Eileen's picks

Portfolio review -- week three

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I'm managing this SLO portfolio the same way I manage the family funds I'm responsible for, but I review it once a week -- more frequently depending on how volatile the market is. I did the last review of my SLO portfolio on August 8 when I questioned whether the rally would last. Would that I were always so clairvoyant!

Here's how my SLO portfolio stands at the moment in relation to the plan: we have 68% of our funds in equities and we intend to have 77%. We plan to have 60% in growth, 25% in value and 15% in blend or core holdings. Currently we're at 43%, 41% and 16%.

In the most important part of the plan, asset diversification, we plan 40% in US equities and have 26%, plan 30% in foreign and have 29%, plan and have 6% in real estate, plan 9% in commodities and have 8%, and plan 15% in "safe stuff" and have 31%.

The allocation by capitalization: 46% large, 42% mid and 12% small is out of line because we're looking for something more in the neighborhood of 60%, 30% and 10%.

And then there is sector allocation, a bit trickier to calculate with confidence. Fidelity Investments has a great new tool called ETF Portfolio Builder that allows me to see the sector allocation of my ETFs, at least for domestic stocks, and it's available for use whether you have a Fidelity account or not.

In my SLO portfolio I've decided to overweight energy until the end of the hurricane season, and industrial materials and telecoms in the foreign category until the end of the competition. I'll pretty much follow the current distribution of the market in the US category. Everything is pretty much on track except technology (software, hardware and media) and consumer goods. That's perfect, because technology is my special interest (with the help of my computer scientist daughter) and Bianca and I are most knowledgeable about consumer goods.

My diversification system now tells me exactly what to do: find a "save stuff" alternative to cash for $235,026; find large cap growth stocks in technology and consumer goods for a total amount of $138,790; and buy $11-13K of commodities futures. As noted in an earlier post, a limit order is already in for the commodities futures and should have actually triggered although it doesn't seem to have. The rest requires some work.