As a member of Wall Street Informer, you likely have a portfolio that your tending to on a regular basis.
Right now, I want to show you how to supercharge that portfolio.
All it takes is 4 simple steps…
It doesn’t take long to start bogging your own portfolio down once you start building it up. How so?
> By adding on impulse trades,
> By creating emotional attachments to your positions,
> By tying up your capital,
> Etc.
So how do we refresh our portfolios to make sure they’re at full strength?
Quite simply, we do a little spring-cleaning just before summer.
Here’s what I do every few months in order to supercharge my portfolio:
Step 1: Lay everything out on the table
I mean this figuratively of course, although utilizing something like notecards to keep track of everything can prove to be helpful.
In step 1, I go into my trading account and take stock of what I’m invested in. How much do I have of each position? What percentages of my capital are being utilized where? How have my positions performed thus far?
I usually take notes of all of those answers so I can see exactly where I stand.
Step 2: Identify real winners and losers
This part sounds obvious, but I don’t just mean differentiate the securities that are making me money from those that are costing me money. For instance, let’s say I have 5 stocks that are all up, but 4 of the 5 are up 20% and 1 of the 5 is up 5%, I would still call that last stock a ‘loser’ within the context of my portfolio (but only if all other things are equal).
Make sense?
I would rather use the capital I have to invest in something gaining 20% than something gaining 5%, so picking out winners and losers can help me allocate my money more efficiently.
Of course, just because 1 stock is up 20% now doesn’t mean it will continue to gain by that rate. So take everything into account. For that 5% winner, have I owned it for a long time? Has it broken support levels? Is it just beginning to break out?
Don’t be too quick to declare a winner or loser unless you’ve properly looked at all the facts:
> Amount of time you’ve been in that position,
> How that security or fund has behaved in that time,
> How much capital it’s taking up,
> Etc.
Step 3: Analyze everything
I analyze my portfolio in 2 ways. First, I analyze the individual positions and how I can better allocate my money. Second, I analyze my system.
I want to make sure the reasons for my buying and selling are pure and technical, not based on impulse or some emotional connection. Believe me, at one point or another you will hang on to a position that you should be selling because its become one of your favorites. You’ll also probably refuse to buy a stock that should be bought because it stung you a long time ago and you’re holding a grudge.
Once you figure that out, it’s time for the final step…
Step 4: Clean it out
Once you’ve completed all the other steps, this final one should be easy. You’ll have identified the strong and weak points in your portfolio, so get rid of the positions that are hurting you and/or holding you back.
And don’t forget that you can push more capital into your best positions.
Then ride your supercharged portfolio to bigger profits!
If you need help filling that portfolio with winners to begin with (whether your experienced or a total stock market novice), you can always rely on us to pick out the best stocks for you. If you’d like that, please check your email for a special invitation to join CHIRP.
