Portfolio Evaluation: Have You Looked At Your Portfolio Lately?

I mean really… have you looked at what you own, what’s currently in your portfolio, how it’s performing, and whether or not your individual equities are meeting the price and performance (return) that you anticipated when you first purchased them? Have your priorities or circumstances changed since making a particular purchase? Do you have a different set of criteria, or perhaps has your tolerance for risk changed?

The new year is an excellent time to review your equity positions to determine if they still meet your individual needs. You may think that this is your broker’s job, your financial adviser’s job, or the job of someone else that you rely on for advice, but the fact of the matter is: NO ONE CARES ABOUT YOUR MONEY MORE THAN YOU DO.

Some things you may want to consider in your evaluation:

– Is the company still the same fundamental company that you originally invested in? Do you understand its business? Often companies change significantly over a year. For example Abbott Labs just recently divided into two very different companies: Abbvie which will focus on the research based pharmaceutical end of the business and Abbott which will focus on diagnostics, medical devises, nutritional products and branded generic pharmaceuticals. If someone had bought ABT solely for its research potential in the past, it would make no sense for them to keep it in 2013. While it might make sense for them to maintain a position in ABBV

– How is the company doing compared to others in the same field?

– How does its price earnings ratio compare to the category in general?

– What is its beta? In other words is it more or less volatile than the typical stocks that you are comfortable with?

– What are the trends in terms of sales growth, margin growth, profitability, and market share?

– If the stock has declined is it because of industry problems, proprietary problems, or an overall market decline? Does the decline mean that the stock is on sale, or in trouble?

– Has the ratio of debt to equity changed? Why?

– Are insiders buying or selling? Why?

– What is the short position? If there is a significant short position is it increasing or decreasing? Why?

There are an endless number of questions that you can ask about an individual stock. The point is you should keep asking and researching until YOU are satisfied that the stock is right for you… or it isn’t.While you may be doing the proper analysis on new stocks that you are considering for your portfolio, are you continuing to do so with stocks that you already own? If not, now is a good time to start!

Copyright 2013 Boyd Investment Holdings LLC. All rights reserved worldwide.

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