Archive for October 2017

Jim Grant-Stocks at current levels are worrisomely high:

Jim Grant, founder and editor of Grant’s Interest Rate Observer, discusses the current state of the stock market and the Federal Reserve. If you are interested I have written a post Here about YouTube copyright policies. Video is 4:42 min.

Diversified portfolio


Diversified Portfolio

We have all heard how we should have a well diversified portfolio. A stock portfolio must be diversified so you don’t have just one stock, sector, or country. It’s not just stocks, you should be diversified with bonds, real estate, and alternative investments. There is lots of opinions about diversification, John Bogle founder of Vangaurd, suggested you should have your age in bonds versus stocks. An example, if you are 40 you should have 40% of your portfolio in bonds and 60% in stocks, if your 50 ,50% bond etc.

Over Diversified

But can you be over diversified?  When we owned mutual funds we had a few different Canadian equity funds as well as US, International and emerging market funds. I was diversified because I owned thousands of companies around the world. But when you overlap with more than one investment in a single country or sector you might be over diversifying, as most hold the same or similar companies. I found most of the Canadian equity mutual funds hold the same companies and sectors.


At the moment, in our TFSA we hold ZWC, ZWU, and ZWB. They are covered call Canadian ETF. ZWB is the Canadian banks, ZWC is Canadian dividend ETF, and ZWU is Canadian utilities. If you look in ZWC its top holdings are 36% banks, 21% energy,15% communication,10% utilities. ZWB holds 100% financial services and ZWU holds 46% utilities, 25% communication, 28% energy. That’s a lot of Canadian banks, energy, and communication. We are over diversified and might be better if we only owned ZWC. How did this happen?

Portfolio Creep

It’s called portfolio creep. Over the years you buy one sector that is doing good or supposed to be the next sector to do well, and next it is something else but you like what you already have so you keep it. That’s why you should look at your portfolio every so often and ask yourself if you are diversified and should change anything. Currently, we are not going to change anything in our portfolio, but when doing changes I will keep portfolio creep in mind. Feel free to check out our portfolio.