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A Case Study In Portfolio Management
#1
Last July I built a portfolio representing how I would invest a lump sump of one million dollars if for whatever reason I came into a pile of money. I went with a batch of 40 stocks that I felt were reasonably priced, high quality, and provided a decent yield for the portfolio. The portfolio has done quite well over the last year, so I wrote an update article discussing the winners/losers and what lessons I learned looking back at the selections.

As usually happens with articles on Seeking Alpha, there was some good discussion that followed, and the question came up about what possible trades I would make to improve the portfolio. This led me to an idea for a new series where I will track not only the original 40 stock portfolio, but will also make trades in the portfolio based on changing market conditions to cut the losers and replace them with "better" companies. I will then track both portfolios going forward to see if the trades resulted in improved performance, or if simply being patient and holding the original selections would have been better.

My plan is to revisit the portfolio every year, make any changes to it that I see fit, and then continue tracking the original and each new iteration and make comparisons between them all. I think this could be a nice case study in portfolio management, and also could be a nice way to see how recency bias and lack of patience can affect long-term investments. It it better to be patient and hold positions through a business cycle or trade in and out of stocks as sectors see ups and downs?

The response so far has been good and I'm excited to see what unfolds. Hopefully I can learn something from the exercise.

Article #1
A Dividend Growth Stock Portfolio For July 27, 2015

Article #2
If I Had A Million Dollars...One Year Later

Article #3
If I Had A Million Dollars: A Case Study In Portfolio Management
My Blog: DGIfortheDIY.com
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#2
(08-08-2016, 09:35 AM)EricL Wrote: Article #1
A Dividend Growth Stock Portfolio For July 27, 2015

Article #2
If I Had A Million Dollars...One Year Later

Article #3
If I Had A Million Dollars: A Case Study In Portfolio Management

I've read all three and like the premise.  It will be interesting to see what levers improve/hurt the overall performance.
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#3
Unrealistic premise, how many people will have $1 Mil or even $500k to invest in a lump sum. Also because its a lump sum investment, the major objective is Capital appreciation, though DG is computed.

Why not take the same premise but set up a portfolio list (say max 20 stocks) for someone who can invest say $1,000 to $3,000 per month and is seeking Income Growth. To assist with this objective, set buy prices and market drops as the buy points. Have all the dividends reinvested and plot it for several years to see much income the portfolio generates, and as a footnote, capital growth.
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#4
(08-11-2016, 10:55 AM)cannew Wrote: Unrealistic premise, how many people will have $1 Mil or even $500k to invest in a lump sum.  Also because its a lump sum investment, the major objective is Capital appreciation, though DG is computed.

Why not take the same premise but set up a portfolio list (say max 20 stocks) for someone who can invest say $1,000 to $3,000 per month and is seeking Income Growth.  To assist with this objective, set buy prices and market drops as the buy points.  Have all the dividends reinvested and plot it for several years to see much income the portfolio generates, and as a footnote, capital growth.

The original premise for the portfolio came from a reader's comment asking how I would invest my cash if I sold a business, got an inheritance, cashed out an IRA, won some money, etc. So, realistic or not, that was the basis for the article.

As to your second idea, this is essentially what I do with my public portfolio that I write quarterly updates on. It started as a $25K portfolio back in the beginning of 2013 and has roughly $300 per month added to it. I highlight all the trades I make and give quarterly updates on my dividend income and the capital growth.

Here is the thread talking about it.
My Blog: DGIfortheDIY.com
Seeking Alpha Author Page 
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#5
Here is part IV of the series:

If I Had A Million Dollars: 2 Years Later

Enjoy!
My Blog: DGIfortheDIY.com
Seeking Alpha Author Page 
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#6
Nice article Eric. But you left off JNJ, HON and UPS. I know hard to add them all lol Wink. I was actually thinking about adding more AMGN and PM here.
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#7
(08-08-2017, 09:16 AM)divmenow Wrote: Nice article Eric. But you left off JNJ, HON and UPS. I know hard to add them all lol Wink. I was actually thinking about adding more AMGN and PM here.

JNJ and UPS are both in there if you open up the spreadsheets. HON had too low of a yield when I built it as I was generally looking for 3%+ on my initial buys.
My Blog: DGIfortheDIY.com
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#8
Thanks Eric. I don't even see the spreadsheet. Got a link? Thanks for all you do.
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#9
(08-08-2017, 09:42 AM)divmenow Wrote: Thanks Eric. I don't even see the spreadsheet. Got a link? Thanks for all you do.

Try this link.
My Blog: DGIfortheDIY.com
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#10
works great. Thanks so much!
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