simonapper (< 20)

Making Sense Of Good Advice

April 14, 2011 – Comments (0) | RELATED TICKERS: SXCI , DAR , BWLD

 

Boomers for whom retirement is now a major "hair on fire" problem are finding out that nobody cares about their retirement as much as they do themselves.With pressure on social security, medicare and medicaid, it is going to be up to the individual to figure out how to maximize their retirement potential. We simply can't leave it to somebody else to figure it out or just to look at our investments once a year -- if we want the most out of it in the end.

There is a constant barrage of information about the best stocks to buy this year, insider tips on how to beat the market and so on. Most of us become overwhelmed and shutdown -- preferring to wash the cat rather than wade through this confusing and demoralizing information.

It needn't be as complex as it seems at first. If you start with an overall approach -- diversify (stocks, bonds, real estate and commodities), be systematic (monthly review, quarterly review) and set your strategy (buy and hold, minimize downside risk), you can filter out 90% of the information which isn't relevant for you.

Recently Tom Gardener's Top 5 stock watchlist was published:

Watchlist Stock

Healthcare Services Group (Nasdaq: HCSG  )

Atheros Communications

SXC Health Solutions (Nasdaq: SXCI  )

Buffalo Wild Wings (Nasdaq: BWLD  )

Darling International (NYSE: DAR  )

We have started tracking these stocks by building a portfolio comprising $2000 for each of the five and creating simulated historical results.

 

Name                                  Last 1 Year   Last 3 Years   Last 5 Years

P Tom Gardner`s Top 5 Watchlist        33%     34%
VFINX S&P 500 Index                          9%       1%               2%

VBINX Balanced (60/40 stk/bnd)          7%        3%               4%

Observations

You can see the additional returns compared to a balanced fund

You can see the additional volatility compared to a balanced fund

Ideally you would want to merge the stability properties of the balanced fund and the growth of the equity fund

An interesting combination would be combining  this simple  six fund ETF portfolio for stability and making 20% of the portfolio this higher growth stock selection

Conclusion

This is a portfolio with potent performers which is great for those who are tracking the performance daily. For those who are looking to invest longer term, a portion of the portfolio might be dedicated to stock picking but the majority will be in long term assets. We will check back on a quarterly basis to see how this selection continues to grow.

Disclosure:

MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical