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My suggestions for what they're worth:

First, note any existing Outperform picks in the index that are still 5 stars, and any existing Underperform picks that are still 1 star. Leave these picks in place; they will persist.

Second, subtract the number of continuing 5-star stocks from 150; subtract the number of continuing 1-star stocks from 50. Note these numbers -- you're looking for this many replacements for both categories.

Third, sort all of CAPS for its 5-star stocks, and its 1-star stocks, and sort those lists by # of picks (your suggested criterion, and a good one).

Fourth, whatever the number of needed 5-star stocks, take the top X of the present 5-star most-picked; whatever the number of needed 1-star stocks, take the top X of the present 1-star most-picked.

Fifth, enter as new picks the new stocks.

Sixth, close the existing positions on the old stocks.

Seventh, treat that special person in your life to a new gift from BlueNile.com (sorry, product placement for one of my stocks). :)

I think you should preserve the pick list of 200 stocks -- it is this kind of consistency adhered to over time that gives meaningful results.

I obviously think you should endeavor to maintain existing 5star/1star picks so long as they maintain their star rating -- it'll be fun to follow how long the longest remain in the index.

Etc.

Foolishly,

David
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