Financial Diversification

The following is a guest post from Rudy from Smart Money Today. You can follow Rudy on Twitter @SmartMoney00.

Hi, my name is Rudy and my blog is Smart Money Today.

Sabeel and I have a similar†story; we had a hard time during the 2008 financial crisis, and we got screw from the so-called “financial experts” by paying too many fees. We realized is better invest in our financial education first and take the matter into our own hands to avoid paying “silly” fees and get better ROI (Return On Investment). But this isn’t what the article is about.

This article is about how you can use diversification to reduce your risks associated with investing. As a result, you can preserve your wealth but still be able to take advantage of the market stock high returns.

NOTE;†One thing you should know: I was born and raised in Italy, so English isn’t my native language. This is the reason why my English sometimes might sound “funny”, but I had the deep desire to help others to achieve more with their finances and English is the best language to spread my knowledge in the world.

I’m constantly working on my portfolio diversification to improve the bottom line; over the years, I went from a single digit growth to a double-digit not by taking extra risks but by diversifying my portfolio strategically.

I was reading Sabeel’s blog and found interesting his way to diversify†investments geographically, you can read his recent post; Geographical Revenue Diversification of My Holdings.

What is Diversification? Diversification†is the process†of allocating capital in a way with the goal to reduce risks.†

Well hereís the truth: investing is†risky.

Continue reading

Geographical Revenue Diversification of My Holdings

Over the course of last few days, most companies have either released annual reports or filed 10-K with SEC, which reminded to go back and update my geographical revenue diversification data. Last time I reviewed this was in Dec 2014, where I evaluated the geographical diversification of my holdings.

To reiterate from the old article, simply looking at the domain of a company where the stock is listed does not provide us with the full picture since we live in a global economy with multinational companies. Most companies have international operations and record revenue from various geographic regions. Looking at each company’s geographical revenue diversification of my holdings provides me with that extra bit of knowledge, visibility and understanding of my portfolio.

Continue reading

Geographical Diversification Of Canadian Banks

The fiscal year for the Big Five Canadian banks ends in October. With the end of the year, and a delay of a few weeks, companies release their annual reports which give investors a clear picture of the overall operations with breakdown in revenue and earnings. This is vital information for long term investors and provides visibility into the operations.

Management may say one thing or another, but the numbers always speak for themselves — and confirms whether management is executing the path that is paved by the ideas generated in order to look for stability and growth. This article will take a look at the state of affairs of the Big Five Canadian banks and their geographical diversification. The five banks take the lion’s share of the Canadian financial markets and also have sizeable operations in U.S. and overseas markets. The data for each of the banks presented below has been extracted for each company’s respective annual reports for the year.

CdnBanks - Geographical Diversification 2015

In addition to the revenue diversification for the year 2015, this article takes a look at the trends of how the geographical diversification changed over a course of past ten years.

Continue Reading >

Safe Haven Investing

Safe Haven Investing

During a storm, we seek shelter. Things are no different with our investments – when there is a financial storm brewing, investors seek shelter in assets, what are commonly called:  safe haven investing. Safe haven investments are investments that are expected to retain or increase its value during times of market turbulence. This article takes a look at some of the safe havens in each asset class.

Safe Haven Investing

Before we dive into the need for safe haven investing, a couple of things need to be stated. It is important to keep in mind that these safe haven investments are temporal: what is considered a safe haven at one time may not necessarily be true during a different time period. This is because each crisis is different; and the same investment may not qualify (although it might) as a safe haven during a financial crisis and then later during a war. What qualifies as a safe haven? In times of instability, the investments as stated earlier – need to retain value at the very least, if not increase in value. There are safe havens in each asset class although investors tend to flock to one or two during times of instability.

Continue reading

Portfolio Retrospection

As a long term investor, it is important to revisit and perform a portfolio retrospection from time to time. Normally investors tend to do this at the end of the year, but as long as you do it regularly (without overmonitoring/obsessing over it), its all good. Our needs, risk/reward profile etc change constantly as we mature and gain more experience as investors. What was once believed and held true can change in a matter of days or weeks. When the markets are going up and everyone is making money, it is easy to lose track and keep emotions in check. Or worse, apathy creeps in. But during market crashes, corrections and bear markets we realize that we should’ve been more careful and regret with some of our decisions.

Portfolio Retrospection

August saw some increased volatility in the stock market and the S&P 500 index dropped 10%. While this kind of correction from time to time is healthy for the overall market, it is important to be self-aware and reflect on the emotions/experiences. Year-to-date, the market is still trading pretty flat with the S&P 500 down just 2%.

Screen Shot 2015-10-10 at 1.29.03 PM

Continue reading