Since small-cap companies are volatile, Greg Beckett CIM, FCSI recommends the following:
- Buy a portfolio of 5-20 Richmond Club companies. To reduce risk and portfolio volatility, these stocks should be from three or more different sectors such as: healthcare, mining, oil & gas, software, technology, manufacturing, etc.
- 20-50% of your portfolio should be a fixed income investment such as the NYSE:LQD iShares IBoxx $ Invest Grade Corp Bond ETF. The point of this is not to get high growth but to have “cash” on the sideline so you can top up your stock holdings when they “go on sale” during market downturns. Our weekly newsletter will let you know when and how to do this.
- Hold your stocks for 1-5 years,
- Equally weight each stock in your portfolio by investing the same amount in each company,
- Rebalance your portfolio every 6-12 months. Rebalancing to maintain an equal weighting of each stock is a non-emotional discipline which forces you to “sell high and buy low”,
- Consult your Investment Advisor before buying any stock.
Companies in the Richmond Club Index pay the Richmond Club a fee to cover the costs of Richmond Club conferences, video production etc. The Richmond Club and/or its employees, from time to time, may own stock in these companies.