If you haven't yet, please see part one of this article, the 2011 performance review.
It is obvious that I need to do something different. 2011 has been bad so far, and looking forward I need to change my strategy along with reacting to the current market conditions. This article will cover the former, and the latter will be discussed in part 3: a look at the market right now.
Everything I do is either a trade or an investment. I need to stop trading altogether; it doesn't work. The overwhelming majority of my trades since I have started investing have failed. Next, I plan to switch from a holistic, numbers-based approach to a ratings and growth based approach. First because I believe using ratings will make it easier to find good investments and thus help limit the up-front research I need to do. I'm switching from value to growth simply because I want to try it and I believe it will be more profitable. I want to find companies that are performing, buy on dips, and watch them continue to rise. My new approach will first focus on ratings from S&P, Morningstar, Valueline, Yahoo!, and Thomson Reuters, as I have access to data from all of these sources. The second focus will be on earnings and price momentum in a search for volatile, high-growth stocks.
The final thing I want to do is have a ready-to-go watch list. These will be stocks that I am very familiar with and can enter as soon as I see a good entry point. So far I have APFC, CLF, SHOO, GES, and PCLN. I could readily enter into positions in any of these at any time after a few hours worth of research. I hope to expand this list if I have time to read annual reports. For now, I want to buy shares of Cliffs Natural Resources [CLF] and Steve Madden [SHOO]. The timing of these is based on the overall market, which is doing terribly. (continued in part 3: Market Tracker, 8-4)