• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Knowing When to Head for the Exits

A beginning-of-December look back at our portfolio through the lens of capital preservation.
By THE AAP TEAM Dec 01, 2015 | 12:30 PM EST
Stocks quotes in this article: KMI, LULU, RDS.A, UTX, DG, AXP, MRK, FOXA, SLB, ESRX, ETN, MRO, UNH, HYH

This commentary was originally sent to Action Alerts PLUS subscribers at 11:05 a.m. ET on Dec. 01, 2015.

In our view, the value of being an Action Alerts PLUS subscriber goes beyond merely having access to our individual trades and stock-specific analysis.

With the honeymoon period of stocks having come to a halt (no more 14%, 32% and 16% annual returns, respectively over the past three years) we find it crucial to also educate our subscribers in a manner that is thoughtful, conceptual and original. To this end, we want to take a beginning-of-December look back at our portfolio through the lens of capital preservation rather than capital gains. In other words, while the vast majority of analysis -- ours included -- across Wall Street focuses on buying low and selling high, we believe it is equally important to protect the portfolio, even when it means selling a particular stock at a loss.

We would like to first preface this by emphasizing we are by no means perfect and have made mistakes along the way, particularly within several investments in the energy sector and boutique medical devices company Halyard Health (HYH). In both cases we misjudged certain aspects of the overarching pastiche. For energy, we misjudged the severity of the decline and in respect to Halyard we misjudged management's ability to execute as well as the complexities involved when it comes to spinoff stories.

That said, we have also honed in on protecting our portfolio -- and subsequently subscribers -- from losing money on existing positions. Instead of digging in our heels when the facts changed, we have taken the approach of proactively exiting positions when we believe the fundamentals, technicals and/or secular direction have cracked.
As evident in the chart below, in the past nine months we have closed out more than a dozen names that have since underperformed the S&P 500, six of which by double digits and two of which by over 20% and 40%.

Our commitment to subscribers is that we will continue to actively, passionately and thoughtfully monitor our existing holdings and dynamically shift our portfolio construction based on the ever-evolving market and company-specific environment.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Action Alerts PLUS had no positions in any of the securities mentioned.

TAGS: Investing | U.S. Equity | Stocks

More from Stocks

This ETF Boasts 'Inflation Protection,' but Will It Rise to the Occasion?

Mark Abssy
Jun 30, 2022 3:26 PM EDT

The Ionic Inflation Protection exchange-traded fund, the latest such ETF to hit the market, offers direct exposure to the consumer price index.

Want to Save Your Retirement Fund? Tune Out the Talking Heads

Jim Collins
Jun 30, 2022 3:14 PM EDT

The first half of this year has been ugly. But we could have seen what would happen to Netflix, Tesla and Meta...

National Health Investors Is Aging Well as It Emerges From a Base Formation

Bruce Kamich
Jun 30, 2022 2:16 PM EDT

Buyers of the shares are becoming more aggressive.

As Carnival, Royal Caribbean and Norwegian Sink, Here's When to Dive In

Ed Ponsi
Jun 30, 2022 1:30 PM EDT

These stocks are priced for an industry-wide calamity, but how realistic is that considering their customer base?

General Mills Is Seeing New Highs on the Charts

Bruce Kamich
Jun 30, 2022 1:29 PM EDT

Here's what traders looking to go long GIS could do.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login