Friday, May 15, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (May 15, 1998) -- Following up on yesterday's column about the Dozens approaches, I'd like to discuss briefly how one might combine the Workshop models into a single Dozens portfolio strategy.

It's not necessary that you stick to a single strategy for this portfolio management technique, and in most cases, you're probably better off if you don't. I'm an advocate of blending value and growth strategies and think that for most people, the balanced portfolio is the best option. There's nothing wrong with going 100% for conservative value approaches or 100% for growth approaches if that fits your needs, but most people fall somewhere in the middle.

I've written in the past that one way to determine a fitting allocation for your situation is to subtract your age from 100. Whatever the result would be the percentage of your portfolio you should consider investing with a growth strategy. The remainder would be in the more conservative high-yielding value strategies.

So, an investor who is 30 years old might want 70% of his or her portfolio in growth stocks. If you're using two screens in a balanced Dozens approach, that would mean you'd probably buy eight growth stocks and four value stocks. As you get older, the balance would shift gradually towards the value stocks.

Which strategies would I recommend putting together? The two obvious choices for high-yield value are the Dow Dividend Approaches and Ethan Haskel's Beating the S&P approach. (Beating the S&P applies the same rules as the Dow Approaches, but it uses a field of stocks from outside the Dow. For more information on Beating the S&P, please see Ethan's web page.)

For growth approaches, the most conservative of the ones we follow would be the Keystone model, which focuses on large-cap growth stocks. More aggressive still are the two versions of our Relative Strength model, the relative strength version of Investing for Growth, and the Formula90 approach.

Exactly what mix of strategies you use is largely personal preference, but putting these screens together in some regular pattern will help you eliminate emotion from the process and spread your assets across a number of terrific approaches. Fool on!

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database

[Robert Sheard is the author of the The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and your local bookseller.]