page where my own trading portfolio is analyzed, and my SocialPicks page where all of my past picks can be monitored from 2007 on.   And if you get a chance, drop by and visit my Podcast Page where my own podcasts are posted. 

Now you are surely exhausted :).

Hopefully, tomorrow will be a bit better for all of us.

Bob 

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.

Earlier today I found that my latest stock purchase, Graham Corp (GHM) had hit a sale point on the downside and I sold my 210 shares at $41.34.  These shares had just been purchased on 1/10/08 at a price of $46.27.  Thus, my loss on these shares worked out to $(4.93)/share or (10.7)% since purchase.  My trading rules dictate me to implement sales as stocks hit (8)% losses.  I am fairly 'old-fashioned' with these sales and monitor my stocks manually.  With the fast-moving market, I probably should consider automatically setting up these transactions.

Since this stock sale is on 'bad news', I do not have any permission to replace this investment with another holding. Thus, I am now down to 10 holdings in my trading account, down from my maximum of 20 and above my minimum of 5.  My portfolio keeps 'talking to me' and I am listening. 

As is my practice, I shall be waiting for one of my positions to hit a sale at a targeted appreciation point to get that 'permission slip' to add another stock.  Meanwhile, I am sitting on my hands.  Hoping against hope that the market does not dictate another sale of a great company with a weak stock price.

With this sale of my own shares, 

GRAHAM (GHM) IS RATED A HOLD

Thanks so much for visiting!  If you have any comments or questions, please feel free to leave them right on the website or email me at bobsadviceforstocks@lycos.com.

Bob 

In this section of the United States, there is no better word to explain my feelings towards the stock market today and the last several weeks.

As this 'Minnesotan' blog explains

"UFFDAH!: @($#@#!&!!

It's the PG-rated version of what you'd really like to say but can't in front of the kids or whomever.  Example: You go out to your car and see a tire is flat and you exclaim, "Uffdah!""

This Norwegian expression says it all.

I am long this market.  That is, I remain an optimist while my stocks mostly decline and head in the opposite direction than my preferred outcome. 

How do I deal with these declines?

As I have written many times over, I have not built a portfolio management system that is designed just for good times.  Anyone can do that.  My portfolio strategy is to respond to market activity instead of anticipating the future direction.  Frankly, I don't know how stocks are going to move tomorrow, next week, next month or next year.  However, if my stocks decline to sale points, they shall be sold.  If I sell positions, I shall be 'sitting on my hands' with the proceeds, continuing to 'pull in my horns' so to speak, or pull in my head and legs like a turtle.

My own portfolio can drift between 5 and 20 positions.  This 'posture' of my own investments is in response to these sales on bad new or sales on good news.  They give me the permission slip to add postions or direct me to stay away from the market.  I don't know if this is the best process, or even if this strategy will work!  But I shall be sticking with it and reporting back to you.

Currently I am at 11 positions--having recently added Graham (GHM) on a signalled purchase by my partial sale of Meridian (VIVO) at a targeted gain.  I like all the stocks I own.  I like lots of other stocks as well.  But more than owning stocks of great companies, I have a strategy of when to be 'holding' and when to be 'folding'.  This, I hope, will give me an edge.

Wishing you all a better trading day tomorrow.

Meanwhile,

"uffdah" is the best way to put my own reaction to the day's trading.

Bob

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.

As I approach my fifth anniversary blogging here, I am most grateful to some of my loyal readers who provide me with the encouragement to continue to write and explore the world of investing.  I shall always be the first to tell you that I don't know everything, that I am not sure that my methodology will work over the long haul, and that there are many wiser minds and writers out there.  I have a load of links to some of the blogs I have learned to appreciate over the years.  Be sure and visit those websites.

But one of my favorite things about blogging is to hear from a reader who perhaps appreciates my efforts and maybe has learned something about investing that he or she didn't know.  I haven't heard from Tony for awhile, but Tony dropped me a line today that truly warmed my heart.  I hope that I can be helpful.

Tony wrote:

"This is Tony, I was the person who wanted to start a website online and have your articles posted on there. However, I was unable to fully spend time in building the site so I decided to focus on my studies more.

My question to you today is... Do you have an "About Me" site? I wanted to know how you got to do what you do and learn the things you do and how you make your pick selections. I want so bad to learn more about Stocks that I've decided to Major in economics with hopes of gaining sufficient knowledge.

I'm currently Subscribed to Americanbulls.com and take their day/weekly picks and recommendation signs to make a little here and there as a student. I would, however, love to learn your style of trading and I think the best way is just to follow your every move and report on the particular companies your have recommended. As a student I dont exactly have a great amount to work with but Americanbulls.com has helped a little to build a little something based on nothing but caddlestick signals.


Respectfully,
Tony T.

P.S. I really like your style.. Sometimes I wish school could teach real things like trading and Technical analysis. Every think about teaching? I'd be first in line!"

Thank you so much for your very generous assessment of my writing and content here.  I try very hard to explain everything the best I can and I am sure if you read through the blog, most of your answers will be answered.

If you would like to know more 'about me' and my philosophy, I have been fortunate to have been interviewed by Wall Street Transcript through my Covestor relationship.  You can read my interview here.  

Also Gannon on Investing interviewed me here.

I think these should explain my philosophy, background, etc. 

In a nutshell, I try to identify what I call the highest quality stocks.  I measure quality by persistence of good and improving results, with stable outstanding shares, positive free cash flow, a solid balance sheet, and a positive appearing price chart.  If I can get good value as well, I am even more interested in that investment.

The other part of my strategy is my aggressive sales of stocks on declines and partial sales of gaining stocks as they reach appreciation targets.

Furthermore, I use these sales, both on the upside and downside, as signals to give me "permission" to be adding new holdings.  Within this context, I have set my maximum size of my portfolio at 20 and float between 5 and 20 depending on market conditions as directed by my own holdings.

I hope that is helpful to you.

If you have other questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  Good luck with your Economics studies!  We certainly are living in interesting times.

Other sites you might wish to visit include my Covestor Page where my holdings in my Trading Account are reviewed and analyzed, my SocialPicks page where my stocks picks from 2007 and more recent are covered, and my Podcast Page where if you have the time, you might want to download some of my mp3's where I discuss some of the individual stocks and answer some of the questions you are raising.

Again, thank you for your kind words.  If I ever have the opportunity to teach, I certainly would love to share any wisdom with you that I might have!  Now, if I can find someone out there that would like to hire me :).

Bob

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.

It is the weekend and it has been a relief to get through this trading week intact if not a bit bruised!  

I like to take advantage of the weekend to look back at picks from a bit over a year ago from this blog.  These reviews assume a buy and hold approach to investing.  In fact, I advocate a disciplined stock management approach that requires me to sell my losing stocks quickly at small declines and sell my gaining stocks slowly and partially at targeted appreciation points.  I utilize the 'buy and hold' analysis because it is easy for me to do, however, the difference in strategies would certainly affect the results in practice.

On July 11, 2006, I posted Perficient (PRFT) on Stock Picks Bob's Advice when the stock was trading at $13.45.  This was a 'revisit' as I had first actually looked at Perficient on March 4, 2005, when the stock was trading at $9.33.  Perficient closed at $16.20 on January 11, 2008, for a gain of $2.75 or 20.4% since posting last year. 

Looking at the "point and figure" chart from StockCharts.com on PRFT, we can see the shapr rise in price from $3.00/share in August, 2004, to a recent high at $25.00/share in August, 2007.  The stock has recently been under pressure but appears to have found support at $15 and may possibly be moving higher once again. 

Let's take a closer look at some of the fundamentals on this stock before determining a 'rating'.

First of all the latest quarter--on November 8, 2007, Perficient reported 3rd quarter 2007 results.  Revenue climbed 20% to $53.1 million from $44.3 million last year.  Earnings per share climbed 50% to $.15/share from $.10/share the prior year.  Net income climbed 60% to $4.5 million from $2.8 million last year.  Non-GAAP earnings were $.21/share.

The company beat expectations of earnings of $.20/share and came in slightly light on revenue which had been expected to come in at $55.1 million.  More recently the company raised guidance on 4th quarter revenue figures to $61.2 to $62.7 million in sales from prior forecast of $56.3 to $62.1 million.

Examining the Morningstar.com '5-Yr Restated' financials, we can see that revenue is continuing to grow steadily, earnings expanding, shares are relatively stable, free cash flow is positive and growing, and the balance sheet appears solid.

Thus,

PERFICIENT (PRFT) IS RATED A BUY

Let's take a look at the other stock posted that week back in 2006: Kinetic Concepts (KCI), a stock that I have also recently owned in my own Trading Portfolio--but currently do not own any shares.

On July 14, 2006, I posted Kinetic Concepts (KCI) on Stock Picks Bob's Advice when it was trading at $44.45. Kinetic Concepts (KCI) closed at $51.02 on January 11, 2008, for a gain of $6.57 or 14.8% since posting.

Looking at the 'point & figure' chart on KCI from StockCharts.com, we can see the stock trading in what I would call a volatile fashion with wide swings of the stock price from a $64 level in April, 2005, to a low of $23 in August, 2006, only to turn around and climb to a high of $66 in July, 2007.  The stock has sold off since November, 2007, to a low of $47 and is seeming to be forming a new are of support---possibly for a continued move higher (?).

Let's take a look at the latest quarterly report.

On October 23, 2007, Kinetic Concepts (KCI) reported 3rd quarter 2007 results.  Revenue climbed 17% to $410.9 million from $350.9 million last year beating expectations of $406.7 million according to analysts polled by Thomson Financial.  Earnngs increased to $59 million or $.82/share from $49 million or $.67/share in 2006.  This also beat expectations of $.79/share according to Thomson Financial.

The company also raised guidance for full year 2007 results to $3.20 to $3.30 per share from prior guidance of $3.10 to $3.20/share.  They also raised revenue guidance to between $1.58 and $1.60 billion from prior guidance of $1.56 to $1.59 billion. 

Finally, looking longer-term, the Morningstar.com "5-Yr Restated" financials appears intact.  Revenue is continuing its uninterrupted rise, earnings, after a dip in 2004 and 2005 have resumed their steady climb, total shares are very stable, free cash flow is positive and growing and the balance sheet is solid.

With all of these findings,  

KINETIC CONCEPTS (KCI) IS RATED A BUY

So how did I do with these two stock picks?  Actually pretty good.  Both had gains and the average of the two works out to an average gain of 17.6%.  I can live with that :).

Thanks again for dropping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you get a chance, be sure and visit my Covestor Page where my actual trading account is reviewed and analyzed, my SocialPicks page where my many picks from the blog over the past year are recorded and also monitored, and my Podcast Page where you can download some mp3's of me discussing some of the many stocks I write about here on the blog.

I hope next week works out well for you.  And that 2008 is a good year both financially and personally for all of my readers!

Bob 

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.

With my partial sale of Meridian (VIVO), I now had a 'permission slip' to be looking for another position to add to my trading account.  Especially at just 10 positions, I use a sale of a portion of an existing position within the account as a  signal that moves me towards the 20 position maximum.  My minimum holdings number 5 but I haven't gotten that close to that level yet.  In that case, even with a sale on bad news, I would be entitled to add a new position as long as it 'qualified.'

With that nickel burning a hole in my pocket, I went right away to the top % gainers list.  Lately, I have been starting with the list of top % gainers on the AMEX where I found Graham (GHM) trading strongly higher.  Graham stayed on the list all day and closed at $47.35, up $3.00 or 6.76% on the day. I purchased 210 shares of GHM at $46.2699 earlier today for my account. (I buy strange numbers of shares like 210 because they are easily divisibly by 7 my portion of sales at gains).

I did a complete review of Graham (GHM) on October 27, 2007, after my loyal reader, Doug S. wrote me and suggested I ought to take a look at it.

I liked Graham then and even bought some shares which I held for a short period.  Graham had just announced a very strong second quarter 2008 result, as well as a 5:4 stock split and an increase in the dividend. The Morningstar.com '5-Yr restated' appears intact and the 'point & figure' chart on StockCharts.com appears to be strong with the stock having recently pulled back from an over-extended position but staying well above support lines. 

GRAHAM CORP (GHM) IS RATED A BUY 

Anyhow, it was enough for me and I really appreciate seeing a name that I am already familiar with on the top % lists when I have the 'permission slip' to be buying!  I bought shares.  Wish me luck!

Thanks again for visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob

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.

Shortly after selling my Harris Stock I was pleased to see that not all of my stocks were 'falling out of bed' today and that Meridian Bioscience, one of my most successful of holdings had moved higher to another appreciation target.  Thus, I sold 1/7th of my 199 shares or 28 shares of VIVO at $34.43/share.  Meridian (VIVO) was purchased almost 3 years ago on 4/21/05 with a cost basis of $7.42/share (!) giving me a gain of $27.01/share or a 364% appreciation on these shares.

This was my eighth partial sale of Meridian in my account having previously sold portions at 30, 60, 90, 120, 180, 240, 300, and now 360% appreciation levels.  When would I sell next?  On the upside, after four 60% intervals, I shall be using 90% intervals and shall wait for a 450% appreciation level for another 1/7th sale.  This would work out to 5.5 x $7.42 = $40.81 before triggering another sale.

On the downside, after multiple sales, unless there is some fundamental reason to sell sooner, I plan on selling if the stock retraces to 1/2 of its highest appreciation sale point which would mean instead of a 360% gain level, 1/2 of that would work out to a 180% appreciation level or 2.80 x $7.42 = $20.78.

Furthermore, with only 10 positions in my account (after my sale of Harris), this sale at a gain gave me a 'buy signal' which allowed me to go looking for another stock to buy.  And I found a great prospect in Graham (GHM), a recent favorite of mine.  More in the next entry :).

Meanwhile, since I am selling my Meridian shares on 'good news', my rating is unchanged:

MERIDIAN BIOSCIENCE (VIVO) IS RATED A BUY

Thanks again for stopping by and visiting my blog!  If you have any comments or questions please feel free to leave them on the website or email me at bobsadviceforstocks@lycos.com.

Bob 

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.

Yesterday I demonstrated my ability to act in an undisciplined fashion.  Today was different.  Harris Corporation (HRS) declined sharply and actually closed at $49.82 on the day down $(5.99) or (10.73)% on the day.  I do not see any news that would explain the drop in the stock price.  I am sure there is something somewhere that somebody will point out but it doesn't really matter to me. 

The point is that this stock in which I have previously sold a portion at a 30% appreciation target moved against me into a loss position.  These 103 shares that I held in this account were purchased about a year ago on 1/31/07 with a cost basis of $50.05.  On 11/7/07 I had sold 17 shares of my 120 share original position at $65.16 which was my 30% appreciation target.

What this means for me is that if I own a position in which I have sold once at a 30% gain, my next sale on the downside is at break-even.  With Harris trading just under break-even, I sold my 103 shares today at $49.67, just under my cost.  I didn't hesitate, second-guess, or buy a load of shares to justify my holding.  I just sold the shares.

This didn't give me a 'permission-slip' to do anything but sit on my hands with the proceeds. 

With this sale of my own shares, I am reducing my rating on Harris:

HARRIS (HRS) IS RATED A HOLD

Thanks so much for stopping by and visiting.  Please feel free to leave a comment on the blog or email me at bobsadviceforstocks@lycos.com if you have any questions.

Bob