There is a lot of mumbo jumbo surrounding the stock investing field, and quite frankly a large amount of horse exhaust as well. Let’s cut through a bunch of that, in this and the next column, to illuminate what’s really important to us as independent investors.
I have taken the portfolio I described in my May 15 issue of Grainews and built a model as shown in the table, based on the maximum TFSA contribution. I used the closing price for each of the stocks on May 15 as the “purchase” price, and the closing exchange rate of 1.2878 Canadian dollars (CAD) per US Dollar (USD), for the international side. I added $10 to the cost of each purchase, to represent transaction fees. I followed portfolio percentages as described in my column, while rounding the number of shares “purchased” to the nearest five, with the exception of Berkshire Hathaway (BRK.B).
I prefer periodic investing to this lump sum approach, but this is the only practical way to track the portfolio I described. My plan is to follow its progress periodically in future columns, demonstrating how a simple long-term plan without due concern for day-to-day fluctuations can produce exceptional returns. This approach is the one I follow with investments, in my book and in my newsletter. I have read over 40 investment books and have never seen anyone track the success of their approach over time, with real bottom line results.
My confidence in my approach has been built over 25 years of success. While I am quite confident in the portfolio it is always important to be mindful of the fine line between confidence and cockiness. Confidence is important; cockiness can kill. This applies to many aspects of life including investing.
Please keep this chart for reference, as the next column will discuss the attributes and financial metrics used to make investment decisions. We’ll cut through a bunch of financial jargon, a.k.a. mumbo jumbo.