Diversification to Reduce Risk (in Dollars as of 10/31/2024)
Allocation Limits
Allocation Limits
Allocation Limits
To reduce risk, we limit portfolio investments to 7% per Company, 15% per Industry, and 30% per Sector. Our portfolio currently holds 39 stocks. It has been said that diversification is the only free lunch in investing.
Sectors
Allocation Limits
Allocation Limits
Spreading your investments across different sectors helps to reduce risk. We currently avoid Utilities and Real Estate because we see better opportunities elsewhere. 6% of our portfolio is now in cash, and we are looking for the right stock and entry point.
Class
Allocation Limits
Class
Having a good mixture of asset classes also helps to reduce risk. 53% of our portfolio is in Mid-Caps (stocks with a $2B to $10B market cap). Midcaps are preferred because they generally have less risk than Small Caps and can grow more quickly than Large Caps.
Beta
Other Asset Allocation
Class
A stock with a beta of >1 historically moves more than the overall market. This chart shows one-year beta's of <1 as Low, 1 to 1.19 as Medium, and >1.2 as High. 60% of our portfolio is currently in carefully selected Higher Beta stocks between 1.2 and 2.0 as we look to outperform the market.
Style
Other Asset Allocation
Other Asset Allocation
The battle continues yearly, with Growth Stocks outperforming in some years and Value Stocks surpassing in others. We prefer to have some of each Style and adjust as market conditions dictate.
Other Asset Allocation
Other Asset Allocation
Other Asset Allocation
Other assets such as Real Estate, Precious Metals, Bonds, Mutual Funds, and ETFs may also be appropriate, but this website is dedicated only to the individual stock portion of investments.
