The following was published at RealMoney... I don't know when, but I do know that this is the first draft, not the finished product - my editor did not want me to mention that I was unemployed.
"I always sell too soon." - Baron Rothschild
In 2003, when I was briefly unemployed, I noticed that my personal account was starting to underperform. Partly to give myself more confidence at interviews, and partly to get rid of a distraction, I went over my portfolio to tune it up. I started out by ranking my portfolio from top to bottom in terms of expected returns. Nothing complex - I just went my price targets and compared them to current prices. Highest percentages are at the top; lowest are at the bottom. My next step was to do the same for a list of replacement candidates. I then looked at the second list, and found that my top three replacement candidates beat the expected returns for the median company in my portfolio. I bought those three companies for my portfolio, and funded it by selling the four stocks in my portfolio with the lowest expected returns. At the same time, I added a small amount to two underperforming names in my portfolio. Here were my actions, and the results through 7/14/03, the date that I sold Pechiney:
Action | Size | Name | Ticker | 7-Mar | 14-Jul | Return | Average Return |
| Sell | 100% | Adtran | ADTN | 30.46 | 58.52 | 92% | |
| 100% | Am Power Conversion | APCC | 14.66 | 17.11 | 17% | ||
| 100% | Texas Instruments | TXN | 16.26 | 19.12 | 18% | ||
| 100% | Bank of Montreal | BMO | 27.94 | 31.91 | 14% | 35% | |
| Buy | 100% | Precision Castparts | PCP | 22.59 | 33.00 | 46% | |
| 100% | Nucor | NUE | 38.70 | 48.81 | 26% | ||
| 100% | Pechiney | PY | 11.60 | 24.61 | 112% | ||
| 25% | Petrobras | PBR | 13.60 | 20.80 | 53% | ||
| 25% | Dycom Inds. | DY | 9.50 | 17.92 | 89% | 63% |
