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  • Establishing a Portfolio for our Future

    I am a believer that all portfolios should have different strategies. You should have different asset classes, different time horizons, different applications of theories, and different tax diversification strategies utilized by some of the greatest investment minds. In other words, we need both stocks and fixed income. We need to be hedged for market volatility, and we need to generate income and take advantage of upside to achieve alpha. For stocks, we will invest in best in breed, but we also will need contrarian, income producing, speculationand value playsOne strategy that I am not a big fan of is momentum chasing. Instead, we will hold cash positions until the price of the stock aligns with our investment criteria which will include a margin of safety.

    As part of a Peter Lynch type exercise of investing in local knowledge, I asked my fiance to provide me with 5 companies with brilliant ideas that will be a big part of our lives the next 10 yearsTwo companies in her list fit certain investment criteria for us to build our portfolio for future wealth. GOOG and VZ.

    Google traded down below the $500 range for a little while, which I thought was a steal given their dominance in ad space as well as growth in their Android platform. Investors seemed a bit sour on Larry Page's performance during a conference call, but fortunately for our portfolio, Google smashed earnings the next quarter and the stock has since soared. While we do want to stay active to lock in our profits where we can, we decided to hold here because we feel that the best is yet in store for Google.

    Verizon provides us with a solid dividend and the opportunity for future growth. Even though Verizon does not have the international presence that makes other opportunities so appealing, the company still has room to grow within the U.S. At the very least, since Verizon is both our provider for television, internet, and mobile, it's somewhat of a hedge for us.

    Other ideas that were considered were AAPL. While Apple is a great company, we would not achieve diversification since Apple and Google look more and more like direct competitors every day, especially with the recent acquisition of Motorola Mobility (MMI). Another stock which was mentioned was KNOT, which was recently changed to XOXO. I don't have an issue with the change in the ticker symbol, but the company completely rebranded as XOXO group. While I agree with my fiance that millennials will eventually tie the know, past performance cast doubt that management will be able to capitalize on future returns and pass them through to stockholders.

    So far, our investments in these 2 positions initiated in June has yielded positively, despite the market turmoil. Going forward, we hope to re-position the portfolio to lock in profits where we can and further diversify amongst asset classes. We hope to contribute a certain amount each month to continue to build our portfolio which will allow us grow over time to meet obligations going forward including donations to charity, college education and retirement. All investment decisions will be made between the both of us.
    Aug 15 9:56 AM | Link | Comment!
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