Sunday, January 15, 2012

Weight and Diversification

With the holiday dinners, baking, and cookies done its time to talk about weight...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Weight by income is something I not seen discussed before. Awareness of it could well be more important then weight by position size for a dividend investor wanting to live off of their income.

The Model Portfolio is still very young with only 5 positions. Do I balance out he weight right now? If I am to have 25 position in Phase 2 of the Investing Account then I have plenty of time because at that point ERF should only be a 4%-5% weight. It will still be a lot higher then WMT which would probably only have a 1.5% but the risk to me would be limited.

But could one fix this and get the weight by income balanced? To do that right now I would have to have about a $850 position in WMT.  Keeping everything else the same that would not only mean 6 more deposits going to WMT but that would push its weight by position over 30% and cause a new problem.

Apart from waiting and letting diversification lower the risk there is also dividend growth that will help. Over the years, WMTs 17% growth will catch up to ERF and the other high yield positions.

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.


  1. In your investment spreadsheet or in the description of this account about the spreadsheet, you should make note that you started with TOS and shares were not DRIPPED until you move to sharebuilder

    1. Not a bad idea but it might be a bit unnecessary. Since I sold all the positions at ToS everything is now over at Sharebuilder. When I did that I did $250 orders I did not carry over whatever the previous balance was so they are really more like new positions with a new start date.

      In the future I might be switching back and forth between DRIP and nonDRIP income so there will be further mingling of the styles.