<FOOLISH WORKSHOP>

Have a Plan

by Jim Stevens ([email protected])

Burlington, VT (December 3, 1998) -- A lot of Fools just getting interested in the Workshop want to know just how to choose in which screens to invest their hard earned dollars. I love witnessing the cooperative ad hoc team of advisors that quickly emerges when these kind of questions get asked on the Workshop message board. It's not always the same Workshop regulars, or even the same advice, every time, but the new Workshop Fool gets a healthy smattering of enlightenment from experienced people who have been putting their own real money in Workshop models of every flavor.

Since there is no "silver bullet" portfolio, what new Workshop investors get coached on are the steps with which to decide for themselves what will suit their needs and how to put the plan into action. By the way, whoever discovers that "silver bullet" port, be sure to let me know first. I'll need to call my travel agent and also stock up on Coco Lopez before the rush!

Usually, the first decision is what mix of growth and value stocks to hold. People often take their age into account, and tolerance for volatility is also a big factor here.

After that, the next thing to decide is how many positions to spread your money across. I've heard -- secondhand -- of all manner of "empirical" studies to determine the perfect number of stocks to hold for the best performance and diversity mix. The results varying from eight to 100+ positions, a wide range. Depending on the size of a portfolio, I think between 10 and 25 will do for most investors.

From there you need to decide from which screen or combinations of screens you'll choose your stocks. You've got the regular Workshop models, value screens like the Foolish Four and Beating the Standard & Poor's, and some "smokin" new screens developed by Workshop readers. Some people do it mechanically, others like to tweak their picks with further research or fundamental screening. What you do is based on how much time you want to spend and what personal preferences you might have toward certain screens.

It's good to have all these decisions out of the way and written down somewhere well before you actually pull the trigger on the stock purchases. The following are some of the possible details you will run across when you get started: picking a broker, opening a new account, transferring money or stocks from old accounts, running your screens, getting current rankings, the math of dividing your portfolio across the positions, and placing your trades.

Then there's Monday happy hour, kids' homework, Seinfeld reruns -- whoops, I digress. If you have the backbone of your plan all mapped out, it will surely come in handy. It also could save you a lot of anguish from the fallout of diving into something half-cocked.

This Friday's rankings will be the ones I pull the "Official Unemotional Growth Monthly Model Update" from. I'll be looking at the UG's recent performance and update the history in next Monday's report.

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database