First Crack at a Focused Rebalancing
This is my first blog post as well as my first attempt at rebalancing my portfolio. For background, I began investing in my Roth IRA immediately upon accepting my first full time offer after graduating college. I started simple enough with stocks I knew which lead to me “investing” aka gambling on stocks I found interesting or made the news. Somehow, this strategy along with investing in wide market ETFs produced less than impressive returns – 14% (unadjusted for dividends, buybacks, fees, etc.) since 2008. I recently brought a child into the world which has led me to reevaluate my finances. As a point of reference, I’m employed full time with no debt other than student loans and am 28 years old.
Ok…here goes my first shot at a “focused” i.e. disciplined approach to rebalancing. Right now my portfolio is skewed…20% in medical, 20% technology and 20% financial sectors. I’m hoping to manage risk a bit more conservatively. ANY thoughts, suggestions, opinions, rants are welcome!
o For ease of discussion, assume $10,000 of resources.
- Current portfolio contains 23 seemingly random equities and ETFs
o Planning on dollar cost averaging into my selections over the next quarter to reduce risk of poor entry point.
o Well begin by locking in gains and liquidating to cash
1. 10 established core holding stocks (60%) - Large Core, Dividend > 2%, MOAT (subjective), ROE >15%, PE<20
2. 2-3 ETfs – (30%)
o Gain exposure to sectors a) not covered in Section I and b) “riskier” sectors
- Small Cap
- International (ex-US)
- Tech ETF
- Real Estate ETF
3. 2-3 Mid Cap/Small Cap Growth Stocks (10%)
· Screen and Results
1. JNJ, ABT, MCD, MO, CVX, CSX, KMB, C, SPDR, MMM
- Added CSX, KMB, MMM
- Reduced position in C, but will maintain
- Reducing position in SPDR
2. VB, VEU, VNQ, XLK
3. LPSN, EBIX
- Currently in my portfolio as losses. I think both are very oversold and represent a good risk/return
Any thoughts?? Ideas? Concerns? Am I crazy?