I analyse a huge amount of performance data to narrow down the universe of potential candidates for the portfolio. Every single stock available for investment on eToro (around 3,000 individual stocks!) is considered, and only the very best make it through this filtering process. These are generally the stocks that have good short-term, medium-term and long-term momentum.
From this much smaller universe, I look at each company individually. I aim to select high quality companies with good long term growth prospects - this is where the "buy good companies" part comes in. Valuation is considered ("Don't overpay") but sometimes you do have to pay a premium to become part-owner of an excellent company.
This is more subjective, using my own judgement to build a diversified portfolio to minimise risk and volatility. This involves deciding what percentage to allocate to each individual stock, as well as taking a high level view of the portfolio to make sure that there's a sensible allocation to each sector.
This step is just as important as the others. I generally only make small tweaks to the portfolio, and I don't try to time the market by trading in and out of positions. Good companies should be held for a long time in order to benefit from their success.
