The system for research

Ideally (and hopefully I will stick more to this ideal), the stocks I pick will fit each of these criteria:
(Note, a lot of this is straight out of the CANSLIM system by William O'Neil according to the book Market Wizards)

1. Current EPS in the 80+ percentile range
2. Annual EPS growth, check last year growth vs. 5 year average growth
3. New - New product or service, new market.. etc
4. Shares outstanding (less than 25mil, average 12mil, median 4.6mil)
5. Leader in relative strength (high performers)
6. Institutional sponsorship.. prefer to have a good amount but not too high
7. Market - The current market situation and technicals

I guess this is the 7 things I'll start with. A simple stock screener could do about 5 of the 7 letters.. (all except N, M.. so I guess that spells CASLI)

For the technical analysis of the stock I will for now defer to sites like http://americanbulls.com and http://stockconsultant.com. For N I will actually go visit the company website and research news I suppose.

Another aspect of this is diversification. There are arguments for and against diversification, and here are the best ones I've heard:

FOR: It's important to diversify, not only in the stocks you pick but also in how correlated each of the stocks in your portfolio is. As such, it's important to diversify across markets, across countries.. etc.

AGAINST: Diversity is a hedge for ignorance. If you know what you are doing and are doing the right amount of research, it's actually a good thing to have all of your eggs in just a few baskets. Obviously diversity still becomes more important as you are managing more money.

Finally, there is this idea of speculation. Up until now every criteria I listed above are about fundamentals or technicals, but there is also a camp of people who believe that you can make a lot of money by speculating and timing the trades. This is probably most true for biomed companies, where news such as FDA approval could make your stock a ten bagger over night. So if I were to play such a market, one might argue that I simply put a bit of money in each of these 'small bets' that may become big.

Anyway, as I progress I hope to refine this system more. For now I have a general idea that except for the SPEC-plays, I will try to follow the above CANSLIM criteria for stock picking. And I will hopefully limit the amount of SPEC plays in my portfolio to about 20-40%.