The Two-Minute Portfolio

Several years ago, my portfolio was all over the place. I had no investment goal, no asset allocation plan, I just bought and sold on whims.

I tried all kinds of techniques as I read about them. Heck, I even tried technical investing for a year, signing up with Stockscores to learn about it. That was loads of fun, even if it wasn't my best year. I still check out the technical analysis of the stocks I buy, but now, it's more for confirmation that decision-making.

Then, as it was becoming clear that I needed to calm down and figure out my strategy, I discovered the Globe & Mail's Two-Minute Portfolio.

And that, ladies & gentlemen, is when I started investing seriously and successfully.

• I didn't follow the portfolio to the letter. There are some sectors that are too volatile for me. I would like to have enough money to take more risk, but I don't, so I stick to safer.
• I didn't necessarily buy the top 2 stocks since I buy dividend stocks only. Note that the Portfolio is switching to dividend stocks only this year. My portfolio now matches theirs much more closely.
• I couldn't afford the top 2 stocks, so I only bought one in the sectors I was interested in, for starters. I'm just starting to add 2nd stocks in each sector now.
• I bought US stocks in some sectors as their dividend payments were stronger. A mistake during a few years as it turns out -- I didn't factor in the exchange rate. (I understand my broker, RBC Direct Investing, will be introducing wash trades this year. About time!)

I'm still roughly following that strategy in terms of diversification. I own one or 2 dividend paying stocks per sector. It's an easy way to diversify, and as the 2008 results are in, you see it performed better than the S&P/TSX composite index. I did better than the index too.

There's something to be said about simplicity.