How to build a professional investment portfolio

In this article you will get a beginner’s guide to building your own investment portfolio (4 different methods). In the next article you’ll see how you’re screwed anyway. But first this:

Burying the grand piano

Pianos were all the rage in the early 1900’s. The iconic Steinway & Sons thrived together with hundreds of other piano companies.

You would almost be forgiven for investing your pension in Steinway as part of your BAH, Trend, Quattro or BLSH portfolio strategy (more about these four classes of investment methods last in this article).

Then, quite suddenly actually, recorded music stole their march, and the dying piano company had to use its aging wood inventory for building coffins (!) for war casualties.

Peak piano was reached quickly and early.

Since then the recorded music industry of course has expanded rapidly, and employs many more than ever worked in piano related jobs*. It’s only fitting that the futurologist Ray Kurzweil was responsible for the final nail in the coffin by inventing the piano synthesizer.

(*it’s not every day I use the word “piano related jobs” in a sentence, but when I do it’s glorious)

Peak everything

Malthusians have throughout history predicted peak food, peak wood, peak oil, peak energy, peak jobs and other catastrophic developments associated with the growing global infestation called humanity.

Right now, it’s automation that piques the doomsayers’ interest.

Is it different this time? It might be. Will unemployment rise uncontrollably, or will the advent of increasingly competent machines (as always before) just result in relieving humans of boring, heavy and dangerous work, rather than create an irreversible increase in unemployment?

Could the accelerating speed with which new inventions are made make a difference vs. history? Companies like Amazon and Google, e.g., have replaced labor intensive industries with machines and machine intelligence. Where are those laid off supposed to go? Unless they acquire new sets of skills, probably straight into long term unemployment. It really could be different this time with technology causing massive unemployment (not necessarily a negative development though).

A recent Freakonomics podcast episode elaborated on the death of the middle class, where clerical and blue collar employees in repetitive jobs risk being replaced by robots and AIs. Only work requiring a responsive and adaptive human touch, both in the low end (massage therapists, dog walkers) and high end (business managers, creative artists, psychologists, physicians, marketing) are safe (for now). The process of automation is speeding up and machines are increasingly crowding out humans from the middle and out.

Note: whatever career path you choose, make sure it’s creative and change resistant, preferably something where you utilize the rapidly evolving technological tools to ride upon into the future, rather than being replaced by them.

How is it different this time?

This article is neither about the death of jobs, nor about the future of technology. It’s not even about the new version (with a disturbing duplo picture of me) of my book The Retarded Hedge Fund Manager (free for newsletter subscribers).

It’s not about asking if various aspects of today are different from similar historic episodes. It’s about asking in which way it is different this time. Not least regarding the economy, money, wealth and in particular the financial markets.

The stock market is different this time

Okay, read-bait, I admit. But still, the market is different, everything is different. The question is only how. More about that later (my next article which I will publish shortly). Here is what is not different: investing.

The principles of investing remain the same as always, i.e. postpone consumption for productive endeavors, as opposed to gambling and speculation (buying things at any price, hoping for luck or a bigger fool). Investment is about value, true intrinsic value that is likely to be realized and compensate for the risk involved. You should approach investments in the stock market and investments in your own business in the same manner.

Four classes of investment methods

These are four of the most common investment methods:

  • Buy And Hold
    • Main local index
    • Global
    • Selective
  • Trend Following
    • Long only
    • Long and Short
  • Quattro Stagione (recommended)
    • Static
    • Adaptive
  • Buy Low Sell High
    • Long only
    • Long and Short

 Let’s go through the models in more detail below.

Buy And Hold

It couldn’t be more easy: Buy stocks any time and every time. Hold on to the stocks forever. Live off of the dividends and reinvest what you don’t need right now.

Over time (100 years, and most 25 year intervals) BAH has produced real returns of around 6 per cent per year. But remember that even the fantastic cycles of 1994-2003 and 1995-2015 only returned 7% per year (including dividends and adjusted for inflation)

The best things with BAH are:

  • It’s super easy, no maintenance at all
  • The returns are decent, as long as you don’t start investing too late in life and happen to get in near a peak
  • You’ll ride every bubble all the way to the peak, periodically making you feel like a genius

The main drawbacks are:

  • Sometimes the return is negative over 10-20 years
  • You have to stay calm when your portfolio halves in value every now and then, since you’ll ride every crash all the way to the bottom, making you feel exactly like the schmuck you probably are :)
    • (e.g., 2001-2002 and 2007-2009. In addition, before that, a BAH investor had to live through the downturn of 1998, the 1987 overnight crash, not to mention the crashes of the 1970s, which was an era eerily reminiscent of the current period since the year 2000)
  • The last 20 years leading up to your death can be hard to manage – the method has no guidance as to how or when to sell

If you want to try to improve on the model, you could be selective in which stocks to buy and hold, e.g.:

  • You could choose last year’s worst performing stocks and hope they rebound. This is most famously known as Dogs of the Dow, but it can really be the “dogs” of anything.
  • You could choose high growth stocks, e.g. stocks with the highest historical or projected growth rates or measured any other way you like.
  • You could choose particular industries, such as high tech only, media only or pharmaceuticals only or any combination that suits your preferences
  • You could choose your main national index – or some other country, or diversify globally.
  • You could churn your portfolio annually and replace your most expensive stocks with the cheapest stocks, or cheapest markets based on any valuation method or methods you fancy: P/S, EV/EBIT, market cap/GDP, various forms of P/E

In short, with BAH you’ll get low single digit returns over time (typically 2-6% real return per year depending on when you buy and how long you stay invested), while experiencing dizzying doublings, triplings as well as gut wrenching halvings. If you are lucky enough to buy near a trough and eventually sell at a peak, your average returns will of course be much higher.

The coming years any BAH investor should expect the S&P 500 index to dip below the peak level of year 2000, thus producing negative returns over 16-18 years, depending on when the downturn and subsequent recovery occur.

S&P 500 index 1994-2015

Investment Portfolio Methods

Green line: 600 day moving average

Trend Following

Device a trend identifying model (e.g., based on a moving average), calibrate and back test. Consider fees, trading too often on false signals and missing turning points by a mile. Then set your alarms and start trading.

Trend Following takes more work than BAH, at least initially, and it can be stressful when the model doesn’t deliver. In return, a well calibrated model can deliver (much) better than BAH. The hedge fund Lynx within the Brummer group (the same group as my fund Futuris), e.g., has delivered spectacularly well with its trend following models in all conceivable asset classes (stocks, bonds, currencies etc) over the last 15 years.

Look at the chart above and imagine you base your trend discovery and trading on the 600 day moving average for the S&P 500 index. Let’s say you decide to buy when the index breaks through the moving average from below and not just sell but go short when it breaks through from above. After one signal you have to wait one year (1 yr filter to avoid false signals) before trading again and then you buy or sell (or stay put) depending on which side of the MAV the index is by then.

With that extremely simple and non-optimized model you would achieve the same return over 1995-2015 as a buy and hold strategy. However, you would only experience one episode of -32% return, instead of two -50% crashes. With my settings above you unfortunately wouldn’t have caught the current rally until 1400-1450 and if a downturn starts soon you wouldn’t sell higher than around 1750, thus only bagging some 20%-points of the recent 200% rally. On the other hand, if the rally continues you would stay invested.

The best with Trend Following models is that they can produce higher returns with less downside risk than a BAH strategy.

The worst is that it can be difficult to trust one’s models fully. Back testing is not the same as future testing.

Quattro Stagioni

The four seasons model of portfolio building is a simple diversification model. Invest one quarter of your assets in, e.g., respectively stocks, treasuries, corporate bonds and gold. The asset classes can be complemented with real estate, soft commodities or longer shorter maturities for government bonds. Other adaptions include the same as for BAH (local, global, selective industries, laggards [aka dogs], cheap, growth etc.)

Reset the asset weights to 25% once a year or semi annually on fixed dates. Usually 2-3 of the asset classes will perform decently every year and make up for the one(s) lagging.

A more adaptive model, that I strongly advocate, increases the stock weights by 15%-points for every consecutive negative year on the stock market: 25%, 40%, 55% etc all the way up to 100% after five consecutive negative years (at which point you would have zero weight for the other three asset classes). Halve the stock weight after the first up-year but with a floor at 25%.

Another (daring) amendment could be reducing the stock weight by 6% points for every consecutive up-year that returns above 25%. After five such years you would be 5% net short in stocks. Or, set a floor at 0%, prohibiting yourself from going short.

The Quattro model takes a fair bit of work, in particular if you want to control the type of stocks and corp bonds in the portfolio rather than just pick the main index constituents. Perhaps you should avoid too much detailed work that eats into your quality time and might produce negative returns unless you know exactly what you’re doing.

The diversification reduces volatility. Adaptive weights both improves performance and reduces volatility. The Quattro model thus is better than both the BAH and Trend models, in particular on a risk adjusted basis (which also means you could try leveraging up, i.e. using borrowed money to invest more than your actual net worth).

In summary, the Quattro takes some work (as much as you like really), but it’s still simple enough for most. The draw downs are small (no crashes), the stress much less than for trend followers that doubt their own models, and the average return is at least as good as for BAH. This is the model most amateurs should adhere to.

Buy Low Sell High, a.k.a. the bullshit (BLSH) model

It really should be called Buy Cheaply and Sell Expensively, but old habits die hard.

Sounds good? Too good? Anybody calling “bullshit” on buying low and selling high? How do you do it?

Choose an objective valuation parameter (or combine several) for the stock exchange. Consider e.g. Price/Sales, CAPE (cyclically adjusted Price/Earnings ratio) and Market cap/GDP.

Over a century of market data, BLSH has performed consistently and remarkably well, for investments with a full business cycle’s (7-10 years) investment horizon. The returns have been at least as good as for the other three strategies and with much lower volatility and draw downs, thus opening up for using leverage (borrowing to increase the return).

Just make sure you do some serious back testing to identify appropriate trading levels. Decide whether to allow for going net short or not. Set alarms and start trading. 

You probably should combine the pure fundamental valuation signals with trend measures (e.g., uniformity among industries) and other technicals (such as junk bond yields) that could help signal peaks and troughs when valuation already is extreme. Just look at John Hussman’s trouble in the current cycle, where ridiculously high valuations have gone stratospheric, leaving him stranded with a fully hedged portfolio (and me fully short!).

BLSH takes a great deal of work. It’s difficult to set fixed levels for trading signals. It’s difficult to once and for all pin down what is expensive and what is cheap. In addition, extreme valuations can be sustained for years depending on the level of investors’ risk tolerance/aversion. The model performs nominally in line with the other models, but (potentially much) better on a risk adjusted-basis.

The best thing with the model is that it intuitively feels right, and like true investing, to buy things that are priced below their intrinsic value and that thus can be bought and hold indefinitely for a good return. And then sell (even go short) at levels where investor euphoria has driven prices above any reasonable measure of true value.

The next best thing is that the returns will be less volatile than BAH and thus allow for leverage (or simply sleeping tight)

The worst thing is that it requires real work (as all real investing does). Buying low and selling high can be made just as complicated as you like.

In addition you will miss riding bubbles to their peaks, thus making you look stupid in the final years of every mania.

The last 20 years of bubble blowing, and in particular the last 6 years, have given the BLSH a bad rep, whereas BAH has gotten the upper hand. Since I think both models will continue to hold up over time, it’s time for the tables to turn now, and let BLSH catch up to BAH the coming decade or so.

I personally prefer to use the BLSH model as a guidance for entire stock markets (right now it’s screaming SELL for the S&P 500) and short or stay neutral the market in the down phase.

Once markets are reasonably valued or getting cheap, I’ll start accumulating individual stocks, that I like and know particularly well, and stick to them until my market model signals SELL again (mainly based on big picture variables such as market wide P/S, complemented with risk aversion signals in the bond market and narrowing advance/decline ratios in the stock market).

In addition, I complement my stock portfolio in a Quattro Stagion-like fashion with gold and commodities, fixed income (lending to individuals and companies, buying convertibles etc.) as well as counting my living quarters as a real estate investment.

When to choose which model

  • If you are lazy but calm and composed, go for Buy and Hold.
  • If you are a little more easily stressed, and willing to do a minimum of work, go for the Quattro Stagione.
  • If you are somewhat more industrious, first check if the market is extremely expensive. Wait if that’s the case. Once it’s less extreme, start buying and holding. If you’re a Quattro guy, just adjust the stock weight appropriately – perhaps to 13-19% currently instead of 25%.
  • The next level, no matter if you started out with BAH or Quattro, is to keep a lookout for when the market is becoming extremely highly valued (like now). Then sell your holdings and wait for more reasonable times. That, however, takes constant surveillance – at least annual check points.
  • If you like to gamble and think you might be able to improve on billions of dollars’ worth of trend research, try your own trend following models. It’ll probably work like a charm for a while. And then you’ll go broke. Good luck.
  • If you’re really into investing and not easily stressed go for BLSH; stocks only.

I‘m somewhere between the Quattro and the BLSH type of investor.

A note on switching models:

If you have two models, like BAH (Buy and Hold) and BLSH that have both performed more or less equally well over a hundred years of investing, then you should switch from the one that has outperformed in the most recent 5-10 year period to the one that has underperformed. Well, unless you think the table really has turned and that it is fully different this time and going forward.

The last 2-3 years, BLSH has performed poorly, while BAH has been a spectacular success. Some might get an urge to switch from the lagging BLSH to the better performing BAH. That would, however, probably end in tears, as the BLSH is bound to catch up with BAH over the coming years, unless a hundred years of investing information suddenly has become worthless.

State of play – summary

I would advice against trying trend following. You’re up against mighty opponents and it has nothing to do with actual investing. It’s pure speculation.

Do go for buy and hold, but be prepared for 10 years of no or negative returns first (with a couple of halvings in between), before you start getting any rewards for your risk.

The market is currently more expensive than it has ever been (on some important measures for the median stock – more about that in my next article). That is not a good time to start investing in stocks.

I would thus recommend building a Quattro Stagione inspired portfolio of gold and safe corporate bonds and keep money in the bank, money market or short term treasuries. Given 6-7 years of consecutive bull years, I would keep the stock component to a minimum (rather than the standard 25% weight) until we see a significant correction (at least -25% from the peak). Personally I’m short the stock market now, but that’s not for everyone.

When the stock market is more reasonably valued on a P/S or market cap/GDP basis, and some market technicals turn more positive (dispersion, advance/decline, junk bonds), I would increase the stock weight to 25% (normal Quattro).

Since I am a stock guy at heart, if stocks fall deeply for 2-3 years, similarly to the troughs of 2003 and 2009, I’ll go 100% long in stocks only, going full retard BLSH until markets look expensive again, where I’ll switch to a Quattro strategy.

What do you do now?

There it is, four (three) time tested investment models, but really all boiling down to the Quattro Stagione  – perhaps complemented with the Rothschild advice of buying (more) when there’s blood in the streets. See any revolutions on the horizon?

And right now? Buy gold, keep cash, perhaps try buying some oil (I don’t have any right now, March 15, 2015), but stay away from U.S. stocks in general (unless you have some special, unloved, single stocks the market has forgotten about).

Wait. Study. Pounce (next year perhaps – stay tuned by subscribing to my newsletter if you want to make sure to get a note when I start buying stocks again). Continue reading the next post to see how things are different, and what it means for your potential investment returns.

Disclaimer: Nothing above constitutes any kind of recommendation to buy or sell financial instruments or engage in any kind of investing behavior

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50 Comments

  1. Great post. See compared to the last ones you absolutely killed it on the content front. Once you have this nailed you can start to add more your creative flair to the design.

    Each word sentence was gold compared to the previous posts. Just a dramatic improvement in the quality of writing. Well structured. And the book was improved as well.

    I’m not sure what your opinion is on Tim Ferriss (I’m personally not a fan at all, think the guy is a con-artist) but he made an interesting point about his blog – he said: “I try to make sure every single post could be read in 2-3 years, even a decade and still have value”. Posts like this people will come back for in two years, when they read through your archives.

    Will definitely be coming back for more! [About me: Young man entering investment banking in Western Europe]

    • You might be surprised to hear how difficult it is to assess your own work.

      I think TF is on to something there, but I still want to write posts that are time-bound as well.

  2. How about investing in the PERM etf (ETF that uses your Quatro strategy, also known as Permanent Portfolio, but only available in USA and not in Europe atm) or DCA into VOO (Strategy of WSP)?

    • PERM sounds good and easy. You might want to do some stock investing on the side to adjust for bull and bear markets, since PERM always stick to equal weighting, but otherwise it sounds fine. I’m not too picky about paying fees, if it makes my life simpler.

      DCA into VOO is a Local Buy And Hold strategy. Not my cup of tea. I would go more global and I wouldn’t want to buy any S&P at all above let’s say 1500.

  3. Thanks for this article, Mikael.

    Do you have an email I could contact you on? Have a few questions. If not no problem.

    Again, thanks for the article. I subscribed last night and I’m half way through your eBook.

  4. Great article Mikael. Very educational. Copied a bunch :)

    What is your opinion on Swedish real estate & construction stocks?
    Like:

    Real Estate:
    –Kungsleden.
    –Fast Partner
    –Fabege

    Construction:
    –NCC
    –Skanska
    –PeaB

    I know your stance on the Swedish stock market as a whole, but what I’m curious about is, do you think these stocks (or any others) would be more resistant to the aforementioned economics downturns?

    • My first action when considering if a stock is “safe” is to see how it performed in previous downturns. There is no reason to hope that any stock will do better in future corrections than they did in recent down cycles.

      Kungsleden halved in value 2011-2012 and that wasn’t even a “real” downturn for the stock market
      Fast Partner has only exhibited a couple of -25% corrections. I don’t know anything specifically about the company but they must have done good deals over the last five years. I would guess that has come with increased (interest rate) risk…
      Fabege dropped 40% in the 2011-2012 correction.

      Considering a larger stock market drop, and centered around interest sensitive stocks, I would expect much larger share price drops than the relatively mild corrections mentioned above.

      NCC halved in 2011
      Skanska “only” dropped by a third (-33%) in 2011, … so… relatively safe. But expect more in the next downturn.
      Peab dropped more than 50% in 2011.

      None of the mentioned seems anywhere near “safe”. That goes in general for all stocks on the market. You really can’t hide.

      What you can do is look for cheap stocks (will most likely get cheaper in the downturn; might even fall more than other stocks, but will bounce harder as well). Right now, I don’t have a list on (already) cheap stocks for the Swedish stock market. However I think Opus should be very good over 5 years (currently 8 SEK per share. I bought mine earlier this year at an average slightly below the current price). If it falls below 6 I’ll buy more. I’m also intrigued by Peptonic medical. However, there are no numbers for that company (just starting up), so it’s basically just speculating.

  5. I’ll refer back to this post like a gazillion times – thanks! Plus it makes for a handy place to refer interested friends to, when they curiously ask about this whole “investing”-thingy.

  6. Trying to set up a Quattro Stagioni, Sprezzaturian-style, with extra Brummer. But corporate bonds… What is the 80/20 way of investing in these? Do you have any advice on funds that can handle the investing in these for me?

    Been looking at:
    -SPP Obligationsfond (0,2 % fee)
    -SPP Företagsobligationsfond (0,4 % fee)
    -DNB Företagsobligationsfond A (0,6 % fee)
    -Swedbank Robur Företagsobligationsfond (0,7 % fee)

    Kind of thinking about closing my eyes, buying all four, and hoping for the best. (Hey, it’s still a strategy!)

    (This comment prolly would’ve got me blocked had I left it att WSPB) :)

    • I’m blocking you right now.

      :D

      I’m no expert on corp bonds. Buying all four is probably okay for the time being, while researching more thoroughly.

      How did they perform historically (during bulls AND bears)? Decide if you want to emphasize downside protection or upside “juice”.

      Final thought: Have you considered corp bonds outside Sweden? Not many investors would place 100% of their corp bond allocation in one single small country in the periphery.

          • Cool story bro!

            Just an update on this note, in case anyone (perhaps mainly swedes) wants inspiration for their bonds. I’m currently looking at this mix:

            -SPP Obligationsfond
            -SPP Företagsobligationsfond
            -SEB Corporate Bond SEK
            -Carnegie Corporate Bond A
            -Vanguard Total International Bond Index Fund ETF

            I BELIEVE this is somewhat diversified in regard to region and corporate/state, and a pretty track record in terms of stability. But I might have fucked up.

          • Thanks for sharing. Some 10-15% of my visitors are Swedish and I’m sure your list is interesting for them (and for me)

        • Sucker's rally.It's a long, long way to Tipperary. It's even longer for the DJIA to get back to 14000. Nearly every stock in the DJIA is overvalued by fundamental analysis. This is nothing but a search for yield in a regime of low interest rates, exactly what got us where we are. When production tanks later this year, we'll be back at 8000 or less and you'll be searching for more corners to turn.

        • Gotta say for the record Hughley has long been a lost cause. The man has a GED and every time he opens his mouth he shows it. Other than the firing of Lou Dobbs CNN's greatest move was canceling Hugley's show. There is a reason why everything the man get involved in gets canceled.

  7. I live in San Francisco, California and agree that both the stock marker and real estate locally is crazy.
    Would you still recommend buying bonds knowing the FED will raise rates eventually causing the bond values too decrease? If not, what is a good place or form to hoard cash waiting for the next downturn?

    • A couple of points:

      1. Bonds will at least guarantee you a certain nominal return, and not least return OF (rather than on) capital between now and maturity. That’s not entirely certain with money at the bank (although The Fed will probably bail out most banks if it comes to that)
      2. The Fed can in theory buy 100% of the outstanding stock of bonds as well as 100% of new issuance. You WILL get your dollars back if buying bonds. There may or may not be runaway inflation or a crashing dollar in the coming 5 or 10 years, but at least you’ll get your nominal dollars back
      3. Nobody knows how this will end. I have a guess. So does Janet Yellen. Macro and markets are inherently unknowable since they are about the future. That’s why strategies like Trend, BAH and Quattro exist – they are capitulation strategies: “This investment might look stupid but since I really don’t know and [trend], [diversify], [over time]…”. There MAY be deflation for 5-10 years. Bonds would look genius then. I don’t think that will happen, and I’m not buying any gov bonds myself, but it could happen.
      4. There really is no place to hide at this point. A bar of gold is pretty and eternal but you can’t eat it or sleep on/under it and there is no way of telling what it should be worth in terms of anything else. Bonds probably are bad investments in the interim (I think the Fed will start raising rates within the life span of a 5-10 year bond) and probably not good to hold to maturity either (due to currency and inflation risk). Stocks are historically expensive as a group, but you might find some local forgotten small/micro caps to invest in or start your own business. The same goes for corp bonds as for stocks – the search for yield has pushed down returns on most corp bonds below what is warranted but you could still find some gems here and there. Holding cash is no fun either, not to mention my disastrous short position in stocks, but cash is still slightly more flexible than bonds.

      So there you have it: there is no good place. That’s the whole point with financial repression, to flush out every bit of saved money into (overpriced) risky assets and hope it produces growth or inflation or both, to make the government debt/GDP situation sustainable.

      It’s not hiding or hoarding, but you could simply buy real things you really want: a farm, a beach house in Vietnam. Or stocks for the long run – sure you might sit with zero/negative return for 20-25 years (see my next post) before they move above the current watermark, but if you sit tight the whole time and add to your position during downturns it will still be tolerable.

      I’m still betting that things will be more or less the same as always. That means the central banks will stop their repression before the the global economy follows Argentina, Greece and Zimbabwe’s route. It means stock prices will correct downward in a typical run of the mill (or more) bear market before (cash) money turns to toilet paper. It means people who borrowed too much will be tight for cash once the downturn passes a threshold making valuations undershoot and creating buying opportunities for anybody with cash at hand. It might be only very briefly (probably will be) like 2003 and 2009. It might be more prolonged like the early 90’s.

      Bonds would still be better than corporate bonds or stocks in that scenario. Gold is just too weird to think about. That’s the only reason I can muster buying gold… :), but almost every developed nation is too deep in debt and growing too slowly. They MUST engineer inflation to stop the run-away debt/gdp situation. Hence I think there will be inflation. Before the US turns into Venezuela I think stocks and possibly bonds will crash but that gold would rise.

  8. Great article. I was on the Quatro route without even knowing it, glad to see my thinking wasnt completely wrong, i.e hold some gold and cash and cut down on stocks.

    Are you buying Opus yet? 5,70:- a share now :)

    • I bought a few more at 5,40 a couple of weeks back. I said then that I’ll keep buying on the way down to 4 if it gets to that, and buy with both hands at 4.00.

  9. This is a brilliant article, thanks Mikael. What about incorporating a preference for dividend aristocrats in your stock allocation? I have been migrating to the Permanent Portfolio and a focus on dividend stocks and would be curious about your perspective.

    • Not a bad idea.

      It’s basically a variation of the Buy and Hold strategy (there are many of those; I mean which stocks are you supposed to Buy and Hold in the BAH strategy?)

  10. Hej
    har kollat på en “Pizza” – portfölj som du rekommenderar för vanliga sparare.
    skulle du kunna rekommendera några tillgångsslag att köpa som finns tillgängliga på Avanza från varje del av pizzan.
    gärna med internationella inslag

    • Hej. Jag har inget färdigt pizzaförslag tyvärr. Min egen portfölj är mer aggressiv i dagsläget. Kort aktier, lång guld och olja samt några småbolag.

      • om jag kontrar med följande, har du lust att kommentera gärna komma med förslag:

        Aktier/Fonder 20%

        – Global fond – index
        – Sverige fond – index
        – Tillväxtmarknad – index
        – Små bolag

        Preferensaktier 5%

        – Akelius
        – Klövern
        – SAS

        Kontanter och korta räntefonder 25%

        – Spiltan Räntefond Sverige

        Obligationer och långa räntefonder 12,5%

        – SPP Obligationsfond
        – AMF Räntefond Lång
        – Vanguard Total Bond Market ETF (BND)
        – Vanguard Total International Bond ETF (BNDX)

        Företagsobligationer 12,5%

        – SPP Företagsobligationsfond
        – DNB Företagsobligationsfond A
        – Carnegie Corporate Bond A

        Guld 15 %

        – SPDR Gold Shares ETF (GLD)

        Fastigheter 5%

        – Vanguard REIT Index Fund ETF

        Olja 5%

        – Long olja H

        • Jag är också intresserad av pizzan. Jag kommer nog dra ner på aktierna till kanske 0-10 % i nuläget som Syding förespråkar. Hur tänker du när du lägger fastigheter och olja där det skulle varit guld? Man har väl guldet för en eventuell inflation vad jag förstår. Fungerar Olja och fastigheter på samma sätt som guldet?
          Frågan är dessutom om man ska variera långa obligationer och guldet nu när räntan är så låg?

          Jag skulle gärna att herr Syding skriver lite mer om “Pizzan”.

          Jag vill dock rikta ett stort tack till Syding som jag upptäckte genom podcasten 25 minuter. Var har du varit hela mitt liv? Mvh :)

          • hej Misantropen

            jag är som sagt inget proffs långt därifrån är jag den första att erkänna därför hade jag också uppskattat lite input från herr Syding.

            reala tillgångar och råvaror har jag läst att man kan kan komplettera med på flertalet ställen tror även Syding nämner de i något inlägg.

            så jag kör är att inget tillgångsslag får överstiga 50% och inget understiga 10%

            aktier 10%
            korta räntor 50%
            långa obligationer 10%
            Råvaror/reala tillgångar 30%

          • Jag gillar grupperingsidén att kalla olja, fastigheter och guld för “reala tillgångar”. Det säger mer än att kalla det för räntekänsligt, oroskänsligt, inflationskänsligt eller liknande. Sen gäller det att ha en fastighetsexponering som ger just realtillgångsexponering också och det är inte alltid lika lätt. Det är bara att ta upp några fastighetsbolags aktiekursutvecklingar över tex en 20-årsperiod…

            Just det ja, jag glömde kommentera företagsobligationerna. 12,5% låter väl bra och jag har inget extra att säga om instrumenten (men det hade ju varit bättre med internationella ftgoblisar om du hade hittat det).

            Just när det gäller ftgoblisar uppmanar jag alla att komma med input för att hitta ett riktigt intressant (globalt eller landspecifikt, gärna asien eller afrika) index. Om du skulle vilja minska din expo mot långa obligationer, aktier och eller guld, skulle jag välja att stoppa pengarna i cash, råvaror eller ett sådant ftgoblisindex.

          • :D

            Kul att du gillar podden och hittade mer av min produktion den vägen.

            Nu har jag skrivit mer om pizzan.

            OBS att olja, guld och fastigheter alla tre är mer komplicerade och komplexa än bara “räntan gör att”, “inflation gör att”, “oro gör att” eller “konjunkturen gör att”

        • Aktier 20-25% tycker jag är alldeles för högt i dagens läge, MEN som en klassisk quattropizza är det förstås kosher. OBS att preferensaktier faktiskt också är aktier. Fördelningen har jag inget direkt att säga om, utom möjligen att småbolag gått löjligt bra senaste året/åren och ofta ligger extra mycket för högt i värde på toppen av en cykel (vilket jag tror vi är just nu).

          Kontanter/korta räntor 25% låter bra, och Spiltan är säkert bra nog. personligen hade jag nog valt något större namn, men bara för att jag inte har tittat på Spiltan i detalj.

          Obligationer och långa räntor 12,5%: Jag skulle inte ha så mycket långa räntor, vad är uppsidan liksom? USA har trots allt börjat höja räntan. Kanske. Ja, ja, problemet med färre bonds är förstås att pengarna måste vara någon annanstans så det här kanske ändå är bra. I takt med att börsen faller och du ska köpa mer aktier så lär ju räntan hålla sig låg i vilket fall. Alltså är det nog en bra andel när allt kommer omkring. Fördelningen är på betrodda namn, så du kan känna dig så säker man kan. Bra.

          Guld: 15%. Oooops, DET är mycket. Inte ens jag har så mycket. Bra att du har valt GLD iaf. Jag har ju en del GDX också med normalt sett dubbla potensen, men givet din andel på 15% är det knappast att rekommendera.

          Fastigheter 5%: Jag kan inte Vanguard REIT, men Vanguard i sig ska du väl kunna lita på. Jag vet inte hur det här fastighetsindexet ligger värderingsmässigt, eller vilka fastigheter, belåningsgrader, beläggning mm som finns däri så jag kan inte riktigt bedöma det. Generellt är det en lagom pizzaslice och jag har knappast bättre idér än cash ändå om du skulle ta bort den. Tänk dock på att du säkert äger din egen bostad också, om du nu ska tänka i pizzaperspektiv. Kanske belånad t.o.m.

          Olja: Är Olja H ungefär samma sak som Olja S på Avanza? Nåja, så länge det är delta 1 Brent-exponering spelar det mindre roll exakt vad det är. Om du efter min genomgång skulle bli sugen att minska på någon av de andra bitarna skulle kanske mer olja och råvaror vara en möjlighet i din quattro, men i det stora hela ser din pizza mycket bra ut.

          Det enda jag riktigt reagerar på är som sagt att ha standardvikten 25% för aktier här efter 6-7 års aktieuppgång till nya all time highs. jag tycker vikten kan närma sig noll eller i alla fall 10% i ett sånt läge, och på motsvarande sätt gå mot 50-60-70% efter 1-2-3 rejäla minusår i rad. Personligen kör jag förstås mycket hårdare än så åt båda hållen (+/-100% aktieexponering), men även som en sund pizza tycker jag man kan göra något i stil med det jag nyss skrev.

          • Tack för ett så långt svar.
            Det jag reagerar på här är att du tycker 15 % guld är mycket när du proklamerar 25 % guld i blogginlägget? Vad rekommenderar du då att man ska ha i den slicen om man inte bara har guld? Oljans guldålder har vi väl för längesedan passerat och den bortrationaliseras väl snart (kan man hoppas).

            Jag själv hade tänkt vikta om portföljen till 25% guld (ETF), 25 % långa obligationer och företagsobl, och 50% cash/korta räntor. När börsen sedan faller ökar jag aktieexponeringen till 25% (jag tar dessa av cash-slicen) och faller den ytterligare ett år ökar jag kan med 15-20% som du förespråkar i inlägget. Det är ju som sagt inte speciellt troligt att börsen går upp nu efter alla år av uppgång.

            Nota bene; jag är en nybörjare och du bör behandla mig som en sådan :D

          • Jag förstår att det låter konstigt. Jag menar att väldigt få utom Marc Faber har 25% guld i sin portfölj. Andra guldbaggar brukar prata om “minst 5-10%” och mena “ca 5-10%”.

            En ren quattro med fyra årstider, där guld är en av dem ska förstås ha 25% guld, och tom mer ibland. Jag har dock svårt att motiuvera det när guld “egentligen”är värdelöst. Det är en försäkring eller en spekulationspost och i båda de fallen bör guld behandlas som det också – och därmed inte utgöra 15-25% med mindre än att man VERKLIGEN vet vad man gör in i minsta detalj.

            Min egen portfölj är så konstig att det inte är värt att prata om den i quattrosammanhang. Min portfölj är inte en långsiktigt sund portfölj, den är aggressiv och spekulativ – för att jag kan och för att jag har andra pengar, kontanter, utlånat, privata investeringar, obelånad bostad mm.

            Guld 10% tycker jag låter rimligt över tid. men visst,… just nu efter guldkrasch senaste åren så kanske man faktiskt borde ha 15 eller 20 eller tom 25% guld, på samma sätt som man bör ha mycket låg eller negativ aktieexponering efter alla år med aktiehausse.

            Det här kanske slutar med att du övertygar mig om att öka min guldexponering mer och snabbare :D

  11. Vad sägs om att öka alla andra tre slicarna med 5 procentenheter och dra ner guldet med 15 procentenheter? Låter det vettigt?

  12. How do you consider your place to live? Should it be part of the pizza? Hard to rebalance every year in case of a drop in value.

    • Well, if you can’t, you can’t…

      I still think you should make the calculation, even if you don’t do the rebalancing.

  13. Hi Mikael, I’m a new student of investing and thrilled to find your site. I’ve started to study risk parity, and am very attracted to the idea of implementing it, and hence am interested in Quattro Stagione.

    Based on my reading, it seems that your recommendation of 25% equities, treasuries, corporate bonds and gold is 75% weighted for being in favour in low or falling inflation; only the gold or commodities would be in favour in a high inflationary environment. Have I interpreted this correctly? Do you mind explaining further your rationale?

    Much appreciated,
    Trish (from Australia)

    • Actually the choice of asset classes as well as their default weights are up to you. I’m pointing out that the typical weights and assets are gold, bonds, corp bonds and equity, but you could have 5 slices or 6, or 3 for that matter. You could replace gov bonds with real estate, or add soft commodities, or change gold to platinum or bitcoin and so on and on.

      My own portfolio looks a bit different. Check out my post from June 21, 2017

  14. Excellent, and thanks for sharing.

    I am also a Pizza investor and the stock slice is +/- %100. Yet 100%, but my finger is always close to the sell button.

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