The error wasn't one that a calculator would have corrected: I mistyped 15% UPS as 55%
UPS. I edited it to correct the faux pas.

As for homework and luck, perhaps a stronger foundation in how to put together a portfolio
- return, risk, correlations of returns, minimizing volatility for a given level of
return, that sort of thing - would allow you to better understand the low allocation to
CDWC.

Last edited on: 02-03-2007 08:44 pm

A fine mix of stocks. Some are very richly valued, but over the long-term, just fine. I
would encourage you to consider expanding beyond large-cap stocks (mega-large cap at
that). Also, 25-50% of your portfolio overseas isn't a bad idea either.

Not to mention that your percentages don't even add up to 100%, I suggest a calculator if
it is too hard to add mentally

Actually, the stocks should be distributed as shown:
40% CDWC
25% SBUX
10% HAL
15% UPS
10% LMT

Perhaps a little more homework magician, and you would know that CDW is worth more than 5%
of your investment. Better luck next time.

The additions have improved the diversification a bit. For a 20% return a good mix of the
new group would be:

7% UPS
34% LMT
3% CDWC
13% HAL
18% SBUX
12% GE
2% DIS
10% MGM
1% BBY

MSFT is only useful if you want around 11% - 12% return; otherwise, drop it.

Last edited on: 02-02-2007 09:53 pm

This is indeed a well-diversified portfolio. Over the last five years the correlations of
returns are remarkably low. For a 20% return a good mix would be:

15% UPS
40% LMT
5% CDWC
20% HAL
20% SBUX

This will give you volatility roughly equal to the S&P 500 over the last five years, and
four times the return.

Adding cash - say, 13-week Treasuries - to this portfolio can lower the risk a tiny bit
while maintaining a 20% return, but the difference in risk is negligible.

Last edited on: 02-03-2007 08:14 pm

Excellent Portfolio, well diversified, looking at about a 20% return.