July 20, 2018

Using the US Investment Report Model Portfolios

Getting Started

One reader likens using the USIR portfolios to hopping aboard a moving freight train—a tribute both to their performance and the challenge of getting started.

The important thing is to begin—no matter how you do it. Here’s my advice:

  • I suggest buying at least 5 or 6 of the stocks in the portfolio best suited to your objectives, emphasizing those rated as Strong Buys on the USIR Recommended List.
  • Better still, buy all of the stocks in the chosen portfolio, even if this means purchasing odd lots of less than 100 shares. That way you can benefit fully from my stock picks and sector allocations.
  • Disciplined use of my stop-loss limits will help cut losses early and avoid runaway declines. Click here for more on stop-loss limits.
  • Mixing stocks from different portfolios is fine, but keep total holdings close to my objectives of 12 to 15 stocks and 6 to 10 sectors. Otherwise you will dilute the impact of my stock selection and my strategic blend of concentration-with-diversity.

Portfolio Strategy

In all three portfolios, my strategy is to be fully invested in 12 to 15 market share leaders spread across at least 6 to 10 different sectors. This blend of concentrated holdings with an effective degree of sector diversification is designed to maximize gains from my stock selection process and avoid dilution of returns due to excessive mutual fund-style diversity.

To reduce downside risk, stop-loss limits are set for every stock. Stops occasionally cause large cash accumulations, which are reinvested as promptly as market conditions permit. Stops are adjusted regularly as prices change.

The US Investment Report Model Portfolios

US Investment Report offers model portfolios for three long-term growth objectives.

All focus on market share leaders in growth sectors and emphasize rapid earnings growth for the coming 3 to 5 years—as well as reasonable price valuations, ample trading liquidity and moderate volatility.

None is a trading portfolio aimed at quick gains. Yet for all these similarities, each invests in very different kinds of stocks:

The Growth Leaders Portfolio, geared for aggressive growth, targets established growth sector frontrunners of all market caps with extra-high long-term appreciation potential with sound valuations and adequate trading liquidity.

The Conservative Growth Portfolio invests in large cap stocks, many household names, with above-average long-term growth potential and moderate risk exposure.

The Emerging Growth Portfolio invests in less known mid and small cap stocks that are gaining recognition as profit-earning leaders in accelerating growth sectors.

Stop-Loss Limits

Using stop-loss limits, I allow a stock gain as much as it can. Then I lock in these gains quickly once the stock begins to reverse direction.

I typically set a stop-loss limit of between 5% to 10% below the stock’s current price. When the price of falls below its stop-loss limit, I sell the stock. But as the stock rises, I ratchet up this stop-loss limit accordingly.

USIR Hotlines

My custom since 1987 is to announce portfolio purchases in advance for execution days later after issues had reached subscribers by mail. With the Internet and e-mail hotlines, I can now announce and execute transactions on the same day.

Contact me at squickel@usinvestmentreport.com if there are any questions, problems or other concerns about receiving issues and hotlines by e-mail.

© 2003 US Investment Report