|HOW TO USE THIS SITE--Buying and Selling|
THE STOCKS IN EACH PORTFOLIO are ranked each week from the strongest (1) to the weakest (36). The strongest ranks tend to continue to rise much farther and faster in future price than the weakest. Take this example of JDS Uniphase (JDSU) from the Paradigm 2000 Portfolio in late 1999. While its ranking remains in the top three, its stock price increases in value 94% in nine weeks. (Prices are rounded to whole numbers to conserve space.)
How high a ranking is "highest?" The top five or six. This can differ from one portfolio to another. Experiment.
Here's another example, from the Classic Portfolio, of stocks rising significantly in ranking. Look at IBM in this case. Stocks crossing the median rank (18.5) tend to be good buys for the weeks or months ahead. IBM crossed median rank on April 30,1999, offering a 30% gain in ten weeks.
Now, to the selling side. When to let go? Give the stock room to fluctuate in rank. You set the ranking level. It need not be as tight as the buying-rank requirement. Here is a good example of a stock, America On Line (AOL) from the Internet Set Portfolio, which headed for the cellar after crossing the median rank (18.5) to the downside on December 17th, with its price then dropping from 85 to 59 in six weeks.
HOW MANY STOCKS TO USE
The optimum for best results is six to eight (see Brealey). If your funds are limited, use as few stocks as it takes to keep your buying commission for each stock less than 1% of the total cost of buying the stock (price per share times number of shares). Do not think in terms of shares. Think in terms of total dollars per position. You should usually enter positions with equal dollar amounts in each.
Invest or speculate in the strongest of the three widely traded indexes, QQQ, SPY, or DIA, irrespective of their rankings in the portfolio in which they appear. Here is an example of what they looked like in the Internet Set Portfolio in late 1999. When they are ranked in the combined portfolios,100 stocks, the range is from 1 (strongest) to 100 (weakest). Note the disparity of relative performances during this period, with highest ranking QQQ (NASDAQ-100 Index) having the best gain, up 25% vs 6% for each of the other two index tradeables during the period shown.
It will start to show up in the relationship of the three portfolios with the more speculative tradeables falling down in rankings first and the more conservative rising. The more traditional tradeable indexes tend to move upward in rankings, especially DIA (Dow-Jones Industrials) because of the presence of "defensive" issues among its components. Further, selections from the
Intermediate market declines lasting several weeks to a few months are discernible from the Money Flow series at the bottom of the weekly Rankings table of each portfolio. These express the energy direction of the aggregate portfolio and may suggest a more or less favorable time for taking or relinquishing individual stock positions. A detailed explanation of Money Flows can be found in the Glossary-Index-Bibliography.
Picking the 'best' stocks is relatively easy. Making profits in them is another matter. In a bear market, losses will occur for most stocks, including the 'best.' Therefore a way must be found to determine 'up' and 'down' in market direction. Several measures point the way: Money Flows, Monetary Conditions, (and Dunes and Ponds in the site's "Separate Section on Market Timing" in the Contents column, Home). Take a look at these pages to see the probability of the presence of a bull or bear market.
USING 'THIS WEEK'S BEST'
This is a source pool for the strongest and most recently dynamic stocks. These tables show the top ten strongest issues both shorter term and longer term. Issues which appear in both tables are prime candidates for potential profits, especially if both sets of the stock's rankings are rising. These ranking numbers may differ from those in the Portfolios tables. That is because each portfolio table ranks itself while This Weeks's Best ranks all three portfolios taken together as a single grouping of 100 stocks.
It will usually be best to pay attention to the direction of a portfolio's Money Flow before buying any of its stocks. Strong, positive Money Flows provide the best environment for successful investing. And Trend Directions profoundly affect profitability.
The site does not tell you what to buy or to sell, nor when to do so. It does provide you with well developed tools enabling you to may make your own selections for profits. Decisions are necessary. Your own are best suited to you. When you learn how to make them successfully, you will develop a growing degree of investing or speculating self-confidence and self-assurance attainable no other way. With practice, you will become better and better applying these stock-selection and timing methods to your own investment and speculating processes and to the expanding cumulation of profits.
* A matter of personal judgement. For example, when a stock drops below the top five or top ten, or below the median (18), or logs three or more consecutive weeks of lower rankings, and so on.
Better for your results would be, after you have some familiarity with the site, to extract your own rules or guidelines. They will suit you far better than mine because you will have chosen them yourself rather than simply accepting someone else's say so even if the fellow is smart--as I am supposed to be.
need other investment advice again.