I bought 1,200 SE @ 26.64

…on this pullback. Natty play. With the wacky weather patterns, earth quakes, famines and pestilences, there will be disruptions…and blood.

The company pays a nice dividend, by the way.

 

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Portfolio management is a four step process, the first of which involves establishing an investment policy statement.

Regardless of whether or not you are an institution, average investor or Joe trader, you will benefit from having a policy statement.

A policy statement is a road map. In it, you want to specify the types of risk you are willing to take and the extent you are willing to take them. You also want to define your investment (or trading) objectives. Once you decide on those elements, all decisions should be based on the policy statement to ensure that they are appropriate. The policy statement is your plan, your strategy in writing.

If you fail to plan,…..then plan to fail.

The goal of the policy statement is to define your investment needs, both short term and long term, and your expectations. While it won’t guarantee your success at trading or investing, it will instill discipline for the investment and trading process. Making those hasty and inappropriate decisions are what you are trying to avoid.

Another reason a policy statement is useful is that it creates a standard by which you can judge your performance. It helps you define your goals.

The goal of “banking egregious amounts of coin”, or “to make more money than God”, is not a legitimate policy statement. For one thing, it may not be appropriate for your comfort level with risk. Plus, surely you must be joking.  Secondly, it’s too open-ended to provide specific guidance as to the investment vehicles you’ll use and the time frame you’re investing or trading. No, “to bank egregious amounts of coin” is more suited to rolling the dice in Vegas, or buying $1,000 in lottery tickets every week, or camping out at the racetrack.

Here are some questions to ponder that might help you walk through the process of constructing a policy statement.

1. What are the real risks out there if things turn south? What’s the worst case scenario, especially in the short term?

2. What are the probable emotional reactions I may have if the market has an “adverse financial outcome”?

3. How knowledgeable am I about the markets, investments, and/or trading strategies?

4. What other capital or income sources do I have, should the market get the “homo hammer of death”?  How important is this portfolio/trading account to my overall financial position?

5. What, if any, legal restrictions might affect my investment needs?

6. What, if any, unforeseen consequences of short term price fluctuations might affect my investment/trading policy?

As in all important plans that you lay out, your goal should be to not only articulate your policy, but to put it into writing and review it on a periodic and regular basis.

In closing, developing a policy statement is work. It forces you to think through and define your whole investing or trading methodology and how you handle risk. Most people will not take the time to complete this first step. Having a policy statement in writing that you can articulate, is what will set you apart from the average trader or investor.

 

 

 

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Let’s talk about this.

Look at the big picture…How do you manage your portfolio? What’s your strategy?

Because we are all different, our strategies will be different.

Risk drives return. Therefore, the practice of investing funds and managing a portfolio(s) should focus mainly on managing risk, rather than on managing returns. The practical implications of risk management should be looked at in the context of asset allocation.

Asset allocation is the process of deciding how to distribute your wealth among different asset classes and countries for investment purposes. It’s also been a buzz word that gets thrown around from one end of the investment kingdom to the other. But asset allocation isn’t a one-decision event. It’s actually a component of a structured portfolio management process and strategy.

Regardless of who you are, or how simple or complex your investment needs may be, you need to start out with a policy statement before you jump in the markets and start buying with “both hands”.

The portfolio management process isn’t about getting the highest return in the shortest period of time. It’s not a sprint. It’s more like a marathon.

I can say, without a shadow of doubt, that if you don’t look at investing like it’s a marathon, you’ll not be prepared for the long haul and you’ll burn out. Most people can’t trade day in, day out, on a consistent basis. You get tired, bored, discouraged, distracted, overconfident, euphoric, irrational, undisciplined, lose focus, etc. etc. etc. This is why you need to have a long term strategy, and it starts with an investment policy statement.

Developing…

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Here’s an update on the stocks I started buying 05/12/08. Since then, three more stocks were added: GLW on 05/13/08; BIG on 05/14/08 and TTEK on 05/16/08.

So far, the group of 22 stocks (equally weighted) is up 5.34% month to date as of the end of trading 05/29/08.

Performance:

Alpha’s  +5.34% MTD

S&P 500 +1.14%  MTD

Dow  -1.36%  MTD

Naz  +3.96% MTD

Top three winners:

EAC   +19.51%

CLF   +17.95%

CLR   +17.95%

Top three losers:

FTI   -5.25%

MOS   -2.98%

AGU   -1.73%

Sector allocations: Energy 37.71%; Materials 34.46%; Industrials 16.46%; Info Tech 7.65%; Consumer Discretionary 4.34%. 

Holdings: (current prices) and purchase prices:

[[AGU]]@86.26

([[AKS]]@68.99

[[BIG]]@ 29.05

[[CLF]]@89.40

[[CLR]]@51.90

[[CNX]]@91.41

[[EAC]]@55.52

[[FDG]]@69.30

[[FLS]]@121.10

[[FTI]]@75.48

[[GLW]]@25.74

[[MA]]@291.75

[[MEE]]@58.50

[[MOS]]@126.98

[[MTL]]@52.11

[[PBR]]@65.55

([[POT]]@199.26

[[SGY]]@67.39

[[SID]]@47.44

[[TTEK]]@ 24.92

[[WFT]]@41.99

[[WLT]]@83.87

I will post changes as I go along.

Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial advisor prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates. Trade at your own risk.

 

 

 

 

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Just in case there are some of you out there that are thinking about buying CROX because it’s “cheap”….

 

 

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Infrastructure is key to economic growth and development. Currently, developed nations are faced with deteriorating roads, bridges and ports. Emerging economies have a big need to build and develop transportation, communications and energy / power networks in order to compete.

The price tag for all this has been estimated at over $40 trillion, according to industry sources and the U.S. Dept of Transportation.

Catalysts for infrastructure spending include:

1.) Urbanization of developing countries

2.) Population growth

3.) Privatization of infrastructure financing and management

4.) Government mandates

5.) Public opinion

Infrastructure assets provide the groundwork for economic growth and modernization. Categories of infrastructure include transportation (toll roads, shipping ports, airports); energy (pipelines, equipment, services, storage, transportation, alternative power-solar, wind, etc.); utilities (electric, gas, water) and communications (wireless, broadcast and cable, satellite systems).

Companies involved in these areas will see their stock prices rise significantly for the rest of this decade and into the next. In other words, this is an area where you want to play and invest—for a long time.

We will also see institutional money like pensions, endowments, foundations, mutual funds, sovereign investment funds, etc., continue to pour money into these kinds of stocks. Why?

Because infrastructure companies have several attractive investment characteristics:

1.) Long-lived assets and stable cash flow

2.) High barriers to entry and significant capital requirements

3.) Monopolistic structure due to government regulation and limited competition

4.) Inelastic demand — essential services that are resistant to economic downturns

These factors have the potential to generate stable growth and income for years. (Exactly what Baby Boomers in this country are needing, by the way.)

Investing in global infrastructure is a pure play on a country’s or region’s economic growth. It’s also a good way to diversify globally. In addition, according to Zephyr Associates, global infrastructure stocks are not closely correlated to global stocks or global bonds. For the past five years ended 2007, global infrastructure stocks were only 73% correlated to global stocks and 51% correlated to global bonds. So, they could be considered a sub-asset class.

Infrastructure is a major long term investment theme.

Some ideas here include [[MIC]], [[VE]], [[EXC]], [[CIG]], [[SKM]], [[CHT]]. There are many others. If you have any that come to mind or that you currently have positions in, post them here. I’d like to compile a watchlist to follow, update and share with all of you.

Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial advisor prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates. The author may have a position in one or more stocks mentioned here. Trade at your own risk.

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