Monitoring a portfolio involves more than watching a stock go up

The Ticker

March 11, 1998|By Julius Westheimer

PEOPLE OFTEN tell me they monitor their portfolios by listing their stock values reported in the financial tables every weekend. (I hear this mostly in a bull market.)

Sorry, that's not monitoring; that's just multiplying and adding columns of figures. It's only one part of the job.

"The primary objective of monitoring is to make sure your stocks continue to meet your selection criteria," says the American Association of Investors Journal.

How do you monitor stocks to see if companies' earnings hold up -- or, better yet -- increase substantially each year? I suggest you include these guidelines:

Watch daily for company news and announcements. As financial writer Maria Scott writes, "Investors should study financial publications and reports for any new developments affecting your company's future -- including earnings prospects, dividends, new products, management changes, share of the market, news of major competitors and, lastly, share prices."

"Monitor annually," suggests Portfolio Strategies, adding, "In addition to monitoring holdings, measure your portfolio's performance by comparing it to an appropriate index or benchmark."

Helpful publications include your local daily newspaper, the Wall Street Journal, Investor's Business Daily, Barron's, the Standard & Poor's Earnings Guide and companies' annual reports.

How do you monitor mutual funds? "One trap to watch out for," says financial planner Harold Evensky, "is when fund managers buy high-risk U.S. stocks and shaky foreign issues to boost returns." He adds, "Call your funds for their asset allocations and top-10 holdings; if you're displeased, sell the fund."

MONITOR MIX: "Put all your eggs in one basket -- then watch the basket." (1998 Stock Trader's Almanac)

"If you don't know what your portfolio is all about, the stock market is an expensive place to find out." (George Goodman)

"When I have to depend on hope in buying a stock, I don't buy it." (Jesse Livermore)

Your stockbroker and/or financial planner can help you monitor your portfolio by sending you reports, etc., periodically.

For TV watchers, CNBC-TV may be helpful with stock data. The channel also runs a continual "ticker tape" all day.

Pub Date: 3/11/98

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