March’s brief correction provided a buying opportunity – GEARS (BLC, TIE, LLY)

Author: GEARS

Model: Speedboat

Disclosure: Long BLC, TIE

I continue to trim the Speedboat model for more rapidly accelerating companies. It has become more difficult in recent weeks. The market is overbought and shares are commonly trading near the top of ranges. Corporate wealth is accelerating broadly and strongly. For the Speedboat to stay ahead of that requires better than average acceleration.

Opportunities to buy better than average acceleration at a depressed price were few last month, but the short correction associated with the Japan disaster did create opportunities to buy  Belo (NYSE: BLC) and Titanium Metals (NYSE: TIE).

Selling opportunities were more common. Sells of Eli Lilly (NYSE: LLY), Integra Life Sciences (NASDAQ: IART), Thoretec (NASDAQ: THOR), Colgate (NYSE: CL), Henry Schein (NASDAQ: HSIC), MDU Resources (NYSE: MDU) Computer Associates (NASDAQ: CA), and Power Integrations (NASDAQ: POWI) reduced the leverage in the model.

I believe that more and better buying opportunities will present themselves over the summer, so I am keeping buying power in reserve to act when the bell rings.

The Speedboat portfolio is not well equipped to deal with a market correction. When the market has a down wave, the Speedboat peak to trough is more severe. But each down wave provides opportunities, so the Speedboat aims to consistently rise to new highs with a rally.

Even with the high octane requirements of the model, the Speedboat is well prepared for a summer correction, should it occur.

To create a successful stock portfolio requires attention, consistency and discipline. Most of all, it requires an information edge. Years of research have shown me that shares of companies that are profitable, with rising shareholder wealth, perform better.

Robert Gay