Build Your Own DIY Portfolio

If you listen to the main stream business news here in Canada then you have plenty of exposure to stock recommendations and advice from investing professionals. Most of it consists of MPT or Modern Portfolio Theory. It is a lot of complicated gobbly gook that only will add to your confusion on what strategy to pursue. They spew on about asset allocation, diversification and risk management. Don't get fooled by professionals and their double speak.

Their primary concern is trading and charging fees. While most are great people they are after all trying to make a living. That's why you just need to stay away.

TV ads in Canada currently show consumers confronting their mutual fund advisers about high fees. They have decided to move their money so they can keep more for themselves. Good move. Learn to do this yourself and become a DIY investor. Pick your stocks, collect dividends, buy more with the proceeds and then forget them.

Let's say, for the sake of a round number, there are 200 trading days in a year. BNN experts provide you with 6 new stock picks every day. How can everyone be right? They're not is the correct answer. How can approximately 1,200 picks a year possibly be right.? It's just entertainment and more financial pornography for you to consume.

Just like buying ETFs their stock picks contain a lot of junk and high yield or growth stocks that don't pay dividends. I don't touch any of them. These are just provided because newbie investors need new investing ideas and stock picks to keep coming back and feel satiated. Many become clients of these portfolio mangers, imagine that. I really can't understand why.

Why it Doesn't Work

• pros track performance using benchmarks, we don't need them
• active trading of your stocks is calamitous to your long term finances
• pros focus on short term performance and then trade to extract fees
• we focus on long term performance.
• they build big portfolios which retailers can't and shouldn't
• pros buy at the wrong time, where we can wait for better opportunities
• we focus on cash flow, they focus on price
• we concentrate on the best companies and not stress over weighting of securities

...and finally, the majority of professional portfolio managers DO NOT beat the market.

Never act on any advice provided to you by the mainstream financial media.

"I DO NOT buy the stock market, only individual stocks" - Stephen Jarislowsky, The Investment Zoo.

Professionals pay NO price when they are wrong. Matter of fact you can be sure they will continue to charge you fees and even raise them when you give them more of your money and your account grows. They have no skin in your game. Remember that.

Lastly, don't think of stocks as something you buy with the intention to sell later at a profit. This is what pros suggest and do, so they again can justify performance fees. 

I concentrate on banks, telecomms, utilities and pipeline/railway/infrastructure stocks. I also avoid high yield stocks = NO growth. Yield + Dividend Growth = Total Return. Hold these long term and avoid the temptation of financial pornography.

I just finished listening to Stephen Groff on BNN. He is a senior portfolio manager with Cambridge Investments. He doesn't own any Canadian Banks and said that "in the short term, we believe there are better investment opportunities."

This is a guy running and managing a portfolio of dividend stocks. This is another example of short term thinking and an excuse for trading. I would never hand over a cent of my money to a so called investing pro like this guy. At the present time ALL Canadian banks are a great buy and represent great value. This is another reason why we all must build our own portfolios and become a DIY dividend growth investor.

Are you a DIY investor or do you use an advisor?

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