Dan's portfolio business plan

[earthtodan]

(05-18-2014, 07:46 AM)cannew Wrote: If one wishes to rebalance than this sounds like a good system, however, I would not sell good stocks just to rebalance.

Agreed, active rebalancing is not in the plan. It is reserved for when I swoop up way too much of a stock on sale like SDRL or ARCP, and hopefully get an opportunity to lighten them up at a profit later, and collect a cool dividend in the meantime.
To this point, the cell in my spreadsheet that calculates the amount I should theoretically rebalance says "Buy [#]" if I'm underallocated, but says nothing if I'm overallocated.

(05-18-2014, 08:43 AM)hendi_alex Wrote: Looks to me like many are making this thing way too complicated. Of course if that is what it takes to make the process both interesting and provide a comfort level, then such is probably the correct recipe for a given individual.

Alex,
True. I tend to overanalyze things when I get the bug to study and understand. There's no way I can ever know the true quantitative risk or value profile of a stock, so in the end I just have to invest and diversify, and go about my life. However as you observed, the goal of this exercise is for my own comfort. Having come up with a rational formula that somewhat mirrors the convictions I've arrived at intuitively gives me some assurance that I'm not just throwing darts. I guess in the end I don't actually want to use a formula, I'm just trying to confirm that I can trust myself to invest my own money.

I grew up in a family that viewed the financial universe with great suspicion, and as a result I never learned anything about investing. My grandfather, after living through the Great Depression, put all his savings in US treasury bonds and never touched a stock in his life, and my parents manage their money very simply. Anything that smacks of Wall St they avoid with a shudder. In fact, I didn't even really understand what a bond was, or that my family used them, until recently. So, I'm climbing a steep learning curve. When I do that I tend to dive in a little deep. The catalyst was working for a company that went public, finding myself with a bunch of money to manage, and then realizing that I'll need it to retire. The investing universe is large and there's a lot to unravel, and I find intrinsic stock valuation baffling, which is probably why I find it so interesting. Eventually I'll wear myself out and move on to the next thing, at which point I will hopefully be able to execute my dividend growth strategy with minimal attention.