Value Line University

Updating a Portfolio

Choosing appropriate stocks is only the first phase of successful investing. You also have to keep track of how your investments are performing and make decisions about when to replace your holdings.

Typically, changing conditions in the economy as a whole or in the stock market are signals to update your portfolio. Successful investors keep regular track of their portfolios and adjust them when appropriate to keep their investment strategies on track, even when the stock market in general is performing in a fairly consistent way.

The information in The Value Line's Investment Survey that you use to identify stocks to buy initially is the same information that can help to track and update your portfolio. For example, if you select a stock because it is ranked 1 or 2 for Timeliness, but during the period you own it the rank is downgraded to a 4, that is a stock you would normally replace if you were using the Value Line investment strategy.

Statistical evidence supports that approach. In fact, investors who consistently sell a stock when it falls to a rank 3, rather than waiting until it drops to rank 4 or 5, have had a higher overall portfolio return although they have also paid higher brokerage fees because they have been trading more frequently.

While Value Line updates its performance data and the Timeliness and Technical ranks every week, you will probably find that updating your individual portfolio somewhat less frequently is also a reliable approach.