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ValuFocus Investing: A Cash-Loving Contrarian Way to Invest in Stocks by William F. Mahoney, Rawley Thomas

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Chapter 19

Managing Your Stock Portfolio

You are ready to pick undervalued companies and stocks.

You are ready to build a stock portfolio and manage it.

We believe our models do the best job of any developed thus far. We can estimate the intrinsic values of some 7,000 companies in our database to identify those currently being under- and overvalued by the market. That serves as the basis to begin the research to decide which ones to buy because they are undervalued and any that might be in your portfolio to sell because they are overvalued. In both cases, we are confident that market prices eventually migrate toward fair value, proven by our empirical evidence.

Our model's ValuFocus screener enables you to identify investment ideas. Importantly, it goes beyond simply selecting stocks to buy and sell. Managing a stock portfolio is a complex process.

Unless you are very rich, you probably want to have fewer rather than more stocks in your portfolio. Who can afford to buy shares in all 500 stocks in the S&P index at their properly proportionate numbers? All that does anyway is enable you to replicate the returns of the index. That's fine when the market is going up steadily. We all know that isn't guaranteed.

Smart investors can do better than the market, while making investments in considerably fewer than 500 stocks. Your goal focuses on achieving good returns. You are setting your targets. Be realistic but also be optimistic that you can do well.

It helps immensely to have a longer-term ...

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