Sunday, February 8, 2009

Stock portfolio: Change in strategy

Previously, selldown made the following strategy:

1. Trade a maximum of one buy-transaction per month.
2. A buy-transaction must not exceed 33,000 Pesos.

I thought about it and I think it would be better to change it to the following:

1. Buy transactions for a single month must not exceed 33,000 Pesos.

This would mean that one could issue an infinite number of buy transactions in a single month as long as the sum of the transactions do not go beyond 33,000 Pesos.

On why I think this is better is because there are so many good companies out there that isolating a buy transaction to a single company for a given month would lose us the opportunity of cost-averaging the purchase of other good companies. So our strategy would be to cost-average the purchase of several good companies simultaneously over time.

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