PRISM: Prioritizing Your Goals

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  • 1.  Selecting and Managing Your Investments - Lesson 5

    Posted 03-24-2022 15:08
    Edited by Jenna Brashear 03-24-2022 16:31

    Narrowing Down the Stock Universe


    Reflect     

    There are over 5,000 exchange-listed stocks listed in the U.S., so how do narrow that list down when thinking about what to add to your portfolio? Before you spend countless hours sifting through potential investments, you will want to think about how your risk tolerance, allocation and investment management preferences play a role in which stocks you should include.

    To start this daunting process, we've compiled a simple checklist to make sure you're hitting each and every one of your individual needs as well as preferences before adding anything to your portfolio. Take a look at the full checklist that is linked at the bottom of this lesson! 

    Participate 

    As we did for the funds section of this course, we are now tasked with narrowing down the stock universe to a manageable list. We ask our members to review the  "How to Narrow Down the Stock Universe" checklist and then participate in the discussion below in order to fully understand what stocks should reside in your portfolio. 

    For this activity, please review the attached checklist PDF and answer these three questions from the list: 

    1. What types of stocks are missing from your portfolio such as large-caps, small-caps, international, etc.? 
    2. At what frequency do you want to be trading stocks?  
    3. When it comes to the type of stock, do you prefer growth, value, income, momentum, etc.? 
    4. Do you have to be cognizant of taxes when it comes to selecting individual stocks? 

          Remember to write these answers down, as they will help you as we progress to Lesson 6 - 9 where we will focus on the guidelines associated with how to select the right stocks for your portfolio. 

          Discussion Example 

          1. I am missing a lot of different types of stocks from portfolio. I would like to add a few small-caps to my portfolio, so I may want to focus on that area right now. 
          2. I do not want to be trading stocks too frequently as I do not have the time to allocate to this activity.
          3. Yes, I want to focus on value stocks right now. 
          4. As of right now, I already have stocks allocated to my Roth IRAs, so I will not be focused on tax preferences right now for this activity. 

              View and download the "Selecting and Managing Your Investments" worksheet 

              View and download the "How to Narrow Down the Stock Universe" checklist PDF 

              Questions about coursework, webinars, worksheets, etc.? Drop your inquiries in the discussion below. We're happy to help! 



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              Jenna Brashear
              AAII Community Manager
              Chicago, IL
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            1. 2.  RE: Selecting and Managing Your Investments - Lesson 5

              Posted 03-04-2023 05:24

              • What types of stocks are missing from your portfolio such as large-caps, small-caps, international, etc.?  Small Cap

              • At what frequency do you want to be trading stocks?  For my small cap allocation I will follow the Shadow Stock Model portfolio. This is reviewed quarterly.

              • When it comes to the type of stock, do you prefer growth, value, income, momentum, etc.?  For individual securities I prefer value.

              • Do you have to be cognizant of taxes when it comes to selecting individual stocks?  No.  The funds will be in an IRA.



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              RICHARD
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              Original Message