The Living Portfolio – Manage Your Shareholdings For Maximum Results

One approach to investing that is likely to have excellent results is to build a portfolio, which may be quite large, focused entirely on shares in high-quality fast-growing companies. My name for such companies is 3G (great chart, great story, great growth).

It is not hard to find these companies but you have to look which may not be an option for people with other interests. All the characteristics I am looking for should be obvious. If you are not sure about any company it is best to move on.

Step one is building this portfolio. I try to do this with a constant stream of alerts and recommendations on Quentinvest. One way to manage your portfolio is with what Warren Buffett describes as ‘masterly inactivity’. If you have a dud in your portfolio like Super Micro Computing, if you never sell it will become unimportant over time thereby effectively selling itself.

However, there is scope for a more activist approach. I look at many different technical indicators and I have found one which seems to work well.

We have been compiling a list at QV of all the shares alerted since the new bull market began in early 2023. This provides many interesting insights, not least because it updates automatically. I have never had a ‘smart’ list before.

I have looked through the list to find sell signals based on the indicator I favour. There have been sell signals for 40 shares including such important names as Microsoft and Arm Holdings.

Always Invest In Shares With Strong Momentum

There are two reasons for selling a share on a sell signal. One is to avoid the risk of an extended decline. The second is to redeploy your funds to a share which looks more appealing. In effect, what I am suggesting is that you maintain your portfolio in such a way that you are always invested in shares with strong momentum.

This way of thinking makes it complicated to assess the value of maintaining your portfolio. We can look at the effect of selling; what is harder to take into account is what you do with the money, which shares you reinvest in and how they perform.

There is the further issue of whether or not you are using leverage, $-cost averaging and other techniques. Since, like you, I want to make loads of money in the stock market, I am thinking about all these issues.

Goodbye Microsoft, For Now

You may be wondering about the Microsoft sell signal so here it is, shown below and marked with a frownie.

This is hardly a massive sell signal and Microsoft remains an exciting business. But it has given a sell signal suggesting that the shares are best avoided until their uptrend resumes. Meanwhile, the funds raised can be invested elsewhere.

Strategy – Manage Your Portfolio Actively To Maximise Gains

If you do this at least your stockbroker will love you. I am very popular with mine. I am going to work with the QV team to learn more about the effect of actively managing The List before discussing this strategy further. There is no point in encouraging you to adopt a strategy which does not work.