No. of Recommendations: 82
I think most investors like to look at different strategies and sometimes test alternative ones......In the last nine years I have set up a high yield portfolio, a cash rich stocks folio, a hidden asset/property backed folio, two sector folios and a simple lowly rated value pick portfolio. Inevitably market conditions throw up different ideas and sometimes a new strategy develops...


For three years now I have been running a mini portfolio where every stock bought must be sold as soon as a 20% gain has been achieved...... naturally that could take years in some companies and there can be periods of negative growth so the aim is to pick a company where the gain can be achieved in as short a time as possible......conversely in this mechanical portfolio I try to protect the downside so the stock has to be sold if it falls 20% even though in reality in another folio within a value situation I would be reassessing the fundamentals and newsflow and probably buying more ......

The ultimate aim is to take this 20% gain in the quickest time possible and move to the next situation .......each move increases the pot and the faster it can be done increases the annual rate of return. However a bad move and you find the trapdoor so it is the financial investment reality equivalent of 'snakes and ladders'!! I have been fairly fortunate to have been playing this game in a period where the general market has gone up every year. That must help but I would not be averse to keeping up the challenge even in a bear market except naturally the number of moves may be reduced with the tide going against you....that is assuming the short selling trade does not become the popular tactic in such conditions to target 20% in shorter time.

Anyway using this strategy I have achieved an average of 89% annually over those three years and in 2006 it was my best performing individual folio with a 142% return. The small caps I generally target have had a pretty good year but this strategy is surely worth consideration especially with the focus we generally share in the Pub looking at the smaller company situations.

So TMF have kindly provided me with a forum for not only highlighting the strategy but also sharing my ideas and more importantly a place where you can all bring your stock ideas and thoughts to a larger audience. I must emphasise though that this board is for specific short term investment ideas targetting that 20% gain and there will be a three month knockout rule if the gain has not been achieved (see rule 3. below)....It is also important that this board is not considered to be like the Pub or in competition with it....for that reason at present the CQ board will be on Fool Fringe and so even if posts receive large numbers of recs the 'Best of' list will not be reached. I prefer that we have a 'situation specific' mindset for a while and those who find their way here will hopefully be those who are keen on research and not just surfing TMF for easy ideas.

Another example of the type of situation that can produce a quick return can be found here ( in fact Eleco has returned 42% in just four months) http://boards.fool.co.uk/Message.asp?mid=10175159

I shortly hope to announce a linked website where all the suggestions that are acceptable under the CQ rules will be logged and each poster will see their history and annual performance within this strategy. I will also be asking at least three other Fools to assist me in judging as amicably and fairly as possible whether an entry is acceptable. Overall though my decision will be final.

The rules

Any posters to the new board must provide company specific information with the following requirements....

1. Company name and epic (minimum £10m market cap)

2. Purchase price and target price on day of posting

3. Reason why the target should be possible in a maximum three month period (rule for this board rather than my folio requirement) ie. very strong or unexpected results due, planning application decision, broker upgrade, sector laggard due to large seller etc.etc

4. Brief fundamentals, ratios and link to company website.

5. Indication of liquidity ie. Normal market size (NMS)

Fairly simple and much the same as the information most posters are used to providing.


Naturally the overall aim is to set up an environment where serious discussion about 20% growth investments can be made only and there will be no off topic posts whatsoever.....the board will not be promoted from the TMF main directory and remember posts do not reach the 'Best of' feature to preserve a more discreet discussion area and to hopefully stay clear from rampers and ideally prevent market makers hiking the prices in anticipation.


I hope that by doing this the Pub would still be the No.1 place for investment discussions and general chat out of trading hours....





At this stage though I must just pick up on the two points raised already on this board in the last couple of days.....I had already considered the liquidity factor but to be honest the actual market cap is not a true guide as some companies (SOCO although in the FTSE350 is a good example due to minimal free float) simply can be illiquid for reasons beyond market cap.....it can be lack of market maker competition for instance. Many companies although small can be reasonably liquid but I had to draw the line at £10m as sheer numbers dictate that stock would not be available for all of us below that level and research would be wasted....however liquidity in any stock is the overiding factor

As liquidity will be the most likely reason for a stock not being accepted I needed to add the requirement that all posts on company suggestions include a liquidity factor with details on NMS and recent trade history. I will also be looking closely at free float(percentage of company not held by directors and substantial holders) and whether share buybacks are in operation to make matters worse. This will also be one of the factors that we can openly discuss when considering an investment as there may be knowledge of a stock overhang for example which may have been the VERY reason why the price is weak and a buying opportunity......How often do we see an Institutional offload simply because the newly appointed manager wants to clear his positions without consideration of the consequence for a small cap??

I can assure everyone that the board will be managed and scrutinised in the same way that I would do my own research......I do not like lazy half hearted attempts in the hope that others will take up the baton and finish a job and I do not in any way condone ramping so 'Carmensfellas Quickies' may initially suggest a broadminded view to investing but that will not be my objective in any way whatsoever.

Those who know me well are also aware that I would not wish to exclude anyone from the board other than my dislike of those who have the sole intention of disruption and abuse .......I am not trying to create a premium site where a subscription payment is required or where an invititation is necessary to post. I do want the tradition of our community and the Fool to be very evident. My request for a little discretion in publicising the board is to prevent the attention of market makers, insiders and rumour makers who may gain financial advantage before those who have done the honest research that is required.


Finally the overwhelming majority of Fools are simply not fools.....they will do their own research and most importantly can decide who they can trust and which boards suit their investment style. Naturally part of your own research should be the posting history of the Fool providing the suggestion as a 20% target in double quick time will attract the attention of 'New Fools' that may have a different agenda to that which is Foolish...


David
Print the post  

Announcements

Quickies FAQ, Entry Form & Tracker
Join in! Read the purpose of the board, entry rules, posting template and performance tracker. Please review this before posting.
Closure of the UK Discussion Boards
The UK Discussion Boards are now closed to new posts.