What is a Quality Stock?
I’m not expecting this to be hugely lengthy and I am living on the edge by having no plan or anything, but hopefully I can stitch something together that is just about readable and might even make a smidgeon of sense.
Whilst creating that ‘Educational’ Blog about Consistency & Volatility the other day (scroll down on the Educational Blogs page and you should find it very quickly), I realised that after 7 years or something of bandying around the term ‘Quality Stocks’ I had never actually made any attempt to try to define that, and this Blog is obviously an attempt to fill the gap (is ‘bandying’ an actual word? The Spellcheck seems happy with it anyway……perhaps it is something to do with Groupies……)
A few months ago I produced a series of Checklists to be used when Buying particular kinds of Stocks and then some while later it hit me that I ought to produce one for those very high risk, often loss-making, start-up type businesses on AIM that I avoid on the whole but occasionally I will buy into one. Before getting stuck into this particular one, here are Links to the other ones I produced – in fact this is the final one but it has Links to the others:
This Guest Blog has been kindly sent to me in order for Readers to see what Journal.Investments are providing in terms of a Website through which you can record information about particular Stocks in a structured way with various ways to analyse your performance and it is FREE to use. I first became aware of this perhaps a year ago and I have had various chats with the guys who run it with regards to how it can be shared with the wider community. It is now ready so feel free to take advantage. Having proof-read the text they sent me I have to say that it does sound a very useful tool.
I have no commercial relationship with Journal.Investments.
PS. You can find a copy of ‘The Art of Execution’ in Wheelie’s Bookshop if you are desperate to spend money.
I realised that just one Checklist for the ‘WD40’ would not actually suit my needs - because I Invest in a range of Investment ‘Styles’ to ensure more Diversification. On this basis, I have decided to produce the following Checklists:
This is the Final Checklist and you can find the other ones at these Links:
This is the third of the Buy Checklists I am creating and once I have Published the final one I will put Links in it to all the others. This one is for Stocks that have fallen foul of the Markets usually after a Profit Warning or several and although Buying such stuff can be Risky it is often a very good strategy for making sizeable Returns and I regularly find that for Quality Stocks that have real decent Businesses underpinning them, they nearly always recover after an often lengthy period in ‘Rehab’. This can apply to Stocks I already hold that have gone a bit messy or for Stocks that are new to my Portfolio.
So far I have published Checklists for these kinds of Stocks and you should be able to locate them fairly easily on the ’Educational Blogs’ Page as they are from recent Weeks and the final one will be for a ‘Quality at a fair Price’ Buffett Stock:
I recently published a Blog with a Buy Checklist for Stocks for my Income Portfolio and now I’m turning my attention to my ‘Normal’ Portfolio.
I realised that just one Checklist for the ‘WD40’ would not actually suit my needs because I Invest in a range of Investment ‘Styles’ to ensure more Diversification. On this basis, I have decided to produce the following Checklists:
As I start to produce these I will probably realise that I need more but I really hope this doesn’t happen as it will just confuse things and make it all too complicated.
Income Portfolio Buy Checklist
I am sure I mentioned that I wanted to create ‘Buy Checklists’ that I could use to help me make a final Decision whether to Buy a Stock or not and having thought about it I have come to the conclusion it is not an easy thing to do !!
I have sort of already done the opposite of this - a ‘Negative’ if you like in a photographic sense - in the form of the ‘WheelieBin’ and if you look at the Website page with the WheelieBin on it you will find a good Checklist of what constitutes a Stock that is best avoided.
Spreadsheets for Recording your Trades
This is yet another of those Blogs I have had sat on the Slate of Ideas for me to write but it has taken up until now to finally float to the top and therefore earn my priority and focus (turds float and all that……). That’s quite a misrepresentation really - rather than an organised and sequential list of Blog Ideas for me to work on, it is a very higgledy piggledy collection of possible Blog Titles with a few having some words underneath to help me understand what I was thinking at the time of coming up with the idea and typing it into my working Blog Word Document. So the true way that a Blog gets to this stage is that it quite simply becomes the thing I fancy doing today and I just get on with it. At least in this way it is more pleasant for me to work on as I do what I want to do, rather than a Blog that I must do because it happens to be at the top of an arbitrary List.
You might have figured out from the Title that this Blog is about how I record my Individual Share Trades and Spreadbet Trades onto dedicated Spreadsheets so I have a record of what Trades I have opened and once they are closed off it enables me to calculate my Profit or Loss in £ Note terms and in Percentage terms expressed against my Capital that was used for the Trade (read that as ‘Investment’ mostly).
This is a Blog that I wanted to get out ASAP because I hope it will help many Readers think about their Approach to 2015 and help with Planning. Obviously it will be beneficial if you get this before we get too far into 2015 !!
At this stage, I won’t dwell on the reasons for having Trading Rules - I am sure I have hinted at this in bits of my Blogs, Website Text and Tweetering, but let’s just assume that ‘Rules’ are a good idea and move swiftly on to the Template. I tend to complete this document in Early January every year - I am never organised enough to get it nailed in December !!
OK, it is stretching a point to call it a ‘Template’ - it is more an example of how I tend to do it. Essentially it is a few ‘Parameters’ for my Individual Accounts and then a list of ‘Rules’ which should help give me guidance - this is particularly valuable when markets are tough and you are at risk of losing your nerve and panicking.
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