A Not So Lazy Portfolio

Hopefully we are now back to regular blogging after the Gladiator Fire. The lazy portfolio concept is intriguing on different levels. The blending of assets is interesting as is the idea of getting from here to there with the least amount of work possible. The opposite of a lazy portfolio might be some sort of frenetic day trading procedure. That leaves a lot of room in the middle for all sorts of strategies. Personally I am not a fan of a truly lazy portfolio for my money but there is merit. I thought it would be fun to put together a not so lazy portfolio of individual stocks with a defensive overlay. We don’t own any of these stocks but we do own some names that are similar. The idea with these stocks is there is very little likelihood of a blowup, they are generally well run not that there aren’t occasional problems but of course the fortunes of any company can change at any time for any reason which is where the defensive overlay will come in. I dug up one name for each of the ten sectors, tilted to yield and with plenty of foreign. Only one stock for each sector makes for a poorly diversified portfolio but can still be an interesting blog post (hopefully). Tech–Seagate Technology (STX) Seagate has been around for a long time and has matured into a low debt high yielding stock. It currently yields 3.8% and has a mid single digit PE ratio. Certain parts of tech have become sources of serious yield in the last few years. Seagate popped up...

Barron’s Ranks Annuities

Barron’s had an odd cover story this week which ranked the top 50 annuities. I have never been a fan of annuities because they are usually very expensive and I do not like the idea of relying on an insurance company to stay in business. My mother had an insurance company fail on her (I had nothing to do with her buying an annuity) which contributes to my sentiment. There are of course some that are not that expensive. One observation that I have shared in the past is that anecdotally I know a few people up here who have annuities and they absolutely love them. I have no idea whether they paid a fortune to get into them, I have no idea if they really understand what they own but they do understand the income stream and they do provide comfort without the worry of being in the stock market (talking end user perception). To the extent any of these folks were with insurance companies that were on the brink in 2008 I don’t know whether they knew they were on the brink or not but this is a big part of why I personally want no part of them. I do acknowledge the comfort they appear to provide. Last night I started working on a regular post for today but got called out on a lengthy medical call so hopefully regular blogging will resume tomorrow but in the mean time please weigh in with what you think about...

Barron’s Ranks Annuities

Barron’s had an odd cover story this week which ranked the top 50 annuities. I have never been a fan of annuities because they are usually very expensive and I do not like the idea of relying on an insurance company to stay in business. My mother had an insurance company fail on her (I had nothing to do with her buying an annuity) which contributes to my sentiment. There are of course some that are not that expensive. One observation that I have shared in the past is that anecdotally I know a few people up here who have annuities and they absolutely love them. I have no idea whether they paid a fortune to get into them, I have no idea if they really understand what they own but they do understand the income stream and they do provide comfort without the worry of being in the stock market (talking end user perception). To the extent any of these folks were with insurance companies that were on the brink in 2008 I don’t know whether they knew they were on the brink or not but this is a big part of why I personally want no part of them. I do acknowledge the comfort they appear to provide. Last night I started working on a regular post for today but got called out on a lengthy medical call so hopefully regular blogging will resume tomorrow but in the mean time please weigh in with what you think about...

The Big Picture for the Week of May 27, 2012

It looks like the ordeal with the Gladiator Fire is over (it would not be a Black Swan if something did happen). A week ago there was no certainty about any aspect of the fire but the uncertainty seemed to fade slowly over the course of the week–thankfully. This was the first Type One Incident to threaten our area so obviously it was my first Type One Incident. There was another large fire in 1972 that I believe predates the current typing system. I made certain decisions on preparing for just in case based on trying to avoid Walker Rd turning into a parking lot under a get out now type of evacuation. Going in it was obvious that not everyone would be happy regardless of the outcome–this is true of every decision made by any fire chief on any topic. We’ve had very little push back but there was a little which again is to be expected. The interesting thing is how some of the biases and fallacies we talk about with investing came out during this event, an event that would seem to be much different than the process of managing an investment portfolio. This isn’t necessarily a shock but it is interesting to see these sorts of behaviors exhibited in a completely different context. One final note (hopefully) on the fire is the extent which I learned a lot, was able to get a structure protection plan devised by people with far more experience and (hopefully) raised the profile of our department made this a net positive despite some serious uncertainty early on. Unfortunately fires this...

The Big Picture for the Week of May 27, 2012

It looks like the ordeal with the Gladiator Fire is over (it would not be a Black Swan if something did happen). A week ago there was no certainty about any aspect of the fire but the uncertainty seemed to fade slowly over the course of the week–thankfully. This was the first Type One Incident to threaten our area so obviously it was my first Type One Incident. There was another large fire in 1972 that I believe predates the current typing system. I made certain decisions on preparing for just in case based on trying to avoid Walker Rd turning into a parking lot under a get out now type of evacuation. Going in it was obvious that not everyone would be happy regardless of the outcome–this is true of every decision made by any fire chief on any topic. We’ve had very little push back but there was a little which again is to be expected. The interesting thing is how some of the biases and fallacies we talk about with investing came out during this event, an event that would seem to be much different than the process of managing an investment portfolio. This isn’t necessarily a shock but it is interesting to see these sorts of behaviors exhibited in a completely different context. One final note (hopefully) on the fire is the extent which I learned a lot, was able to get a structure protection plan devised by people with far more experience and (hopefully) raised the profile of our department made this a net positive despite some serious uncertainty early on. Unfortunately fires this...