New Column Real Money Column: Nine Stocks for Playing the Long Side Safely

Friday, June 08, 2007 | 11:33 AM


I have a new column up at Real Money: Nine Stocks for Playing the Long Side Safely

It is based on our response to a request from research clients, managed asset accounts, and institutional traders, who have all asked some variation of this question:

"I am afraid this market is overvalued, over-extended, and overdue for a major correction -- but I want to play from the long side (variation: I cannot afford to fall behind my benchmark). How can I participate in a way that is relatively safe, but still allows me upside?"

The response we crafted was to quantitatively screen stocks for these characteristics:

1) Identify strong sectors with good money flow;
2) Screen for stocks with the best technical and fundamental potential;
3) Look for stocks within those sectors with desirable risk/reward characteristics;
4) Find stocks that are near good entry points;
5) Avoid the "runaway momentum" names;
6) Look for stop-loss protection that is a reasonable percentage downside away.

The column identifies nine firms, with entries, targets, and stop losses.

Before you yell "Capitulation!," understand that this was in response to client requests. I continue to have concerns about a laundry list of economic problems: inflation, slowing growth, slow job creation, rising interest rates, the drag from housing.

The stocks and sectors I picked, however, are more likely to outperform on a relative (as well as on an absolute) basis, especially if the economy slows or slips into a recession. The key is identifying those stocks that will participate at much lower levels of risk.

I'll see if I can get it moved to the free site eventually . . .


Nine Stocks for Playing the Long Side Safely
6/8/2007 10:32 AM EDT

Friday, June 08, 2007 | 11:33 AM | Permalink | Comments (9) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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/sorry...had to be done.

Posted by: Pool Shark | Jun 8, 2007 12:56:05 PM

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