This portfolio is an expression of my investment beliefs and therefore reflects my investing philosophy. I believe that when values, decisions and actions align, the results can be extraordinary.
I mostly subscribe to the Fama-French/Carhart five-factor model and the belief that most outperformance in the market can be captured by a small number of factors: market, size, value, quality and momentum.
For the most part, I want to buy quality growth at a good price. The order is important: I believe in understanding the sustainable business drivers of a company before looking at valuation. This rule of thumb eliminates a lot of poor quality companies that are not really worth looking at. I try to answer two questions before making any investment: (1) is this a good company? and (2) is this a price at which I'm happy to own it? If the answer to either is no, I take a hard pass.
In terms of portfolio construction, I tend to bucket stocks that pass the gauntlet into one of three categories: yield stocks, compounders and special situations, and I try to maintain a 1/3 allocation to each bucket. Yield stocks comprise of REITs and dividend payers; compounders include ETFs and market leaders that can reliably compound at 10-15% like Microsoft and Google, and special situations include stocks with temporary dislocation from their rightful valuation.