Summer is almost here. I know summer is almost here, because spring came without my notice. I walked down a street the other day, looked up and panicked. I thought I was lost until I realized the trees sprouted leaves. Somehow, I missed that. Leaves, flowers, grass?they make the world look different, don't they? But, in spite of my rapid orientation to spring, I'm still not quite ready for summer.

My problem? The leaves popped out before I executed my spring cleaning. Ever hear of "summer cleaning?" I didn't think so. I haven't either. However, there's one nook and cranny that needs my attention. I need to plow through my Watch List Portfolio and drop the losers, keep the winners, and decide if it's the right time to invest in the latter.

Fortunately, I won't need rubber gloves, a shovel, and a large garbage bag for this job (unlike my kitchen sink). If you haven't signed up for BUYandHOLD's watch list, portfolio tracker, news alerts or e-mail alerts yet, you're in for a treat. First, they're free. Secondly, there's no risk. All you do is register. Go to that page and pick "watch list" or "portfolio" in the little light yellow box at top right. Each link will take you to a registration/login page. If you hesitate to register, just know that BUYand HOLD keeps your information private.

Now create a portfolio with company names or ticker symbols. Just select "New Portfolio" from the drop-down menu at the top, and walk through the steps to add your stock choices. If you don't know what to add, read our article last week, where Cora and I discovered about twenty-five new equities and while we learned about a new profession. Go do your own thing, and after you have about four to ten choices, plug them in.

If you already maintain a watch portfolio and if you went a little overboard in equity choices (like me, with over twenty listings), we might need to eliminate some stocks. If you're as busy as I am, twenty choices (with e-mail alerts, no less), leaves little time to appreciate or compare everything. I prefer to keep about ten stocks in the watch portfolio, and they usually stay there for a year. This way, I can get past my urge to day trade, and I can also show my daughter how a stock works over a year as opposed to one hour to three days, or even a month. Additionally, I can compare ten stocks a lot more quickly than I can twenty.

The first thing I do as a volume freak is check that last column on the right. When one stock stands at 20,648,000 and another stock stands at 25,000, I might fight the urge to eliminate the lower volume equity. Instead, I go to that company's chart to discover why the volume is so low. At this juncture, I usually open another window in my browser to check the charts (point the mouse to the "BUYandHOLD logo" with acorn in the upper left portion of the screen > left click > select "open link in new window"). Once I have another window open to BUYandHOLD's home page, I use the "Stock Quotes, News, and Charts" link on the right to find my stock's chart and information page.

Consistent low volume means the stock is trashed, especially if the stock price is level or descending. I want active stocks, but I also need to watch the price with high volume. So I check the other stock to see how they fare, also. If they're both descending in price, I wait to check my other stocks against those two before I eliminate one.

There are many other factors to consider before stock elimination or promotion to the real portfolio. I added my stock choices to e-mail alerts (once a week is enough), so I know the skinny on each company. This is another way to eliminate stocks. If the news is bad three to six months in a row and the next quarter also looks grim, the stock is eliminated. Additionally, if the watch stock just doesn't appeal to me anymore (some stocks are selected on a whim), that stock also heads out the door, unless it appears that I accidentally made a good choice (that rarely happens).

After I reduce my watch list to ten stocks, I evaluate them for possible real purchases. When money is involved, I become very picky. Once again, I go through the process of elimination and try to find one or two stocks that might be worth the investment. If I had that imaginary $10,000 my daughter's teacher gave the class for investments a few weeks ago, I would probably be more forgiving, but since I live on a limited grad-school budget, I'm harsh about my choices.

My deal is that I need to live with the stock for at least a year, unless it acts up, trashes the furniture, or just sits around and watches TV. Then, a year is way too long. Oops - I mean if the stock just sits there for six months, or if it becomes way too volatile for my taste, I will try to sell when the stock inches up. Volatile high-risk stocks are great for growth, and they add to the portfolio's diversity. However, at my age, and based on my current hectic schedule, extremely volatile stocks stay in the watch portfolio for entertainment purposes only.

So - that's the point of the watch portfolio. No money, no risk - even with the high-risk equities - and no loss. We can watch these equities 'till the cows come home (just one more thing to spring clean), and we won't be worse for the wear. However, the point to this exercise is to invest eventually, become a long-term investor, and to pride ourselves on smart choices.

Until Next Week,
Linda Goin