Maven's 50 Focus List and Portflio Methodology

I finally compiled my current focus list that contains approximately 50 stocks I follow pretty closely. These stocks I know fairly well from the fundamental perspective, since I either presently own them, owned them in the past, or monitoring, so I can take a position at a more attractive price.

Fundamental Criteria: For each of these stocks, I listed some of the fundamental criteria, such as forward PE, 5-year earnings growth rates, current and next year's consensus earnings estimates, average price targets from Wall Street analysts, etc. This is just some of the information that I monitor. I also pay close attention to their balance sheets, insider trading patterns, and most recent earnings transcripts.

Entry/Exit Prices: The spreadsheet also provides my "ideal" entry price and exit price for each of the 50 stocks. I use a variety of technical tools to identify support/resistance levels for each, and remain disciplined about both the entry and exit. Generally, I'd like to see a pullback to my 'ideal' entry price or just below it in order to initiate a small position. I would add on a bounce from there. The near term price target/objective is a level where I generally sell either most or some of the position. The balance of the position would then be hedged with at-the-money calls.

Risk/Reward and Portfolio Beta: I calculate the risk/reward of entering a position frequently, using a very simple, but effective calculation. If I decide to buy into a position right there and then, I need to see at least a 2:1 reward-to-risk ratio. This is only one of several criteria which comes into play. Other factors include my expectations for the overall market, portfolio's concentration in a particular sector/theme, and portfolio beta. Speaking of beta, I use it to decide how much risk exposure I want to have in a portfolio at any given time. When the market is oversold, I increase my weighted beta by loading up with high beta stocks. When I believe the market is vulnerable to a pullback, I 'lose' risk by decreasing my portfolio beta. I accomplish this by either rotating from higher beta to lower beta sectors like utilities and healthcare, going to cash, writing covered calls or frequently all of the above.

Here is the first installment of Maven's 50.