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Stock markets had a very good year in 2017. With things going so well there may be a tendency not to check your portfolio to determine the real drivers from the laggards. I was reminded of this as I reorganize my home office. Some of you may know that in addition to my duties at ICLUBcentral I teach at a community college. My office tends to get cluttered while school is in session and I normally take the time between semesters to file and remove clutter. I am now between semesters and decided to reorganize the office rather than just clean and clear. It struck me this is a good metaphor for portfolio reorganizing. A portfolio may accumulate stocks that no longer serve their purpose just as books or supplies may no longer be needed.
So here is a reminder- if it has been too long since re-evaluating the companies in your portfolio now is a good time to start.
I usually start with finding the under-performers in the portfolio. This can be done in our accounting software using the return figures in the Valuation Statement or with price charts. I then re-do an SSG and compare it to my original SSG. I ask if my original reasons still look valid. Has anything changed to cause me to doubt my original reasons for buying? When complete I have a list of possible stocks that may need replacing.
After going through the under-performers I re-evaluate the rest of the portfolio in a similar manner. This is to see if any of these may need replacing after a run-up or are candidates for increasing my position.
When things are going well most of my portfolio is evaluated at least 4 times a year. A personal portfolio takes more time so I do not often do the entire portfolio at one sitting. Re-evaluating a club portfolio should be an on-going process with stock watchers updating the stocks that are their responsibility on a regular basis.
May your investing be better in 2018.
Russell Malley
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 1 user thanked Pawche for this useful post.
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