I had second thoughts about my second thoughts and decided to allocate dollars earmarked for long term capital appreciation. We are talking about a wide swath of securities, so I will not inundate this blog with the details. If you are curious as to what I bought, all trades are posted and listed inside of The PPT.
The details are fairly straight forward. No position is bigger than 5% of holdings. Everything is divvied up between the 7 principal sectors of the market. 66% of the stocks earmarked for long term capital appreciation are mega caps, greater than $10 billion in market cap. The median cap in the S&P 500 is $18 billion. I am purposely imitating the index.
33% of the stocks are under $10 billion in market cap. I set aside 5% of my capital for short term trades and another 10% will go towards high beta stocks, intended to be long term holds. The mantra of the allocation is GARP (growth at a reasonable price). And, finally, 25% of the capital is reserved for cash because of seasonality. In the event of a market pullback, the 25%, which is now placed in TLT as a cash equal, will be liquidated and allocated amongst the current holdings.
The only thing left to do is position into the high beta names, which I will attempt to time perfectly.
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Fly,
When allocating capital for long term investments, do you try and buy these stocks below their 200 day moving average or anything? Or does the long term nature of the investment make bargain hunting kind of moot?
Never mind, missed your earlier post, “… I don’t want to micro manage entry points in what will probably be 5 year holds.”
no position bigger than 5%? why the lack of conviction?
Long term holds. The individual isn’t important, only the allocation.
buy NUGT
Banned
Do you recommend this strategy for the average asshole? By which I mean me.