Author:
James Roberts
Covestor models:
Fortune's Most Admired,
StockDiagnosticsAlcoa (AA) and Freeport McMoran (FCX) were sold from my portfolios in October because the materials industry group has been sinking in popularity for months. In fact, my investment strategy has been altered so that such a costly occurrence is not as likely to happen again.
I am now incorporating the composite rating from Investors.com into my strategy with the idea of favoring companies with high readings, while eliminating companies from the portfolio with low and declining ratings. In order to maintain proper diversification, however, some companies with low ratings may be maintained. I advocate exposure to a diverse group of investment styles while making sure that both large and small cap stocks are represented.
My Fortune Most Admired portfolio contains few, if any, small caps. Consequently, I will not be able to include smaller companies in it. The predominant investment styles are growth and value. By including the Investors.com composite rating, I am leaning towards the growth/momentum investment style.
Free cash flow metrics are a value criteria that I use in my other models. I am sure that I am influenced to some degree by free cash flow in the Fortune Most Admired model, as well. I am including some stocks like Lowe's (LOW), Johnson and Johnson (JNJ), and Berkshire Hathaway Class B (BRK-B) that represent the value style. QQQ (Nasdaq 100) was added to the portfolio because it overlays with the Fortune Most Admired Companies list to a 74% degree, owing to its capitalization weighting. Apple, Inc. (AAPL), for example, is around 14% of the QQQ.