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Author: 1953hogan Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 18386  
Subject: Re: Adding to an existing position #3 Date: 8/29/2000 11:28 PM
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Mark,

Your approach is brilliant in its simplicity. I've got a question, though, and also an observation.

First, the question: What's the basis for multiplying the "relative position" by 2. Just curious for your take on this.

Second, the observation: In doing some sample computations, it strikes me that, in portfolios where the respective stocks make up relatively equal portions of the entire portfolio, the formula will probably only rarely, if ever, suggest adding to the position with the highest ranker score, or even the position with the second or third highest ranker score.

In a portfolio where all of the respective stocks have relatively equal dollar amounts, I'm still inclined to put my monthly investment into the stock with the highest ranker score.

As you said, rules are meant to be bent or broken. I've previously read Dave Goldman's post and also your post from last December, and like you have kept up with this dialogue for these past several months. I'm not sure that we will ever come up with a method that can be used on a purely mechanical basis without any subjective intervention.

Still, I like your formula and think it is the best method proposed to date.

hogan
(formerly powerfade)
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