Portfolio Breakdown by Geography

I’m always intrigued by how investors position themselves in providing a measure of protection against market downturns.  Most common is sector diversification where the theory is a downturn in one area of the economy is offset by outperformance – or at least stability – in other areas.  DivHut recently posted his quarterly sector review which – as he indicated – is reasonably aligned with his risk tolerance and goals.  The weakness in this approach is his low exposure to Technology or in my case an overexposure to Financials.  So long as potential weaknesses are identified, this approach does allow a portfolio to be tilted towards sectors which the investor believes will outperform the broader market.

Another approach was presented by Roadmap2Retire last March where the attempt was made to isolate the geographic revenue diversification of the companies he owned.  A daunting effort to be sure, but I’m not sure the data he obtained was complete.  As an example, he reports BCE’s revenue as 100% Canadian.  That is likely as reported in filings.  Not reported is their 37.5% stake in Maple Leaf Sports which owns the Maple Leafs (NHL) and Raptors (NBA).  The NBA pays revenue sharing in US dollars (not Canadian).  Basically any minority stake, investments or joint ventures with other companies are likely to be excluded from any of the companies he owns.  The question becomes – is this revenue identifiable and negligible?

The approach I take is – first sector and secondly the country where the company is headquartered.  Dividends paid are recorded post exchange to US currency which does result in some fluctuation based on the relative strength (or weakness) of the dollar.  The following table illustrates the non-US source for roughly 15% of my dividends.

8.98% Canada
0.53% United Kingdom
0.04% Bahamas
2.44% Australia
0.13% Ireland
0.32% Mexico
0.00% China*
1.29% Hong Kong
0.20% Chile
0.26% Luxembourg
1.47% Singapore

* no dividend paid at this time

The UK dividends are set to increase once a merger involving one of my US companies is complete.  I may be forced to slow foreign purchases as recent political events have resulted in the US dollar weakening and the Yen and Swiss Franc strengthening.  If so, I’m sure I can find a few US companies to put my money into!



Prepping for ’17

In my inbox I found a message inspired (?) by my last post.  In a nutshell, it was a request for further insight into my October purchases.  I have to admit that, on the surface, the appearance is that I was throwing stuff against the wall to see what would stick.  I would like to think I’m slightly more calculating.  To set the scenario, I had an oversized cash position due to a merger, the markets had started their pre-election downward drift and the FBI just breathed new life into Candidate Trump’s aspirations.

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Hiding In Plain Sight

“cant see the forest for the trees”

Simply that you have focused on the many details and have failed to see the overall view, impression or key point.  Urban Dictionary

I find it interesting when multiple unrelated occurrences converge and coalesce into a singular thought.  Case in point:

  • Investment Hunting did a financial quiz with one of the questions being “I’ve never bought a stock on OTC Markets?” Wallet Squirrel’s response (presumably tongue-in-cheek) was, “No, no idea (what) that is. “Octopus Tentacle Club”?”
  • DivHut presented his June 2016 stock considerations with a response by Tawcan being, ” … I continue to like V, SBUX, National Bank (not sure if they’re listed in US market) …”

It dawned on me that there was a lack of understanding regarding the OTC (over the counter) market.  Without getting into the nuances (grey, pink, etc.), let me just that a significant benefit to US investors is unprecedented access to foreign markets – notably Canada, but also Australia, Singapore and more.  In this post, I’ll focus on Canada.

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2015: What Went Wrong

This is the final segment to the best and worst of 2015. This series was inspired Bespoke Investment Group’s article tailored to actual holdings in DGI portfolios. The first post, 2015: What Went Right can be found here.

Again I need to address the caveats:

  • Only publicly disclosed data culled from portfolios in my Blog Directory were used. If your blog is not listed, your data was not included.
  • My data only reflects a snapshot in time. Once entered in my database I generally make no updates.
  • I make no guaranty as to the accuracy of the data either through input errors, processing errors, or the legitimacy of the source data. Meaning, use at your own risk – or you get what you pay for.

Bespoke’s article raised a number of questions in my mind. Although not specifically targeted to the DGI community, I found it to be timely none-the-less. So the question today is why were so many ‘losers’ contained in DGI portfolios?

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