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- No new trades.
The article I wrote that drew the most response by far in this round was the one about the Bicycle Trust my wife and I established for our children and future generations. Nothing vets an idea faster than having thousands of motivated, intelligent people look at it.
I've received some great ideas about how to improve our Bicycle Trust from Strategy Lab readers who took the time to review the mission statement my wife and I wrote. When this round ends, I will post the article to my blog so that we can continue the conversation. The blog requires a subscription, but fortunately I can offer you a free trial subscription so you can follow along between Strategy Lab rounds.
Investing for your family is different than investing for yourself. When I was young, I felt I could take big risks because I had a lot of time to recover from any losses. Well, the years have passed quickly, so I no longer have as much time, and the stakes are higher because I am not the only one whose life would be affected by a significant loss.
Yet, I've found that when you are investing for your children and grandchildren you have a very long time horizon that calls for an aggressive but diversified "explore" portfolio. For my family's Bicycle Trust, I am not aiming at the S&P 500's long-run average return of 11% a year. Because of the Bicycle Trust's long investment horizon, beating the market by even a little can make a huge difference in the amount of money available to fund the things I want our Bicycle Trust to do for our descendants.
That was the original reason I started my Best Ideas Portfolio. I've been writing about the portfolio in Marketscope, our newsletter, and it has been the basis for my Strategy Lab portfolio for the last three rounds. It is an aggressive but diversified explore portfolio that has performed much better than the market, putting my family's investments, and our client's portfolios, far ahead of plan.
In fact, it has performed so well that it skewed the weighting between the core and explore portions of some of our client's portfolios enough for us to recommend re-balancing -- taking money out of their explore and adding to their core. Adding to your core reduces the rate of return that is needed to make your financial plan work, thus making it more certain to be achieved. No one likes to pay the commissions or taxes involved with re-balancing, but I hope that our explore portfolios perform well enough that our clients have to address this problem often. If you would like to see what we do for our clients, visit my site. If you would like to discuss your situation with me, send me a message.
The best decision I made this round was right at the start when I decided to stick with the team members that have proved themselves to be best in "choppy" markets. You can view the track records of some of the best members of the m100 team by clicking here. I think they are the best team available to anyone anywhere, including on Wall Street.
Elan (ELN, news, msgs) and Valero Energy (VLO, news, msgs) were my best performers, even though Wall Street sentiment has been bearish on Elan for years and recently turned negative on Valero. After nearly tripling in the last round, U.S. Global Investors (GROW, news, msgs) was my biggest disappointment this round.
I look for stocks that have the potential to double within a two-year investment horizon, but I never know which ones will come to fruition during a six-month Strategy Lab round. There were no stocks that doubled this round as there have been in previous rounds. But after three rounds of Strategy Lab spanning 18 challenging months, the overall portfolio is on the right pace to double in two years.
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