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Portfolio Strategy From A Retiree's Perspective

May 02, 2018 11:51 AM ET5 Comments
The Hedged Economist profile picture
The Hedged Economist


  • Diversifying to produce stability and Alpha will follow.
  • Each piece of the portfolio should serve a purpose.
  • Managing large issues can be simplified by breaking them down.
  • Provide for one's basic needs first, but anticipate surprises.


This is a first in a series of postings that will focus on looking at a total portfolio in terms of its components. Specifically, it breaks down the total portfolio to focus on groups of holdings with slightly different objectives. There are a number of authors on Seeking Alpha who manage portfolios as one single portfolio despite holding shares of a broader number of individual companies. My experience has been that that approach requires a level of trading and analysis beyond the scope of the effort I'm willing to put into achieving retirement.

Focusing on groups of stocks within the portfolio facilitates a greater level of stability in the holdings. It can result in slower growth and income over the short run, but if the components of the portfolio are carefully selected and bought at advantageous prices, it can result in Alpha over the long run. Long run doesn't refer to months or even quarters, rather the focus is on multiple years until retirement and then in retirement.

Previous postings providing updates on the portfolio (e.g., “Dividend Growth Portfolio Update,”, Oct. 16, 2017, Dividend Growth Portfolio Update, or “Year-End Portfolio Summary: Keepers Carry The Portfolio,” Dec. 31, 2017, Year-End Portfolio Summary: Keepers Carry The Portfolio) presented the entire stock portfolio of 40 some holdings. However, as stated in the December 31 year-end summary:

“No stock in this portfolio is held for its own sake. It is a part of the portfolio with a portfolio objective that is more or less permanent. Any objective for an individual stock is very temporary. For example, it is nice to get a bump up in price immediately after the purchase, but that bump up in price does not justify a semi-permanent holding as a part of the portfolio.”

In many respects, looking at the

This article was written by

The Hedged Economist profile picture
No surprise: The Hedged Economist is an economist. I’ve been at it for more years than I like to admit. If one leaves graduate school with a degree in economics, there are really only three options short of abandoning the degree and starting over. The options are: “doing” economics, telling people about economics, and applying it to your own affairs. I’ve done all three. Currently, my focus is on applying economics to my own affairs especially financial management. That isn’t new, but my blog (hedgedeconomist.com) represents a departure. Traditionally I have avoided giving other than the broadest advice regarding personal finance, especially investing. It doesn’t take behavioral economics research or financial neurology to know people believe that they are responsible for their own financial success but fail because of bad advice. I also kept my opinions on policy to myself. People prefer confirming information, another startling discovery of behavioral economics; imagine that; people prefer “yes” men. So, given little upside and all the downside, a perversely asymmetric set of returns (that’s economist speak for a bad bet), I’ve stuck to my own affairs. But, increasingly, I get asked for my opinion, thus the blog.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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