You've come in late. Past performance of Jubak's Picks looks attractive -- it's up more than 330% since the beginning of the portfolio in May 1997. But how do you get started? Buy everything all at once? Buy just the most recent picks? Cherry-pick the list looking for what's most attractive now?
Here's how I'd suggest you get started.
Here are my rules
Let's begin with a few simple principles.- First, Jubak's Picks is an equal-dollar-weighted portfolio. I buy the same dollar amount of each stock, no matter what the price of the shares or how enthusiastic I am about the stock at the moment.
- Second, I don't make additional buys to add to positions if the price of the pick goes down. Nor do I sell partial positions when the price climbs. (This is more a way to simplify bookkeeping than it is an investment rule: Many times I wish I could buy additional shares or sell partial positions. I just can't offer you any advice on these strategies.)
- Third, Jubak's Picks is not intended to be a complete portfolio. I try to construct a balanced portfolio of equities that fits the stock market at the moment, but the portfolio is 100% stocks. It doesn't include bonds, CDs, gold coins, real estate or other asset classes. You should own assets other than stocks. I just can't tell you, given all that I don't know about your individual financial situation, how to mix those other assets with Jubak's Picks.
- And finally, don't buy everything, but don't buy just what you think looks hot at the moment, either. The first strategy will get you into some stocks that don't match your investment objectives, whatever they may be. The second approach will put you into exactly the most risky stocks on the list.
Picking from my picks
With that general advice out of the way, let's get to the hard part: How do you decide which of my picks to buy if you're coming to Jubak's Picks now and not when all the current picks were new?Let the difference between today's price and my target price be your guide. Ideally, you should be calculating your own target price for every stock you own, instead of just accepting mine. I know some readers don't: They either don't know how or they don't have the time. But whether you accept my target or calculate your own, the steps are pretty much the same.
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Look for target-price updates less than three months old. At the end of the blurb for each pick, you'll find a target price and the date it was set in bold type. You're looking for target prices that reflect recent developments in the stock and in the stock market. Ideally, the targets should be as up to date as possible. You don't want to buy stocks on stale information.
At a minimum, you'd like to begin with a target that captures the most recent quarterly earnings report. (A good time to jump into Jubak's Picks is often during or right after earnings season, when I've just updated a stock and its prospects.) Any target prices that were set more than three months ago are too old. I'd hold off on buying any of those until the target price is updated.
Eliminate stocks swept up in major market moves. From the remaining stocks, throw out those target-price updates and initial stock picks made when the character of the stock market was very different from the current market. Examples: if higher interest rates suddenly take hold and slam the home builders or a war in the Middle East causes transportation stocks to plunge. I admit this is subjective, but if you're going to run your own stock portfolio, you'll have to make these calls.
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