Thursday, August 30, 2007

Stock Portfolio Management.

The recent turmoil at the Wall Street provoked to me re-analyze my portfolio strategy. After completing almost one year at the Wall Street analyzing and trading stocks, I realized that I was good at picking stocks but was bad at managing the portfolio.
I chose the stocks at the right price but didn’t sell them at the right time. I really feel bad looking at my unrealized profits which vanished into thin air. After analyzing the situation I have came up with some rules that I need to strictly follow here on.

Buying Principles:
  • First position in the stock will be in the range of 12-15K.
  • Second position in the same stock will be 20K when the price goes 8% below my latest BUY Transactions.
  • Third Position in the same stock will be of 30K when the price goes 8% below my latest BUY Transactions.
  • Forth Position need strict re-evaluation. You may be catching a deep falling dragger.

Selling Principles:

  • If the stock rises 20% in less than 1.5 months. Book your 20% profits.
  • If the Stock rises 30% in less than 3 months. Sell all and wait for corrections.
  • If you haven’t made any sell transactions using the above rules and your Profits are greater than 10K then book 10K.
  • Once you made 100% in less than 1 year. Get out of the stock and wait for correction.

Notes:

  • Always keep 10% in cash during good times. So that its handy when there is a market crash.
  • Always keep track of PEG ratio.