portfolio question

so i was talking to my friend earlier and he asked me for some advice. he says he has a portfolio of 20 or so stocks.

he had no system and would just buy random stuff that he thought would go up (what a ZIP). most of his stuff is up over the last 5 or so years but some positions are down.

so now he says he wants to become a value investor but most of his holdings dont fit his criteria for security selection.

he was asking me what to do, should he liquidate his positions and only keep the ones that he thinks fit his new style, keep all and just open a new brokerage account to do his new style investing, sell the losers and let the winners ride, or what?

p.s. he didnt say how much he has in his account but i think its around 50 grand.

If “your friend” can liquidate his unsuitable positions without tax implications, then he should just do that. There’s no real point in holding some random stocks if he thinks another balance is better for his needs.

This sounds like a recipe for disaster.

ti sounds like he doesnt really know what he is yet and is just testing shit. i would tell him to buy etfs and use a simulation. he needs a concrete set of values.

personally i feel the value vs growth thing is retarded. in any investment you have price and growth, they are intertwined. there is a garp - growth at a reasonable price ideology. with that said, value usually outperforms growth because with growth ppl tend to overpay, so there is that bias. people who tend to say i want to be a value ivnestor or growth investor, should really just buy etfs cuz they dont know what they are talking about.

If you really want to be a good friend, tell him to put 75% into index funds (US equity, international equity [emerging/developed]) and he can use the remaining 25% for his value stock picking.

i dont think its a tax deferred account. he said he uses scottrade lol

his claim is that he wants to buy stocks at cheap valuations so i assume that includes both value and growth stocks and whatever else

i told him to put everything in facebook, he laughed at me LOL

i think this might be the best idea. not sure what hes gonna do with his current portfolio

If he’s one to read research, tell him to check out Joseph Piotroski’s F-score for value and Mohanram’s G-score for growth.