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Portfolio Strategy


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Rather only talk about individual stocks or the overall market, I wanted to start a thread on the portfolio strategy.  My object is to return at least15% per year.


Here are some of my ideas for an aggressive portfolio and a conservative portfolio.

Both portfolios are 25% to 35% in cash, both have a small put position on the overall market.

Both portfolio have relatively small allocations to oil companies (Contago mostly) and Gold (bankers, junior miners, and Gold miners index).




Conservative: 5% oil, 5% gold (mostly in the miner's index), market put, 10% in  preferreds Well, Orh mostly; Luk; Brk; arbitrage positions; the rest in larger, balance sheet sound, statistically cheap companies.

Aggressive: 8% oil; 8% gold; market put; LUK; arbitrage; positions is smaller companies.


Any thoughts?


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My strategy today is simply to keep what I have = capital preservation. I think people are wayyy to optomistic about how cheap the market is, how cheap companies are etc etc. Yes, in 12 months we will look back and there will have been certain sectors and companies that will have done extremely well. Individuals who invested in said companies will have performed very well and may attribute it to skill.


I think we are in a very dangerous time. Paradigms are shifting. What was 'common sense' will no longer be so. This is not a regular recession. Cash is king. We are no where near then end of the pain... how can one 'invest' right now and not have a better understanding of whether we are in the 2nd inning or the 7th inning of this mess?     

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If its just strategy as it relates to Portfolio Management, there are all kinds of text books. There are a series of well defined steps, & mechanical execution will get you to a reasonable solution relative to your defined paramaters.


If its about application, look at the various academic papers on different topics. But do not expect someone to tell you how to apply the concept, or what to watch out for. These are essentially the value propositions that keep individuals in business.


There are very real differences between how public vs private money is managed. Most of it is fiducial, temprement, the relative strengths/weaknesses of the individual vs the institutional Balance Sheet, & estate planning. Strategy & execution are largely the same, just executed from a different POV. As the majority of the more successfull individuals are current & former Portfolio Managers, Treasurers, CFO`s, etc. , much of the ìnvestment`skill set is similar.


Most private money is individuals investing for a specific purpose (buy a house, pay for a wedding, go to school, etc.) The majority of the `return` is as practical education, vs actual $. Generally longer term views, as many of those individuals will go on to be those future PM`s, Treasurers, etc. WEB does the MBA students, this is `School of hard knocks`.


Be a little more specific.






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A continuation of portfolio strategy--What are people using for cash equivalents these days?  Somewhere someone suggested ORH callable preferred as cash.  But that presumes that ORH/FFH will call them in 2010, which is reasonable but not a cash equivalent in my book.  It is a reasonable conservative investment but hardly cash!


Now that the arb spreads have come down, are the purer arbs on the board doing fewer?


Further parameters on our portfolio--patient capital, absolute return, (but should beat S&P) can show year to year losses and or underperformance, (probably not three year though.) No high water mark issues, no institutional imperatives, shorts and derivatives are used.


SD your brickbat is acknowledged ;).  Nevertheless, what I'm interested in is what others are doing.

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