Thursday, February 19, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (February 19, 1998) -- I frequently get mail from Workshop readers asking how they should pick from among the screens to put together their own portfolios. It's hard to give the definitive answer, because the screens can have a number of uses that will vary from reader to reader.

The first thing I suggest is that you determine what kind of balance you want to have between value and growth stocks, and how many overall stocks you wish to hold. The Cash-King portfolio, for example, will always hold twelve stocks (four Dow Approach stocks and eight Cash-King choices). The Fool Portfolio typically has eight to twelve stocks. I prefer ten to twenty. Choose what's right for you.

Once you've made those decisions, then it's a matter of how you want to fill in the slots. If you're going to buy fifteen stocks, selecting ten growth and five value stocks, then you can begin to narrow down your choices.

Some investors will simply pick a favorite screen and take the top five or ten mechanically. Other investors will use the stocks in the current rankings and then do additional research on the individual companies to ferret out the best of the best. How you use the rankings is largely a matter of your personal experience, time available for additional research, and desire to make case-by-case decisions.

Whatever ultimate pattern you adopt for making the individual stock choices, though, it's crucial that you start off with a clear-cut strategy for allocating your entire portfolio across the positions. Hit and miss investing can push you into corners and cost you time and money straightening out the mess. Take some time and develop the outline for your portfolio first, then fill in the blanks with the stocks and strategies you like the best. (I know, it brings back memories of those dreaded college term papers, but it works!)

We'll have a new set of rankings and return numbers tomorrow for the eight screens. Stay tuned!

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