Dan's Investment Strategy
Many of us wonder about the investment side of our savings, without any real steadfast strategy. We have left it up to a financial advisor to whom we very seldom talk and who very seldom has our goals and objectives in mind. As I have spent a great many years in the financial management business managing hundreds of millions of dollars, my goal was to develop a strategy that was going to work - wherein I could manage actively and would have a positive effect in the accounts. Now, in all investments there are certainly risks and unforeseen circumstances in the economy that are totally out of one’s control. My goal with my strategy is not to totally avoid those things, because they are unavoidable unless you decide to stay in cash or cash-equivalents like money markets or CDs. Since we cannot avoid them, we need to position our portfolios so that we are actively managing and avoiding the lowest of the lows. In other words, if the market does crash because of an unforeseen circumstance, the goal is to be able to be nimble and move quickly; to be able to have positions in the portfolio which are very stable under just about any circumstances, so as not to experience the extreme lows that the rest of the market will be experiencing.
The other strategy is to be able to recover as quickly as possible. It would take many pages for me to describe my investment strategy in every detail. But what I have done over many years is to manage the same pool of stocks – a couple of mutual funds, and recently (in the past three or four years) I have added some ETF funds. The advantage is that out of all of those stocks, 65 of those stocks are companies that have never changed in my investment strategy. These are companies which I have traded for a minimum of the past twenty years and feel I know very well. If you notice, when you look at my stock list, you will recognize the vast majority of companies. I do not believe you need to take a lot of risk with small companies that do have great potential, but will also be extremely risky. I believe that you can make money without taking extreme risk.
I like stocks which pay dividends, as the majority of those on my list do. I do not reinvest dividends and I would recommend that you not. I like my dividends to be received in cash. I want to “feel” them and be able to see my gain. You do not have to actually receive them in cash but they should be paid out into your money market account, which should be part of your portfolio.
I am also a profit taker. When a stock is up by a fair amount of money and I believe the upside potential is at its peak, I believe it is time to sell the stock. When you sell the stock, the idea is to find another stock that is on the buy list. So, out of all of the positions listed on my “picks,” there are only a select 20 or perhaps 30 (which have sometimes been as few as 9 and other times as high as 35) which are on my buy list. Every Monday I change my buy list based on some very disciplined and strict parameters which I follow under all circumstances.
The management of a portfolio should be relatively easy. Do not put any new money into your portfolio that is not on the buy list. If there is a stock which you like that is not on the buy list, do not buy it. Learn to manage the group of stocks which you own, or perhaps mutual funds. This has helped me to manage the group of stocks which I own, and not necessarily every individual account. I do not have to be concerned about selling all positions of one particular stock in everyone’s account if it is profitable. I know that it will then be profitable in everybody’s account, because if someone owns it, they would not own it unless at some point it was on my buy list. Remember, make sure your portfolio is well diversified across many industries and instill in your financial advisor your resolve to maintain your diversification and to add to positions when they are down. I always like to have cash in an account for that reason - 7 to 10%. I also will include bonds as they become available to put into your account. That list will be updated regularly.
As you continue to follow on the website, you will learn increasingly more about my strategy. My ultimate goal, however, is not to help you be a do-it-yourself investor. My goal is to give you guidelines and investment strategies which you can pass along to your financial advisor. You need to be actively managing God’s money. You need to instill in your financial advisor the kinds of things you wish to buy and your goals and objectives, so that they can do their part in actively managing your accounts.
I always suggest that you should have an expert. When you have a toothache - for as many times as you have had a filling put in your mouth - you do not know enough about it to do it yourself. You go to the dentist. I believe that a fee of 1% to 1.5% is an extremely small fee, compared to what you are probably paying now if you own a series of mutual funds.
I hope you will consider joining this website. Not only will it help you in managing your portfolio, but it will support this ministry so that we can share biblical principles and the reminder week after week that it is God’s money. Please help us in getting this message out to as many people as possible. It would be such a blessing to me if you elected to support this ministry in that way.
Finally, remember that all we have and all that we’ve been given is from God. It is His money. We need to honor and please Him in the way we invest it. We are not called to bury it in the sand, but we are certainly not called to be foolish and make unwise decisions. Let’s be prudent and conservative and gain what we can, using Godly wisdom and counsel so that it might benefit the Kingdom and His work here on earth.