The Intelligent Investor Top 10:
The list will be for growth and income oriented investors who wish to generate above-average total returns through both capital appreciation and rising dividends. Questions and comments on the businesses, or the list as a whole, are both invited and appreciated as it forces investors, including myself, to defend and reinforce their ownership. As an intelligent investor, if you cannot present a rational and prudent reason for owning a business, SELL IT!
Some positions in the list are for there for defensive reasons, while others are for growth. It is always important to possess a little bit of both. No matter how right we think we are, it is important to remember that even the Intelligent Investors can never be right 100 percent of the time.
THE INTELLIGENT INVESTOR PORTFOLIO:
- I SHARES SHORT-TERM BOND ETF XSB
- RIOCAN REAL ESTATE REI.UN
- I SHARES S&P 500 ETF - CDN CURRENCY XSP
- SUNCOR ENERGY SU
- SHOPPERS DRUG MART SC
- BANK OF MONTREAL BMO
- GENERAL ELECTRIC GE
- IMPERIAL OIL IMO
- TMX GROUP X
- JOHNSON AND JOHNSON JNJ
Other personal positions will be added to the list when, and if, they replace one of the Top 10 holdings.
Happy Investing : )
I'm interested in your XSB choice. I recently divested of two bond funds; CLF and CBO (both Claymore) because I was under the impression that in an up market, these funds will go down. Certainly the trend over the past 1 to 5 years appears to prove this so my plan was to move this capitol into something a little more 'robust' until such time as the next downturn appears imminent. Although we may be in for a period of slow growth, I don't subscribe to a double dip any time soon.Your thoughts?
ReplyDeleteHey Stephen,
ReplyDelete1) XSB is the "short-term" bond fund index, managed by IShares, which is cheaper than Claymore and a lot more liquid, so the pricing is often more accurate.
2) People only have so many places to put their money, so you are right in generally thinking that if stocks are going up bonds might be going down because there would be less demand for them. However, downturns only generally appear imminent if there is an inverse yield curve... meaning that long-term rates are lower than short-term rates, or if a market is "over-bought," which means that prices are too high based on fundamentals. In this respect, though we have a normal yield curve, we easily might have an over bought market. Earnings yields, or how much you actually get for every dollar invested in the market, is only about 5.5 percent in Canada... not great considering the risk. Bonds, therefore, can simply act as a cushion against any upcoming pull-back, and a place to pull money from to get deals in the market... not necessarily as a place to earn more money.
3) Also, short-term bond funds do not behave the same as longer term funds. They are never more than a few years in duration, on average, and the rates in the portfolio will actually largely adjust to the current market interest rates, as opposed to getting hammered when interest rates go up. If we know we are probably in for a period of slow growth... I agree with you on that one, then the extra earnings yield over bonds will not equate to that much unless we choose the right stocks. Bond money allows us to earn something while we search for the right ones.
I hope that helps,
Matthew.