The Real Money column I mentioned Friday has been moved to the (free) The Street.com side: Nine Stocks for Playing the Long Side Safely
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
What led to this research and stock selection was a repeated 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.
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 further or slips into a recession. Our goal was to identify those stocks
that will participate in the upside, but at much lower levels of risk.
There is a video discussion here:
Nine Stocks for Playing the Long Side Safely
6/8/2007 4:44 PM EDT
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.