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Best Practices for Investment Club Portfolio Management
Best Practices for Investment Club Portfolio Management
Best Practices for Investment Club Portfolio Management
Best Practices for Investment Club Portfolio Management
Best Practices for Investment Club Portfolio Management
Best Practices for Investment Club Portfolio Management
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Best Practices for Investment Club Portfolio Management

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Some tips on portfolio management for investment clubs.

Some tips on portfolio management for investment clubs.

Published in: Economy & Finance
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  • 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 www.iclub.com • Write me gerlach@iclub.com 12 Page 6

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