Monday, October 20, 2008

10/20/08 Stock Buy List - Changing My Purchase Strategy

With the stock market decline in 2008, I've decided to update my buy list, in anticipation of a good buying opportunity in the near future. No stock met my criteria in the modified Unemotional Investor Growth system. Therefore, I have chose the top five stocks. For background, see My Stock Picks for Q1 2007 for a description of the modified Unemotional Investor Growth system. The Top 5 system is a direct application of the Unemotional Investor Growth system described in the book The Unemotional Investor by Robert Sheard.

My Wealth Builder Buy List - 10/20/08
StockSystem UsedTarget PriceTarget Shares
Kansas City Southern (KSU)Top 5


Hess Corp (HES)Top 5


CF Industries (CF)Top 5




Flowserve (FLS)Top 5



To avoid buyer's remorse again, I plan to wait for a further market correction before taking any long positions. The approach I will use is to sell a November expiration put with a strike at about 50% of the current price. For reference, here are the current prices and 52 week highs.

My Wealth Builder Buy List - 10/20/08
Stock10/20/08 Price52 week highPut Month, Strike, Price
Kansas City Southern (KSU)$30.93


Nov 30 - $2.55
Hess Corp (HES)$57.38


Nov 30 - $0.50
CF Industries (CF)$60.97


Nov 30 - $1.30
EMCOR (EME)$19.87


Nov 17.50 - $1.15
Flowserve (FLS)$66.21


Nov 40 - $0.60

Based on the availability of November put options at strikes 50% below today's price, I will try to sell November 30 puts for both Hess Corp and CF Industries. Selling a put obligates me to buy 100 shares of stock which has fallen below the strike price. If Hess Corp or CF Industries are below 30 on November 21, 2008, I will gladly buy either of the stocks.

Disclosure: At time of publication, I do not own shares of any stock mentioned in my trading accounts. Hess is owned in accounts managed by our financial advisor.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

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