How To Find And Hold Winning Stocks For The Long Run | Summary and Q&A

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August 22, 2019
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Investor's Business Daily
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How To Find And Hold Winning Stocks For The Long Run

TL;DR

Learn how to adapt IBD's growth investing concepts to the institutional world by focusing on three key factors: innovation, positive operating momentum, and positive price momentum.

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Questions & Answers

Q: How did Vernon Bice get into investing and the IBD world?

Bice became interested in growth investing through his stepfather, who read IBD religiously. He learned from his mistakes and evolved his investing process before joining Lord Abbett and focusing on technical analysis.

Q: How does Lord Abbett adapt to the volatility of the market as an institution?

Lord Abbett classifies stocks into four categories and has a maximum cash level of 5%. They also have stable growers and defensive areas of the market to reduce risk during market downturns.

Q: How does Lord Abbett's team determine when to sell stocks during a pullback or a downtrend?

They use the 150-day moving average to determine the trend. If the price is above the upward-sloping moving average, it's considered a pullback. If the moving average turns negative and slopes down, it's considered a downtrend. They aim to cut their losses quickly and let their winners ride.

Q: How does Lord Abbett balance risk tolerance and concentration in their portfolios?

Bice started with a small amount of money and invested in 2-3 stocks as a retail investor. As an institution, they aim to be diversified but concentrated, with portfolios of 25-75 stocks. They adjust their position sizes and diversify to manage risk.

Summary & Key Takeaways

  • Vernon Bice, portfolio manager for Lord Abbett, discusses how he got into investing and adapted IBD's growth investing concepts to the institutional world.

  • Lord Abbett's team focuses on investing in companies that are innovators and have positive operating and price momentum.

  • They classify stocks into four categories (secular, stable, defensive, and cyclical) and use technical analysis and absolute and relative price momentum to make investment decisions.

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