Best Practices for Investment Club Portfolio Management

Uploaded on

Some tips on portfolio management for investment clubs.

Some tips on portfolio management for investment clubs.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads


Total Views
On Slideshare
From Embeds
Number of Embeds



Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

    No notes for slide


  • 1. Doug’s Portfolio Clinic Best Practices: Club Portfolio Management by Doug Gerlach ICLUBcentral Inc. April 2010 © Copyright 2006. ICLUBcentral Inc. Doug’s Rules for a Healthy Club Portfolio © Copyright 2006. ICLUBcentral Inc. Page 1
  • 2. Doug’s Portfolio Clinic Goals of Portfolio Management 1.Reduce 1. Reduce Risk 2.Increase 2. Increase Returns 1. Diversify by Sector & Industry • Spread out holdings into many industries – Beware focusing too heavily on retail, consumer goods, restaurants, healthcare • Avoid sector concentration Page 2
  • 3. Doug’s Portfolio Clinic 2. Diversify by Company Size 3. Don’t Own Too Many Stocks • Traditional rule: 10-12 stocks offer good 10- diversification • New research: 15-20 stocks provides 15- better benefits • In a club: own no more companies than members can follow effectively – Such as 1 per member Page 3
  • 4. Doug’s Portfolio Clinic 4. Don’t Fear Selling • Review stocks after each quarterly EPS announcement • Replace (not “sell”) stocks with limited upside potential or problematic concerns – Over-valued stocks are as a big a risk to your Over- portfolio as under-performing stocks under- • Upgrade your portfolio often! 5. Don’t Get Dragged Down by Fees • Commissions & costs should be less than 2% per purchase – and ideally closer to 1% – Otherwise, fees eat excessively into your returns • Larger investments also force you to concentrate your energy into finding absolute best candidates Page 4
  • 5. Doug’s Portfolio Clinic 6. Be Tax-Smart Tax- • In club, transfer highly-appreciated highly- shares to fully-withdrawing partners fully- – Delay recognition of embedded capital gains until each subsequent partner withdraws from club (could be years!) • Never forget tax impact of portfolio decisions – Just don’t be governed by them! 7. Portfolio Goals are Moving Targets • There is no such thing as a “perfect” portfolio. • Your club portfolio is always changing, always requiring adjustments. • Consider these as “guidelines,” not hard and fast “rules.” • But beware of consequences if you break the rules! Page 5
  • 6. Doug’s Portfolio Clinic For More Information • ICLUBcentral • Write me 12 Page 6