Dan's portfolio

[earthtodan]

(04-11-2014, 09:23 AM)Dividend Watcher Wrote: I'm a little confused, the pie chart/allocation is based on what you already hold or what you want the balances to be? The wording was a little confusing to me.

At your age, that allocation seems good.

Hi DW,
I see how that's a bit confusing. The pie chart I posted is my target allocation. I didn't decide on the numbers myself; I came up with them by entering a desired starting allocation for each individual stock. Each position is assigned a profile, and the spreadsheet adds them up. I enter them in such a way that they always add up to 100%, no matter how much I enter. However I did massage the positions so that the balance looks right.

I came up with a really cool system for calculating a target percentage. It's in a Google Doc that streams prices and other info in real time from Google Finance. I'd post the link, but I don't know if that's entirely wise since it's linked to my Gmail account, but I'll try to describe it.

I don't enter a target percentage. Instead I enter my target Position Multiple (Px), on a scale of 1-5, which is kind of like my level of conviction for that stock. I end up with a column under the heading "Px" with numbers 1-5. At the bottom, the numbers are added in a cell. Say the total is 78. That means there are 78 basic units of conviction in my portfolio, each one being 1/78th of the total.

The next column determines the target allocation by multiplying (100/78) * the Px of each position. If my conviction for JNJ is 5, then my target allocation is (100/78*5) = 6.41%. This way I can play around with one position at a time without worrying about making sure they all add up. It also gives me my target allocation in $, based on the % of my total portfolio size, so I know how much to buy.

Say I want to add a position. I like the healthcare sector, and I want to add BDX. I add a new line in the appropriate place, enter my Px, and all the rest of them automatically adjust. I can see how adding BDX will slightly push down the rest of my % allocations. Say I give BDX a Px of 3, which brings the total to 81. That gives it a target allocation of 3.7%, but pushes JNJ down to (100/81*5) = 6.17%, along with everything else.

In fact, the percentages I posted in the image above are rounded for simplicity. In my spreadsheet they are all decimals.