This article is part of our Rising Star portfolio series.
My real-money Rising Star portfolio is designed so you can follow along and achieve a well-rounded, diversified portfolio of your very own. Now that I'm a few recommendations in, I want to step back and assess where we are at this point.
First, here's a look at the stocks I've bought and their performance to date:
|
Company |
Date Purchased |
Return |
|---|---|---|
|
Coca-Cola |
Nov. 30, 2010 |
6% |
|
Coca-Cola |
Dec. 31, 2010 |
2% |
|
lululemon athletica |
Jan. 12, 2011 |
23% |
|
Johnson & Johnson |
Feb. 28, 2011 |
(2%) |
|
Abbott Labs |
Feb. 28, 2011 |
4% |
|
lululemon athletica |
March 24, 2011 |
13% |
|
II-VI |
April 5, 2011 |
(2%) |
So far, so good. There's no way to draw any meaningful conclusions after just a few months, but getting off to a good start is certainly better than the alternative!
When I started the port, I established the following allocation guidelines:
|
Large caps |
45% |
|
Mid caps |
15% |
|
Small caps |
15% |
|
International |
25% |
I won't be too much of a stickler about hitting these percentages, but this is a pretty good guideline for most people. After buying five stocks over seven different purchases, here's how it shakes out so far:
|
Company |
Market cap (millions) |
Size |
Value |
% of Port |
|---|---|---|---|---|
|
Coca-Cola |
$155,200 |
Large |
$1,080.32 |
28% |
|
lululemon athletica |
$6,600 |
Mid |
$1,283.94 |
33% |
|
Johnson & Johnson |
$163,400 |
Large |
$477.16 |
12% |
|
Abbott Labs |
$78,500 |
Large |
$505.75 |
13% |
|
II-VI |
$1,500 |
Small |
$542.08 |
14% |
|
Totals |
$3,889.25 |
100% |
So that gives me 53% large-cap exposure, 33% mid-cap, and 14% small-cap. I have exposure to health care, retail, technology, and however you want to define Coca-Cola (sugar water industry?). I really like the way things are shaping up.
It's also pretty easy to see where our next stop should be: international. This is sort of a squirrely category to begin with (to use a technical term). After all, Coke, Johnson & Johnson, II-VI, and Abbott Labs all have more than half their sales overseas. But all my stocks are headquartered in the U.S., and I do want to branch out some more to get some internationally based companies in the mix.
Why? Increasing your exposure to foreign stocks, up to a certain point, both raises your expected returns and lowers your risk. It's what Princeton professor Burton Malkiel calls "the closest thing to a free lunch in our world securities markets." Not buying foreign stocks, says Wharton professor Jeremy Siegel, "is a risky strategy for investors."
In my next article, I'll show you how to construct a screen that will provide us with a great list of international candidates. Until then, feel free to keep up with my tweedlings on Twitter.
