The Deipnosophist

Where the science of investing becomes an art of living

My Photo
Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

13 June 2007

Update to clients, shared here

The troubles the markets now suffer appeared destined to occur during May, but instead hit this month. The markets have tumbled hard, as I warned: yields screamed higher as bond prices plummeted, the US$ rallied (with higher prices seemingly ahead), and stocks tumbled.

This action seems likely to continue for a brief while at least, while fundamental concerns and seasonal factors play out. However, declines of this sort do not disturb me, nor should they you, to shake confidence in my Core 9 Opportunities: Apple/AAPL, Chipotle Mexican Grill/CMG, Google/GOOG, Intuitive Surgical/ISRG, J Crew/JCG, Master Card/MA, and Research in Motion/RIMM. (btw, the final 2 slots have opened recently; front-runners for these 2 open slots include Colgate/CL and Riverbed Technology/RVBD.) Core 9 positions will not be dislodged from your portfolios based solely on ephemeral market action. Of course, I review daily each position, especially the charts, looking for any sign of a meaningful share price reversal; so far I see none.

Ancillary positions, however, come in for deeper scrutiny with a gimlet eye. I have little patience holding secondary and tertiary positions hoping for a positive outcome, no matter the time frame. If price declines breach stop levels, then I sell with nary a hesitation. As I said in a previous post, no one knows how low is low (nor how high is high). With the cash available from disciplined investing (not bidding higher for stocks running to new highs) and from liquidations from actuated stops and profits, we have the cash, desire, and emotional balance to invest when the buying is good. As we shall, I suspect, and soon.

The coming days, weeks, and months afford the investor the opportunity to review, to study, to merit, to weigh, and finally to decide which investment possibilities merit inclusion among his or her portfolio opportunities. Expect changes to occur, with the predominant fact being the key one: during this (or any) decline, your portfolio's value will decline less than the markets, and when the markets right themselves, your portfolio will rapidly increase in value far in excess of the rate of return for the general markets.

Why would that be? Because my objective is to have your portfolios weighted to the market's leaders.
-- David M Gordon / The Deipnosophist

Labels: ,

who's online