12-13-2019, 05:04 AM
(12-12-2019, 08:48 PM)fenders53 Wrote: 5. It's my opinion that blindly buying and holding a large amount of stocks is a recipe for under performing the S&P 500. That's OK if you are here for the entertainment, and I do enjoy this. My investment goals are risk adjusted at this stage of my investing life. I will sell as appropriate and if I underperform the index so be it. It's important to me that I outperform when the sky is black. Some famous old guy said "don't lose money".
Well, the thing is that risk and reward usually go hand in hand.
Unless you are really good, then logically with a safe portfolio you should lose to the index when times are good and outperform the index when the times are bad. And the other way around of course.
I'm exactly like you, I don't really care about beating the index when times are good. I want to have a portfolio that can take a punch or two when the times get rough.
But now, just for the purpose of this post, I checked my historical performance since the end of 2013, which is when I opened my investment account and really started to invest globally. I'm actually super close to the SP500 performance, beating the index just slightly. To be honest I wasn't really expecting this since I have always thought my portfolio to be more defensive than the SP500, which should translate to lower returns when the times are good.
Though looking at the chart, the more recent downhills that I see are last december and early 2018 and in both of those my portfolio declined less than the index. Who knows, maybe I've just been lucky.
With regards to the actual topic, I don't really have any written rules. I do tend to stay away from large tech companies. I do not like to invest in companies with negative EPS. I want to see a dividend, preferably a growing one. But these are not written in stone and as such I don't consider them rules. More like guidelines.
I buy every month, no matter what. Usually I split the money evenly between 3 stocks. Sometimes it's 2, sometimes it's 5. I really can't tell you how I choose these stocks, mostly it's looking at my portfolio and trying to see what is fairly valued. Sometimes I make purchases purely to balance the portfolio a little bit. I add new companies every now and then based on what I find. But there is no real science to any of this and as I said, no hard rules.