Sample portfolios always fascinated me. For more than thirty years I
subscribed to many investment newsletters and magazines from all over
the world. And most of these publications would regularly publish
portfolios that they recommended at that stage.
I used to study these portfolios and researched why the recommendations were made. I can't recall that I acted on more than one or two recommendations during all those years.
I have always been reluctant to invest in the equity of an industry that I don't understand. Financial instruments and derivatives fell into the same category – I didn't understand it! What's more, I have always been a conservative investor. I have probably missed out on several really lucrative investments, but so be it. I do not have the nerves for more risky investments!
I think you want to invest in a diversified portfolio that you feel comfortable with. That you can understand and that you can easily track. I also learned that volume of trade is important. When you want to sell a particular investment there should be sufficient trading volume to complete the transaction speedily.
The current depression played havoc with the tradability of many investments. Where there used to be good trading volume it dropped to almost nothing.
So, why do investment newsletters and magazines publish these recommended portfolios? I can only assume that there is a demand for it from their readers. People want to see recommendations and hear success stories.
But I suspect that the success stories are a bit bloated. I once tracked the 'success' of a particular newsletter publisher. Every newsletter had claims like: 'If you acted on our last recommendation, then your profit would have been …' But in their calculation they assumed that you bought at the lowest/highest price and eventually sold at the highest/lowest price. In real life it never works that way.
I had a look at my own current portfolio. I am not even sure that my spread of investments is the best under the current economic climate! How on earth would I have the nerve to publish my portfolio and recommend to readers to adjust their portfolios accordingly?!
Unless of course I get a commission when you follow my recommendation. No no, I'm joking, that is not an option. I am not a financial advisor. I am merely a retired person trying to survive, like you, through this economic depression!
A sample portfolio might be informative and educational. But your investment portfolio should leave you reasonably comfortable with the choices you made.
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