November 3rd, 2008

Model Portfolio

One of my most loyal and favorite readers suggested that I create and track a Stock Chartist Model Portfolio. Great idea! I think? If I do set one up, you’ll be able to see how the notions I’ve written about here like stock market life cycle, momentum investing and charting are put into practice. The major downside is that any bad stock picks (need I remind you, no one ever hits a 100%, gets holes-in-one daily or always bowl perfect scores) or poorly executed portfolio management will be exposed for all to see.

Regardless, I’m game, will give it a try and let’s see what happens. When I make purchases or sales, I’ll try to explain in charts and words my reasoning (hopefully, it won’t become too much of a time consuming burden). The model portfolio will be similar to other online, fictional portfolio sites/games:

  • The initial capitalization will be $10,000.
  • Any funds not invested will be held in non-interest bearing cash.
  • No more than 25 stocks can be held in the portfolio at any one time. Individual purchases will be $500 or more.
  • There will be no shorting but short etf’s will be allowed.
  • The portfolio will focus on individual stocks; etf’s will be allowed.
  • Transactions will take place at the end of trading each day.

The performance of the Model Portfolio will be compared to and evaluated against a “buy-and-hold” strategy against the S&P 500 Index (SPY). As portfolio transactions are made, they will be recorded at the bottom of the day’s blog posting. The model portfolio will be available by clicking on Model Portfolio.

To begin the portfolio (and start slightly behind), I’m seeding the portfolio with the two lists of “golden cross” stocks from the Friday, October 17 and Saturday, November 1 posts.

Although I have a significant cash position in my personal portfolio to go along with my belief that we are approaching the end of this short-term bounce off the bottom and that a test of the bear market lows is due soon, I’ve included all the stocks listed on those pages to be completely fair; I’ll soon begin pruning some, or most, of those stocks and increasing cash as market weakness becomes more evident.

Wish me luck and let me know whether you find this useful and informative. In any event, it will keep me accountable and, according to one of today’s favorite terms, transparent.

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