Sticking To 1 Investing Style Can Be Hard!

October 12th, 2007

I’m torn! I love investing for dividends, investing in small resource exploration companies and in fast growing companies using options. I really don’t know how to best allocate my money at this point in time. That is where I’m divided. I’ve had some success at investing for dividends and I’ve had some success at investing in options. I’m trying to find a healthy mix that will ultimately yield the best returns over the long run but its hard to structure a portfolio.

My Recent Success @ Options

This is well detailed within my fake Hedge Fund. In one month I was able to get over 17% return on an options portfolio. What’s even more interesting is that each of the options I chose is in positive territory! Not one loser in the bunch.

Success @ Investing for Dividends

I had some success at a fake mutual fund I setup to invest in income producing stocks only. I set this up on January 12, 2007. It hasn’t been a year but I’m already up over 27% (projected to be 38% by the end of a full year). That is an awesome return. What’s more impressive is that out of 13 stocks I bought (all on the same day!) EVERY one is positive. In fact, the worst gain I’ve got is from GE and that is still a respectable 8%! The other 12 stocks are all above 17% gains so far.

My Investment Dilemma

I just can’t seem to decide how to best structure my portfolio to achieve the best returns possible. I’m able to get a 30%+ return using a traditional income investing strategy and I’m also able to post some really impressive results when investing with options and warrants. Then there is the even bigger problem about sector investing. I love the solar sector and its future… A mutual fund I set up to only invest in solar stocks has done fantastic and is actually rated #6 on Marketocracy for the 6 months ended June 29, 2007! I’m just so confused! How should I do this properly so I don’t end up with 30 different stocks and so diversified I can’t beat the market?!?!?!

I need time to think this over and come to a conclusion. I’d love to afford an early retirement and live off passive investment income and for that reason I want to have a portion of my portfolio that invests for dividends. I also love the ability to capitalize on knowledge of fast growing companies which can yield extremely high returns when you invest in their options.

I Think My Investing Style Is Changing!

The truth is, I’m leaning towards investing at least 50% of my money in options & warrants. This affords me the ability to have my money work much harder due to its leveraged nature. I’m only interested in long term options though and that severely limits my selection. The remaining 50% of my money will be divided into any investment arena I think I can get a good return and that will most likely include an eclectic mix of the following: value investing, dividend yield investing (for passive income) and dividend growth, resource exploration companies, new technology companies (like solar power), etc.

Maybe sticking to one type of investing style is what limits many investors as they avoid opportunities in other arenas. This way I don’t miss any opportunities or count certain investments out just because they don’t fit my portfolio model. The only thing I don’t want to compromise on is the number of stocks in which I invest… I want to limit it to 10… at least until I have more than a $500,000 portfolio. Then I might raise it to 15. As I get older and as my portfolio grows I will eventually change the portfolio to have 50% invested in income producing investments and that will allow me to retire early.

You know what, typing this out sort of helped me decide how I want my portfolio to be structured and how I think it should evolve as I age. I still think sticking to only 1 investing style can be way too hard. I believe you have to go after the opportunities that you come across.

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