Cincinnati Model Investment Club Agenda
May 17, 2003
9:30 Call to order by President (Don Bunnell)
9:35 Minutes of previous meetings
9:40 Treasurer's Report (Joyce Shinn)
9:50 Old Business
10:10 New Business
10:10 Education Program - "Portfolio Management Guide"
10:30 Stock Study
11:00 Portfolio Review Orthodontic - D. Bunnell
Kohl's - Mary Thomas
11:10 Decide on Months Investment.…
11:15 Discussion (stocks to review for our next meeting)
11:30 Adjourn.
The next meeting will be 9:30 A.M. Saturday June 19
in the Greenhills Municipal Building.
1
PMG Portfolio Management Guide
Cincinnati Model Investment Club
May 17, 2003
James Hurt
2
What Is Portfolio Management?
●
Portfolio Management is the
art of continually improving
the quality of your portfolio
in order to maximize your
return.
3
Good Portfolio Management Is
–
Watching the performance of the company rather
than the price of the stock.
–
Selling a company when you determine that it
will not produce the sales and earning growth
you expected when you purchased it.
–
Replacing a company with one of equal or better
quality having a better potential for return.
4
Portfolio Management Is Not:
●
●
Selling stocks that perform well while keeping
those that don't in the hopes that they will
improve their performance.
Letting price and P/E
performance influence you
decisions about selling.
5
Portfolio Tracking,
Performance Measurement,
or Record Keeping, while
often misconstrued as
portfolio management, are
only ways of keeping track of
how well you have managed
your portfolio.
6
PMG Criteria for Selling
●
●
Price is in the SSG's “Sell”
range.
P/E is at least 150% of the 5year average P/E (Relative
Value over 150%).
7
PMG Criteria for Buying
Price is in the SSG's “Buy”
range.
● P/E is at or below the 5-year
average P/E (Relative Value
is less than 100).
●
8
Company PMG
●
You Update the Company PMG
Yearly when you redo your SSG.
Quarterly when new earnings are
announced.
Monthly with the latest price.
9
PMG was designed for easy
manual update.
Each year, add average P/Es from your
SSG
Each quarter, add earnings.
Each month, add price and compute P/E.
Each month, update graph on back.
10
PMG for Kohls April 2003
●
Part 1 of the Company PMG
–
Each year redo your SSG.
–
Copy High and Low average P/Es from Section 3.
–
Compute 5-Year average P/E in Column 5.
–
Compute 150% of Column 5 in Column 6.
11
●
Part 2 of the Company PMG
–
Each year, redo your SSG.
–
Copy top of your “Buy” range to Column 1.
–
Copy bottom of your “Sell” range to Column 2.
–
All judgments are on your SSG, not here.
12
●
Part 3 of the PMG
–
Each Quarter:
●
●
–
Add Quarterly earnings to column 2.
Compute TTM earnings in column 3.
Each Month:
●
●
Add price to column 5, 8, or 11.
Compute P/E in column 6, 9, or 12.
13
Graph on Back Side of PMG
●
Plotting seven curves in three scales:
1. Monthly Prices (solid green)
2. Top of “Buy” range (solid green)
3. Bottom of “Sell” range (solid green)
4. Monthly P/E ratios (dotted red)
5. Five Year Average P/E (dashed red)
6. 150% of Five Year Average P/E (dashed red)
7. Relative Value (black bars)
14
Bottom of “Sell”
“Sell” P/E
Monthly Price
Average P/E
Top of “Buy”
Monthly P/E
Relative Value
15
PMG is indicating Buy when:
Stock Price is below the Top of “Buy”.
P/E ratio is below 5-year average P/E.
And Relative Value bar is down.
16
PMG is indicating a Sell when:
Stock Price is above Bottom of “Sell”
P/E ratio is above the “Sell P/E
And Relative Value bar is over 150%.
17
Monthly Report to Club
●
●
Each month, you should report the following to
the club on the stocks you are tracking:
–
Name of the company.
–
Any significant news.
–
Current price.
–
Is this price in the “Buy”, “Hold” or “Sell” range.
–
Current P/E.
–
Is this P/E in the “Buy”, “Hold” or “Sell” range.
–
Do you recommend any action?
This should take less than a minute.
18