Do You Have a Survival Guy Portfolio?

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If you were to construct a Survival Guy all-weather portfolio, your first matter of business would have to be coming to terms with “Hey, it’s going to get ugly out there.” (More on that in a minute.) If Your Survival Guy ventured out into the investment woods with my “Survival Pack,” the first item I would unpack would be a book to get me in the right frame of mind.

I’d find some focus with my spiral-bound copy of Ben Graham’s The Intelligent Investor, where terms like margin of safety and the difference between an investor and a speculator would be covered. As an aside for you, I have two copies, and everyone in my family has their own copy. I suggest you own it too. Also, I’d have my copy of J.R. Tolkien’s The Hobbit, because you need to enjoy life even when you’re in survival mode, and for your creative thinking. Remember, investing is mostly art, not science, and it’s certainly not about stock prices.

Which brings me to how ugly it can get out there, especially when markets are lost in the woods and the trees are chattering about AI. Look, you know I’m not the weather, and for that matter, I’m not the weatherman because I don’t like predictions. I like controlling risk, which is why risk control is at the root of my Survival Guy portfolio. That is where the Efficient Frontier comes in.

Because here’s the deal. Great stocks can look terrible at times, so bad that they can be left for dead. But often, selling is a mistake. There are plenty of dividend payers that keep on keeping on long after the newbie investors have sold. That’s ok with Your Survival Guy.

I want you to look at the histories of two companies I’m thinking about this morning, Microsoft and Amazon. Run your finger along the line of those brutal times where their futures were in question. Sound familiar?

Owning two stocks is not what I’d recommend ever. Double that to four is not enough either, same with eight. 16? We’re getting there. Double that to 32 or more, and you’re probably in the sweet spot. 500? Forget about it.

My point is that when you construct a well-diversified portfolio, you don’t have to bet the ranch, or your life, on a few companies. You need to get out alive, and I don’t want to depend on two companies for my future. How do you do that? Well, you begin by investing in my #1 favorite investment in the world, Y-O-U. That’s when you immediately understand it’s up to you to get out alive. I like those odds.

Action Line: Having a guide never hurts, either. Your Survival Guy’s been fortunate to have trained at the best business school in America, Babson College. I’ve learned plenty from my studies of Richard C. Young’s Intelligence Report and from having a father who believed in me. But I’ve learned the most from my conversations with you, where you tell me about you. Because it’s what you don’t say that tells me the most. Yes, we’re all different, sure, but at the end of the day, our lives have a lot in common, and we all want to enjoy our own walk in the woods. When you need a guide through the forest, email me at ejsmith@yoursurvivalguy.com. In the meantime, pick up a map by clicking here to subscribe to my free monthly Survive & Thrive letter.

Originally posted on Your Survival Guy.