I wrote four weeks ago that I considered by my stock portfolio to be “Intelligent”, meaning that it contained investments (companies that were purchased and held at a price that made them good value based on dividends and earnings) and no speculation. This was a key learning from Benjamin Graham. But Graham offers some other key advice: to always hold between 25% and 75% in bonds and 25% to 75% in stocks. I did hold a bond fund in my company’s defined contribution plan, but this only represented around 17% of the overall portfolio value. I feel pretty bullish about stocks and current PE Ratios are quite low when compared with historical averages, so I decided to set my bond portfolio to 30%. I went ahead and rebalanced the defined contribution plan (current holdings and future contributions) so that I will hold around 30% in bonds.
I consider my portfolio – stocks and bonds – to be “Intelligent”.
- SELL TSX Fund @ $239.73
- SELL S&P Fund @ $105.81
- BUY Bond Fund @ $200.42
One month after these trades, on 13th June 2011, they look like a good call. The bond fund is up around 1%, while the S&P and TSX funds are down around 4% and 2% respectively.