Here is my initial list of replacement candidates for the third quarter 2008 portfolio reshaping:

AA    ACMR    ACS    ACXM    ADP    AEM    AEO    AET    AFFM    AHL    AIB    AINV    ALL    AME    AN    APA    ARP    ATWO    AVID    AVZA    AXS    AYR    BAGL    BCPC    BDK    BGC    BHI    BJS    BKS    BLL    BP    BRO    BRS    BSET    CAM    CBI    CBK    CCK    CCRT    CDNS    CFI    CKH    CMI    COG    COLM    COMS    CPB    CRDN    CROX    CSCO    CSL    CTB    DD    DELL    DFG    DLM    DRYS    DUK    DVN    EGLE    ENH    EP    ETP    FAST    FCX    FDRY    FITB    FLEX    FLXS    FRPT    FRZ    FSR    FTEK    FTO    GFF    GHM    GIL    GMT    GNK    HAIN    HAL    HAR    HAST    HCC    HCN    HCP    HELE    HK    HLYS    HNT    HNZ    HOC    HON    HRS    HRZ    HTH    INFS    IPSU    IR    IRE    ISCA    ISYS    IVN    JCI    JNX    JOSB    KCI    KEY    KMX    KOF    LMC    LPX    LRCX    LSTR    LZB    MAN    MAS    MCRL    MGIC    MHK    MHP    MI    MKSI    MOT    MPS    MPWR    MWA/A    MXGL    MYE    NBR    NBTY    NFX    NG    NM    NRG    NSHA    NTGR    NVS    NWLIA    OC    OCR    ODP    OIS    OKE    OMAB    ONNN    ORI    OSK    OXY    PAYX    PBI    PBY    PCZ    PHX    PKD    PKI    PPC    PPG    PRE    PRU    PTEN    PVA    PWR    PXP    PZZA    RCII    RDC    RDK    ROP    RS    RTN    SAFM    SCX    SENEB    SFY    SGIC    SGY    SI    SII    SJM    SKM    SKX    SLB    SLGN    SNDK    SNG    SNX    SNY    SPSS    STZ    SVR    SVU    SWN    TECUA    TEX    THOR    TLK    TMS    TPX    TRMA    TRN    TRV    TSC    TSO    TTC    TXT    UNF    UNT    URI    USU    VE    VLGEA    VLTR    VZ    WAG    WDC    WFT    WGOV    WNC    WRB    WTI    WTIU    WTM    WY    XEL    Y    ZNT    ZZ

Quite a melange, huh?  Well, my quantitative techniques will winnow the list down.  At this phase in the cycle, I am likely to lower my weights that I apply to future earnings.  Profit margins are declining in many places.

The second quarter was good for me on a relative basis, though being away from home, I suspect I am off a tiny amount in the first half, and that I was a little ahead of the S&P 500 in June.  The first two days of the quarter have not been kind, either.  Well, the quarter is young, and we have a lot of the year remaining.  The market is short-term oversold by my oscillator.  When I have opportunities I add a little here and there.

Over the long weekend, I should post the results of my industry and country screens.  I might begin my quarterly reshaping while on the road.  Pretty amazing what one can do with a PC, the Internet, and Bloomberg out in the middle of nowhere.

I try to ignore short term market moves, and just focus on what I have done well with in stock-picking.  Usually that ends up working well for me, though one can never tellwhat the future will hold.  No stock-picking method is perfect.  I try to make mine a little better by structuring my process highly, making fewer decisions, and making the structure of my decisions easier.  I don’t have to choose the best stocks, just a few stocks that will do better than the stocks that I am selling.  Keep repeating that formula, and the results can be quite good.

If you have other replacement candidate ideas, please feel free to pass them on to me and the rest of the readers.  I usually throw them into the mix, and sometimes I buy one of them.