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Slow Movers In Your Portfolio Will Cost You In Opportunities

Putting slower-moving stocks in your portfolio is a lot like hiring lazy workers who don't do squat for your business.

You're not going to make much progress with either, and both will end up costing you in lost opportunities.

In investing, the big money is made in leading stocks. In a tough market such as 2011, when the S&P 500 was flat, Questcor Pharmaceuticals (QCOR) rocketed 182%. Gun maker Sturm Ruger (RGR) jumped 119%. Jazz Pharmaceuticals (JAZZ) nearly doubled.

Sometimes, holding a portfolio full of older, slowing-moving issues can make for less headaches. Yet it can cause you to miss out on some spectacular winners during a bull market. Sometimes, the slow stocks may continue to fall while young, high-growth issues greatly outperform.

Investing by way of the CAN SLIM investment methodology does not entail automatically going to the market's most volatile issues. But Chinese or other foreign issues that fit the mold will often have more ups and downs that most other stocks.

While a slow mover may take a whole week to move a point or two, growth leaders will move several points in one session. Higher-priced stocks, such as Priceline (PCLN), Chipotle (CMG) or Google (GOOG), move 10, 20 or more points in a matter of minutes.

CAN SLIM is about trading in stocks of companies that own innovative products and services, high growth rates and strong institutional sponsorship. The time to buy is when such stocks break out of bases or clear secondary setups. CAN SLIM stocks are generally more volatile, but you have to trade where the action is in order to catch the big moves.

With 2013 being a solid year for the market (the Nasdaq up 38% and S&P 500 up 30%), a large number of leading stocks more than doubled, including Chinese social media innovator YY Inc. (YY).

The November 2012 new issue racked up a whopping gain of 253% in 2013. YY's run started after clearing a 15.37 buy point from a first-stage base in February 1. The 10-week consolidation showed a 21% correction, so it was too deep to be a flat base. But it featured weeks of tight closes, a positive feature, after running up from the 10.50 IPO price.

The stock bolted 36% before settling into another base. YY gave investors more buy chances, including a breakout at 20.99 and normal pullbacks to its 10-week moving average. AT&T (T) and McDonald's (MCD) lagged in 2013, up just 4% and 10% respectively.