Basics: Model Portfolio

Now that you have learned how to create your own finance page in Yahoo or elsewhere, our next step in the investment process is to select companies for your Model Portfolio list.

Pick about five companies you think are a good fit for you. Is the company in an industry you know? Does it pay a dividend you like? Start collecting stock market symbols from those companies and put them into your portfolio. You can even pretend you bought a certain number on a certain day and enter that info, too.

Most financial websites, newspapers and newsletters list symbols after the name of companies they write about. One cool newsletter is Hulbert Financial Digest, which tracks performance of investment advisory newsletters.

This is a good place to start looking for likely companies to invest in. Add companies you like to your model portfolio. Keep an eye on news about them, as well as general market news, and news about their industry. Don’t do anything for a while. Just get a sense of what is going on.

Here’s a cautionary tale: A few years ago, IFO jumped in too fast on an entire industry – energy commodity companies, like coal miners, etc. Little did she realize at the time, but that was a “market play du jour,” a fad. Everybody was writing about these companies and this industry.

Prices were skyrocketing. Big clue here! Shortly after she jumped in, the entire sector dropped. Well, plunged, actually. So, don’t do anything too quickly and don’t put more than about 10 percent of your investable money into any one company or sector. And get out quick, if market prices start to go down!

Some time soon, we’ll talk about trailing stops and other arcana, for ways to get out with minimum emotional trauma.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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