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Fooltergeist:
The Cash King list is not a mechanical model...

Remember that. The Cash-King portfolio (soon to be renamed as the Rule Maker portfolio, apparently) is used to illustrate the principles of this style of investing. With these companies, we expect outstanding performance, though the window of performance for any particular company is long - ten years or more - and you may see short-term movement in the wrong direction (as earlier this year in AXP and still with KO to some degree).

As a result, the current valuation of the stocks are not considered as a criteria for investing in these companies as the idea is that they will be worth significantly more in ten years. In other words, if you find a stock that meets the criteria, the time to buy is now. Or at least, it's not recommended that you wait until January or something like that. :)

...therefore we can pick and choose any stock we like from the list without having to follow any sequence, right?

Yes. And no. The idea behind this portfolio, and most of Fooldom in fact (at least to me), is that you do your research and pick companies which you feel meet your criteria for investing, be that Cash-King or whatever other approach you take. Simply looking at a list of current holdings, even if that list comes from TMF, is a Bad Thing. For two reasons.

#1 - By not doing your own research, you are taking someone else's word for the fact that this company meets whatever criteria you are looking for. And while this might not be a truly Bad Thing, I would rather know for myself that whatever I am buying is something that meets my own personal criteria.

#2 - To me, this is much more important: when the stocks that are currently in the portfolio were purchased, they were researched rather well. Presumably they have continued to be researched to make sure that things still look just peachy. However, even since that last research, the fundamentals of the company may have stumbled. So while it was a strong C-K pick when purchased, it might be in some questionable territory right now. Obviously we hope that this is not the case - but the fact is, some picks are not as good as others and it can happen over the course of time.

In other words, it does not matter whether you pick the last 3, the middle 5, or you can even use a dart board and it is going to be OK, Right?

I will only quibble about the choice of words here - it will likely be OK, but there is no guarantee of that fact. Once again, do your own research and come to your own conclusions about whether you think it will be a good choice or not.

It does not matter whether you invest a lump sum or do dollar cost averaging, and there is no holding period requirement other than hold them as long as you can, right?

Interesting point. When I first started picking C-K stocks, I dumped all my money in at once. Simply because I had it and wanted to be fully invested.

I'm not complaining about that now as it has turned out nicely. But for a while there I was on shaky ground. I think I would have felt much more comfortable spreading the purchases out, much like the online portfolio has done. One month, pick a stock and buy it. The next month, do the same, even if it is to get more of the first stock. Continue as necessary. You might even want to buy more than one stock each month. But for me, the value dropped rapidly just after I bought in - so had I spread the purchases out, they would have been more effective.

There really is no advised holding period for the C-K port, and rumor has it that another step will be added that will help determine when to sell. Just remember to keep an eye on your picks. Some companies may need less of an eye (KO) than others (CSCO) (or vice versa :). But just because it is a good choice now does not mean it will be in ten years...

Hope this helps.

CJ
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