3 Bucket Approach To Portfolio Construction

Educational Primer: How to Think About Portfolio Construction

This is a post for subscriber discussing my views on portfolio management and what goes into building out a portfolio. Everything for me starts with the idea generation process and any investor/trader out there can tell you that the hour spent researching can be a pain in the ass if a) You don’t know what you are looking for or b) Are researching ideas that have no place in a portfolio.

The approach I am going to cover in here is not the standard or “accepted” way that most think about or write about such as:

All of that stuff works, for certain portfolio sizes and needs, again, it just depends what the investor is after. The approach I am going to take here is similar to what you see me discuss in our weekly market newsletter and on the webinars.

At it’s core, it starts with the why. Why do we select certain stocks? Why do we size positions heavier than others? Why, in certain cases, do we elect to use options express like Ron does in his $1.4 million portfolio v. buying the equity?

I don’t think there’s a right way or wrong way to structure a portfolio which is also why you never see us paint ourselves into a corner saying we’re just: value investors, small-cap investors, short-sellers etc — all of it plays a role and I am going to break it down in this post for subscribers.