Portfolio strategy

Our target is to build portfolio which will give good returns independent from market conditions. In portfolio we have strenght stocks in long and weak stocks in short side that are balanced (equal). Our ideal target to get this situation. Let’s suppose that we have ideal balance in long and short side of portfolio and market is in zero point. If market changing up on 1 basis point, long side ads 2 basis point and short side ads 1 basis point. So on market move on 1 basis point our overall result is 2-1=1. Next market making move down on 1basis poing. Long side minus 1, short side minus 2. So overall 1-1+2=2. Now we are in profit of 2 basis points. So in every next market’s step in 1 basis point our portfolio growing on 1 basis point.
For balancing long and short side of portfolio we are using Beta coefficient. If we have different Beta we entering a position with more or less quantity for making position equal.
At first we are looking which sectors are the most interesting for long/short. This analyses we do with calculating next data Market cap, P/E, ROE%, DIV Yield%, Price to book value, Net profit margin%, price to free cash flow. We pick most interesting on this and then doing discretionary analyses. We researching expections on this sector, catalysts, risks, events, etc. Then we took stocks from the interesting sectors and doing the same analyses on companies. So we have to be sure that we are picked the strength stocks from strenght sectors and the weakest stocks from the weakest sector. Also we are using technical analyses for sectors charts and stocks to identify important levels. We dont entering in market on all portfolio in one time. We trieng to enter in right time on every stock. So we have some risks, because we have a time when our portfolio is not hedged in all.
Also for picks we are using two ratings.
1st – Stocks Chekup on www.investors.com . Its site of CAN SLIM system developer – Williahm O’Neil. He developed this system many years agos, its very popular, but this system representing not changing financial principles and CAN SLIM will work for many many years more. CAN SLIM system developed for picking stocks with amasing potentional of growth. So we use it for an evaluation of growth potentional. Below we can see basic principles of CAN SLIM:
C & A
Sizing up a stocks earnings growth.
N
The biggest stock winners had new products, new management or new conditions.
New price highs offer new opportunities.
S
One of the most basic economic principles is the law of supply and demand.
L
Steer clear of stocks that are laggards.
I
When it comes to investing, it pays to watch the pros.
M
This section will help you learn to size up the health and direction of the stock market.

2nd – MSN Rank.
It includes fundamental, ownership, valuation, technical analyses. We use it to see strenght or weak stock are. For buy the best picks are with rank between 6 and 9. Its show that company have potentional for improve. Very good if it is confirmed with our rating of potentional growth – CAN SLIM. The same, only reversal, for our short positions.