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New Column Real Money Column: Nine Stocks for Playing the Long Side Safely

Posted By Barry Ritholtz On June 8, 2007 @ 11:33 am In Economy,Investing,Markets,Quantitative,Valuation | Comments Disabled

Realmoney_3 [1]

I have a new column up at Real Money: Nine Stocks for Playing the Long Side Safely [2]

It is based on our response to a request from research clients, managed asset accounts, and institutional traders, who have all asked some variation of this question:

"I am afraid this market is overvalued, over-extended, and
overdue for a major correction — but I want to play from the long side
(variation: I cannot afford to fall behind my benchmark). How can I
participate in a way that is relatively safe, but still allows me

The response we crafted was to quantitatively screen stocks for these characteristics:

1) Identify strong sectors with good money flow;
2) Screen for stocks with the best technical and fundamental potential;
3) Look for stocks within those sectors with desirable risk/reward characteristics;
4) Find stocks that are near good entry points;
5) Avoid the "runaway momentum" names;
6) Look for stop-loss protection that is a reasonable percentage downside away.

The column identifies nine firms, with entries, targets, and stop losses.

Before you yell "Capitulation!," understand that this was in response to client requests. I continue to have
concerns about a laundry list of economic problems: inflation, slowing
growth, slow job creation, rising interest rates, the drag from

The stocks and sectors I picked, however, are more likely to outperform on a
relative (as well as on an absolute) basis, especially if the economy
slows or slips into a recession. The key is identifying those stocks
that will participate at much lower levels of risk.

I’ll see if I can get it moved to the free site eventually . . .


Nine Stocks for Playing the Long Side Safely [2]
6/8/2007 10:32 AM EDT

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2007/06/new-column-real-money-column-nine-stocks-for-playing-the-long-side-safely/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/photos/uncategorized/realmoney_3.png

[2] Nine Stocks for Playing the Long Side Safely: http://www.thestreet.com/p/rmoney/investing/10361438.html

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