Portfolio considerations

Rebalance

Rebalance your portfolio quarterly or bianually to automatically secure that you buy low and sell high

Reallocation of assets

Once you have a portfolio of companies set-up and the dividends start coming in very limited effort is really required. However, there are instances where reallocation of assets should be considered.

  1. The long term company fundamentals are deteriorating and you expect that company will not be able to recover in the coming years
  2. Significant negative changes to the dividend policy
  3. The share has become significantly overvalued

Size of portfolio

There is not a simple answer to how many different stocks is optimal. For the defensive investor 25 or more is probalby adequate.

If you are an active investor and follow the companies you have invested in deeply then time also becomes a factor. Following too many stock is time consuming. If on the other hand you only have limited interest in following the companies then from a piece of mind perspective greater diversification is called for.

Leverage

As a defensive investor you should do just that – Stay defensive; do not leverage your portfolio