Number of Stocks

One takeaway from my reading of Phil Town's #1 Rule book was his comments on the number of stocks to own. He argued strongly that by buying more stocks, you are not making your portfolio less risky, but rather you are making it more likely you'll match the indice averages. That made me think. My current portfolio has 42 stocks. 12 in my non MFI account and 30 in MFI. That is probably too many stocks. I like the 12 in non MFI. I really need that many to get me international exposure, banking, utility & insurance... areas not covered by MFI. However, I want to pare the 30 MFI stocks down to 20 in 2007. I believe (though I could be wrong) that if I pick fewer stocks that I can generally get a little better quality stock and be more selective on when I buy. We'll see how it works. I want to get higher quality stocks in 2007 because Jubak keeps scaring me with his outlook for the future.

An added benefit of fewer stocks is that it'll be easier for you to see my list on a single page.

Cramer had what I felt was a useful way of thinking about stocks. He would score his stocks every Friday from "1" to "4". A "1" meant you would like to buy more at the current price. A "2" meant you would buy more if the price dropped a bit. A "3" meant you would like to sell if a decent rally. A "4" meant sell ASAP. Along with each score, you had to write one or two sentences explaining why you owned the stock. Just going through the thought process weekly was very helpful. It was also very interesting to look back 3 or 6 months later and see if you were right on your scoring. Quite often it was exactly opposite. The stocks you scored as a "3" (I rarely used "4") should have been "1"s. That was because of fear. The stock had dropped and you scored it a "3" as you had lost confidence in it. In fact I should have been buying instead of considering selling in a rally. I won't bore you with the sentences, but here is how I would rank my stocks right now:

"1" Stocks ELX 18.11

HW 24.33

PTEN 23.66

PNCL 7.14

PONR 25.09

FTO 26.08

KG 16.29

EZEN.OB 1.60

BLDR 15.95 "2" Stocks

MGLN 42.61

MSTR 99.07

TBL 28.90

PACR 27.88 2

DLX 17.64 2

PGI 8.83 2

TGIS 11.15 2

CHKE 36.32 2

RAIL 55.00 2

FDG 27.41 2

ORCT 8.76 2

PTSCE.OB .87 2

ISNS 12.14 2

BBSI 21.24 2

VPHM 12.47 2 "3" Stocks

UST 53.49 3

ANF 71.57 3

PCU 90.88 3

MTEX 17.21 3

OVTI 14.28 3

TRLG 20.84 3