The Concept of Dynamic Investing

Market conditions have changed drastically in the last 10-20 years. Equity mutual funds control hundreds of billions of dollars, and they invest most of that money in large-cap stocks. Tens of thousands of momentum oriented investors use the Internet to monitor the market in real time, making many short term buy and sell decisions. These characteristics have resulted in a two-tiered market--i.e. the large-cap and, to a lesser extent, mid-cap stocks, and the rest. Large-cap stocks often become grossly overpriced, and small-cap stocks with great potential are often ignored. Momentum investors push both up and down price trends well beyond limits which might have been seen 20 years ago. It is thus becoming ever more important to monitor our portfolios closely. Even long term investors should consider selling off at least a portion of those stocks that become grossly overpriced according to classical evaluation techniques due to the effects cited. Data presented in our web based "newsletter" section makes such situations clearly apparent for those stocks covered. If a high quality growth stock is not covered, it usually means that it has recently encountered a bit of earnings related difficulty or we consider it too expensive.

Dynamic investing involves the following:

1. Individual control of your investment portfolio. You should be able to do at least as well as the typical mutual fund, which fails to keep up with the major indices.

2. A source or sources of investment suggestions and stock data such as those provided by our services.

3. Selection of stocks that appear to offer exceptional long term capital gains potential.

4. Use of the Internet to gather as much supporting information as readily available before making a final buy or sell decision.

5. A continuous weeding process to eliminate stocks which become grossly overpriced or for which the fundamental outlook is no longer satisfactory.

6. An attempt to time purchases and sales such as to take advantage of the normal cyclical nature of prices.

Item 6 deserves an explanation. It is generally best to follow classical investment adages such as "never buy a stock in a clear downtrend", "let your profits run--i.e. hold onto stocks in clear uptrends", "don't send good money after bad--i.e. don't average down or add to positions that have performed badly", etc.

Fees as low as $5.00 per transaction are currently available. It is thus much less expensive for individuals to manage their own investment portfolios than 10-20 years ago, when fees often exceeded $100, even on transactions of modest size. It has also become feasible to manage your portfolio more aggressively, weeding out non-performing stocks, those that become overpriced, etc. Thus dynamic investing, as described above, is an appropriate way for modern investors to manage their investment accounts.