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Author: Stevenjwallace One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27423  
Subject: Portfolio Weighting Date: 10/27/2012 2:52 AM
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As a new investor i'm looking through my portfolio and analyzing the weightings of my stocks.
How do i determine what percentage my stocks should carry?
I am looking for a diversified portfolio, but am unsure which stocks should have a larger place in my portfolio. Should growth stocks have more, or dividend stocks a larger percentage?
In the current market, what would be good percentage weightings from certain sectors?

Much appreciated
Kiwisteve.
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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26243 of 27423
Subject: Re: Portfolio Weighting Date: 10/27/2012 5:04 PM
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I've been investing since I was around 18 and I'm 29 now. I'm pretty much following the same strategy now that I was 11 years ago.

I'm young enough and my risk tolerance is enough that I'm comfortable with growth stocks, but not putting everything in aggressive growth stocks.

My portfolio has 20 individual stocks and funds.

33% is in the mutual fund VINIX, which is meant to track the broader market. My next two largest holdings are Disney and Apple. Disney provides a decent amount of diversification in itself (media network, parks, consumer productions, studio entertainment). I also inherited most of this Disney from my grandfather, and have been slowly selling it to reallocate. Disney I would consider a stable growth stock, and Apple is moving from an aggressive growth stock to a stable growth stock in my opinion. Apple is only so high because it's grown so much since I bought it.

#4 is OAKBX, another mutual fund that is meant to track the market, but also provide some income and preservation of capital. When I started my 401k I split my contributions 80/20 between VINIX and OAKBX. If I had to do it again, I'd do it 100% VINIX. I'll probably realloact 100% to VINIX in 2013.

#5 is Proctor and Gamble, a stable growth stock that used to provide segment diversification, but they've been selling off a lot of they non-househould brands (Folgers coffee, pringles).

The top 5 holdings make up 2/3s of my entire portfolio. If they were all individual stocks I'd be concerned, but since two of them are mutual funds, I'm not concerned.

The remaining 33% is split between 15 segement ETFs (Infomation Technology ETF, Utilities ETF) or individual stocks, some slow growth (GE, Hasbro, Johnson and Johnson), others more aggressive (Telsa Motors, Corning Glassworks, Molex). I don't follow these companies anywhere near as closely as I should and hope to get better about that in 2013.

As I get older (early 40's) I'll move away from the more aggressive stocks (which even including apple only make up about 18% of my portfolio today) and more towards stable growth and dividend performers. As I near retirement (late mid - late 50s) I'll probably move even away from the stable growth and towards more secure investments.

WRJ

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Author: Stevenjwallace One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26244 of 27423
Subject: Re: Portfolio Weighting Date: 10/28/2012 3:26 AM
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Thanks WRJ,

I should give you some disclosure on my weightings to see where i might be going wrong. From Largest to smallest:

Ford (F) 27%
Goldcorp Inc (G.to) 16.5%
Corning Inc (GLW) 16%
Intel (INTC) 13%
Johnson & Johnson (JNJ) 10.5%
Waste Management (WM) 10.5%
Rosetta Stone (RST) 3.5%
Azure Dynamics (AZD) 3%

I have money in bonds in New Zealand but looking to take that out and put into a mutual fund at the end of the year. I am also 32 years old.
Does this like a diversified portfolio? Are there any sectors i should be in that i am not?
(Azure Dynamics is no longer trading so i'm locked into this worthless stock at the moment. I'll sell that position asap).

Thanks for any help
Kiwisteve.

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26245 of 27423
Subject: Re: Portfolio Weighting Date: 10/28/2012 7:21 AM
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Eight individual stocks would be too few for my tastes.

Looking at the sectors you have (I've combined Corning and Intel):

Automotive 27
Mining 16.5
Tech 29
Consumer Staples/Healthcare 10.5
Industrial Goods 10.5
Consumer Discretionary 3.5

I think you are a bit heavy into automotive, especially since it's only one stock. I own Ford as well and feel they will do well long term, but I wouldn't put 27% of my portofolio into them since they still have the debt that they didn't shed by filing bankruptcy that GM and Chrysler did.

Tech is the same thing - you have almost 30% of your portfolio in two companies, one of which has not has a good past few years due to commodity costs with foreign competition (Corning); even intel is having some trouble this year, although both have decent dividends (3% for corning and 4% for intel). If you want to be bullish on information technology look into the ETF VGT (http://finance.yahoo.com/q/hl?s=VGT+Holdings) and check out its top 10 holdings (Intel is there). Apple makes up 19% of the fund but that also means the other stocks in the fund make up 80%.

One of the reasons I have a decent amount in a well rounded mutual fund VINIX (besides not being able to trade individual stocks in my 401k) is that is helps provide me with diversification into the sectors I don't care to follow enough to research individual stocks. Just be aware of funds with heavy weightings in a single company (Apple is probably going to be the top holding in any total market mutual fund today due to is massive market cap, between my holdings in VINIX, VGT and Apple directly, I have more in Apple than I think I do. Not a bad thing, but something to keep in mind.

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Author: JustMee01 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26246 of 27423
Subject: Re: Portfolio Weighting Date: 10/28/2012 1:44 PM
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No financials. Yes, many are still afraid of financials because of the crisis. Yet, many financials are cheap as a result.

There are some that are high risk that are very cheap. Others have had a little run up. Many insurers can be bought at historically nice prices and many of those are very solid long term performers.

Two I own are Aflac (AFL) and Berkshire-Hathaway (BRK-B). I also own BAC, but that one's not for the weak of heart and needs to be actively traded. It's not a long term hold. Buffett recently disclosed that he's still buying Wells (WFC), so he sees it as still holding value. However, the big banks could weaken fast if the gov't decides to get more militant if Obama gets a second term. That said, they could soar in a Romney victory. There's definitely the potential for the election having an impact.

Energy might be another sector worth looking into, with oil prices softening a little. Patience might be warrented though. Oil may have more downside.

I'd concur that that's pretty heavy for Ford, which I also own. European headwinds will remain a problem. Hopefully, they can get the unit turned to neutral before US sales fully kick in. It would be a shame to pour those US profits into continued European losses.

Peter

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Author: Stevenjwallace One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26247 of 27423
Subject: Re: Portfolio Weighting Date: 10/29/2012 4:36 AM
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Thanks guys,

I understand i'm heavy on Ford at the moment and that is because it is a full position. The other holdings are partial positions in which i'm looking to add as they become cheap and have the capital to put into them, so Ford's weighting will come down as i fill out my portfolio.

WRJ, you are right that 8 stocks are not enough and i plan to have between 15-20 business over time. I'm in that process of finding the right ones.

"No financials. Yes, many are still afraid of financials because of the crisis. Yet, many financials are cheap as a result."

i have not considered the financial sector because i'm not confident i can totally understand the business as well as i should, but Berkshire is an interesting prospect. What would should i look at when valuing Berkshire?

I don't have any high growth stocks, are there any you suggest I take a look at? I also have a utility i'm watching (Spectra Energy) and just waiting for it to pull back to the price i want.

Much appreciated
Kiwisteve.

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Author: kahunacfa Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26248 of 27423
Subject: Re: Portfolio Weighting Date: 10/30/2012 1:15 AM
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As a new investor i'm looking through my portfolio and analyzing the weightings of my stocks.
How do i determine what percentage my stocks should carry?
I am looking for a diversified portfolio, but am unsure which stocks should have a larger place in my portfolio. Should growth stocks have more, or dividend stocks a larger percentage?
In the current market, what would be good percentage weightings from certain sectors?

Much appreciated
Kiwisteve.
- Stevenjwallace | Date: 10/27/2012 2:52:08 AM | Number: 26247

My portfolio when I first started it in 1974 invested in ten different companies with ten percent of the portfolio invested in each company. As the portfolio grew and as the number of companies held increased, I strove to have approximately five percent of the portfolio invested in each company with a five to ten percent cash position waiting to be invested in the next new bright, compelling investment idea.

Kahuna, CFA
Investment Professional
1974 - Present

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Author: Stevenjwallace One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26249 of 27423
Subject: Re: Portfolio Weighting Date: 10/30/2012 4:00 AM
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Thanks Kahuna,

Is it standard practice to have equal weightings throughout your portfolio or is that you personal preference?

I was thinking for a younger person with a longer investing period to have heavier weightings on growth stocks, and later in life change more to income generating stocks.

My portfolio clearly doesn't reflect that at the moment, but my stomach for risk is not very high. I definitely want to add some growth stocks in the future.

Kiwisteve.

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Author: kahunacfa Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26252 of 27423
Subject: Re: Portfolio Weighting Date: 11/3/2012 1:01 AM
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It is generally my personal preference to initially start with stocks being equally weighted in my portfolios. Those weightings change, of course, based on the differences in performance of each company.

For example, with the Apple I bought in 1997 at $10 1/4 per share <pre-split> the Apple weighting has gotten quite large. I sold some of the Apple shares after the first Apple eight-bagger, but still retain a large position in the company. Post the 2 for 1 split, the cost of my Apple shares are $5.125 per share.

Kahuna, CFA
Investment Professional
1974 - Present

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