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No. of Recommendations: 4
..... Now I am in a position to consider going deeper into the Recommendations. Therefore I need an intelligent way to assemble a portfolio from the Buy section as well. However, I don’t want to buy (can’t afford) all the Buy picks and am wondering what criteria others have used to weed through the Buy list to make their selections......

...Are there specific filters or strategies others use to make selections to filter down the Buy list before purchasing the recommendations?


Hi ATF!

There probably are as many different strategies for building an II portfolio as their are members, with different financial circumstances, goals and risk tolerances....and (hopefully) different long-term financial plans. ;-)

That being said, some tools that one use include how much "Potential Upside" there is ( a column on the "Stock" page ), an absolute minimum dividend level, as well as a minimum dividend growth level ( 5 or 10-year history ). Also, I feel that one should pay attention to sector diversity, never having more than 20% or so in any given sector ( energy, utilities, consumer staples, consumer discretionary, etc.); a tool to use for this is the Industry browser at Yahoo ( http://biz.yahoo.com/p/510conameu.html#jnj )....and never having more than 5% in any one stock ( unless you are an uber-Professional ).


There are tons of due diligence tools out there:

In addition to the Income Investor "Buy First" and "Buy" lists, I often look at the logarithmic charts from the BMW Method after identifying a company I'd like to consider to establish a reasonable buy price:

http://invest.kleinnet.com/bmw1/


And here are some more general DD approaches from other Fools:

http://boards.fool.com/due-diligence-template-29125146.aspx

http://www.fool.com/community/pod/2007/070503.htm

http://www.fool.com/community/pod/2007/070608.htm

And last, but not least, here is a great valuation archive, if you want to get deeper into analyzing stocks on your own:

http://boards.fool.com/improved-fool-valuation-archive-24217...

Hope some of the above helps...if not...ask away!

Cheers!
Murph
II/SPOPS/BigS/ALPHA Home Fool
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