The 3 best stocks in my portfolio

When I was asked what I liked about my 3 best holdings I could answer right away:  They all look alike.  That may sound strange but I feel that once you decide what you want out of your portfolio then all the holdings should look alike.

Today too many talking heads say buy and hold is dead and this is the era of the stock picker.  I've worked in the financial services industry for more than 40 years as an accountant, attorney and financial advisor and I've never seen a job requisition for a stock picker.  I've seen a lot for a portfolio manager and that's what I feel I am.

As a portfolio manager it shouldn't matter if you are a growth investor, income investor, value investor or like me a momentum investor, every holding in your portfolio should look alike but like Lake Wobegon it should be above average.  The trick is not to find stocks that meet your criteria; that's really the easy part.  The real trick is to buy stocks you like and hold them as long as they meet your criteria but not one day longer.  Knowing when to sell is the trick.  That's what portfolio management is all about.

Ron Prichard, the editor of MSN Money Central told me I write like a Data Head.  I hope he meant that as a complement because I love data.  I live and breath the stock market and read everything I can.  I have all the TVs in the house on different channels: CNBC, Bloomberg and Fox Business news.  I read the Financial Times, Value Line Research Center and screen stocks on Barchart.  When I find stocks that meet my statistical criteria I further research them on Yahoo Finance, Motley Fool and because I'm a top contributor to Seeking Alpha I have complementary access to over a dozen more financial websites.

I do a top down analysis to get as many indicators in my favor as possible  I'd rather be approximately right than precisely inaccurate..  I want to see an expanding economy and use a consensus of 21 economic indicators.  I want to see an upward trend to the overall stock market and use over 25 technical indicators every day to see where the market is heading.  If the winds are favorable then I use over 27 technical indicators to screen 12,000 stocks, ADRs, closed-end investment companies and ETF's to find those few that meet all of my technical criteria.  By the time I do this I usually end up with a list of about 10 stocks that meet it all.  Some days none pass the screening so I won't buy anything - I don't spit in the wind.

My last step is to review 4 graphs containing moving averages and turtle channels that include the latest trading activity in 5 minute intervals.  If a security can pass all those tests I might consider buying it.

The final and ultimate test; and so few pass this one is a 3 fold hurdle:

• The price has to have appreciated in 50% of the last 20 trading sessions
• Wall Street brokerages must have published buy reports based on expected increases in sales and earnings
• And last, there has to be a wide and positive retail following

I don't buy because Wall Street and the general public likes a stock but I realize if 10 Wall Street firms have sell reports out, then there are a lot of brokers asking all their clients for sell orders and I be foolish to think my pick will swim against that out flowing tide.

Now the picks:

VMWare Inc ( VMW) - Prepackaged software.  - up 50.75% since purchase

• Wall Street has 14 buy and 19 hold recommendations
• Analysts expect Sales to increase 37.30% this year, 19.40% next year
• Analysts estimate EPS to increase 39.00% this year, 21.60% next year
• May have become over valued as my momentum indicators are neutral and the 14 day relative strength index in 45.27%
• Short interests are very slightly increasing
• Positive investor sentiment

Aberdeen Asia Pacific Income Fund ( FAX ) - Holds sovereign debt of mainly Australia - up 25.60% since purchase

• Wall Street firms  do not make recommendations of closed end funds but are pushing recommendations to clients to acquire sovereign debt and most view Australia favorable
• My technical indicators have 11 positive and 2 neutral signals at present
• Short interests are decreasing
• 14 day Relative strength 72.16%
• Positive investor sentiment

Trina Solar Ltd ( TSL) - Produces monocrystalline ingots, wafers and cells for use in solar panels - up 24.57% since purchase

• Wall Street has 21 buy and 4 hold reports published
• Analysts look for Sales to increase 75.60% this year and 12.90% next year
• Analysts estimate EPS to increase 64.30% this year and continue at an annual rate of 20.00% for the next 5 years
• Technical indicators have 10 positive and 3 neutral signals
• 14 day Relative Strength Index is 55.14%
• Short interests decreasing
• Positive investor sentiment

See, they all look alike:

• Positive price momentum
• Wall Street recommending buys based on increases in sales and earnings
• Positive investor sentiment

The rest of the portfolio looks very similar statistically.