Price is what you pay. Value is what you get.

 20 months in and we wish to provide an update as to how our Model Portfolio has been performing.  The following is the original strategy as outlined on this blog as we commenced trading back in February 2016. The portfolio has made 30% profit during this period.

1. The portfolio strategy is put together based on Deep Value, Distortions in Equity, Forex and Bond Markets, Need, Income, well-informed Speculation and a look at what is coming on the Horizon.
2. We began accumulating most of the assets for this portfolio on 11-Feb-2016.
   It is well diversified. Sectors, Asset Class, and Geographical location.
3. Since February 11, 2016, and moving forward we will never deploy more than 3% of total principal to any one asset (normally between 1-3%), and we keep disciplined 5- 20% trailing stop on all positions (depending on the particular equity). This allows us to keep risk and losses contained and to a minimum (and we don’t like to lose money on anything). We will not hesitate to cut losses.. if a position goes against us for reasons we have not foreseen in the analysis we use to buy in the first place.
4. We want portfolios to be compensated not only by equity return but by healthy dividend yield also, where we can get it. (You can see the current Yield in the attachment).
5. We keep a healthy amount of cash available at all times. It allows us to sit and wait for the positions we want to take. Price is what you pay, value is what you get..

If you look closely at the portfolio, we have clearly implemented the above strategy. It is indeed well-diversified across different asset classes, sectors and geographical locations. We have maintained our discipline by covering each position with trailing stops thereby keeping any losses to a minimum. We have cut our losses on a few positions this year, having got stopped out of Cone Midstream Partners (CNNX) for a loss of 5%, General Electric -12%, Fluor Corporation (FLR) -10%, Teucrium Wheat ETF (WEAT) -5% and Teucrium Corn ETF (CORN) -1%. Since 01 March of this year we have added the following positions: Blackstone Group (BX), Wisdom Tree Emerging Markets Debt Fund (DEM), PowerShares S&P 500 BuyWrite ETF (PBP), KKR & Co. L.P. (KKR), Western Asset Emerging Markets Debt Fund Inc. (EMD) and finally Wal-Mart Stores, Inc. (WMT).

In August 2016, we recommended two speculative plays in the cryptocurrency market: We advised that  ‘A sensible play would be exposure to both Bitcoin and Ether.’ We stated that ‘The beauty about digital currencies and gold are the fact that they are good hedges against fiat currency devaluation.’ Bitcoin has gained 2600% since then and Ether is up 2800% since that post. We have not included these gains in the model portfolio.  Some well-informed speculations are being lined up over the coming months especially in the resource sector.

We stated in our original strategy that we want ‘to be compensated not only by equity return, but by healthy dividend yield also, where we can get it. (You can see the current Yield in the attachment).’ Again we have backed this up and the vast majority of our holdings offer us a substantial dividend payment. In fact, 14 of our current holdings are paying out an annual yield of 4% +. Lastly and by no means least we spoke about keeping a healthy amount of cash on the side for upcoming purchases. We see great value in certain sectors. Each portfolio is different due to timing. An investor who is starting out now or in the coming months, will have a different portfolio to the Model Portfolio because many of the positions have already made healthy gains. We will get you into positions long before they come to the attention of the mainstream and therefore secure value for you. After all, price is what you pay. Value is what you get.

Click here to see current holdings.