The Blend Portfolio
A model portfolio for long-term investors
Hello Antagonist community!
When I rolled out the Challenge Portfolio last month, I also mentioned that I planned to create additional model portfolios that align with various investing styles and risk profiles.
I’m thrilled to announce the that our second portfolio will launch this week!
It’s called The Antagonist Blend Portfolio, and this FAQ provides the details:
What is a model portfolio?
Model portfolios are designed to help people start investing for the first time or to help them invest in new areas, asset classes, and/or trading styles. Rather starting from scratch, investors can adopt or tweak a model portfolio based on their personal financial goals and risk tolerances.
Model portfolios are also great for people who want to profit in the market but don’t have the time or desire to conduct their own research.
What is the investment style of the Blend Portfolio?
The Blend Portfolio is designed for investors who prefer stocks—not options—and want to achieve gains over the long term.
The portfolio’s holdings will have characteristics of both growth and value stocks. If you’re unfamiliar with these terms, this summary from Fidelity is helpful:
Growth investing
Growth investors are attracted to companies that are expected to grow faster (either by revenues or cash flows, and definitely by profits) than the rest. As growth is the priority, companies reinvest earnings in themselves in order to expand, in the form of new workers, equipment, and acquisitions.
Don't expect dividends from growth companies—right now it's go big or go home. Growth companies offer higher upside potential and therefore are inherently riskier. There's no guarantee a company's investments in growth will successfully lead to profit. Growth stocks experience stock price swings in greater magnitude, so they may be best suited for risk-tolerant investors with a longer time horizon.
Value investing
Value investing is about finding diamonds in the rough—companies whose stock prices don't necessarily reflect their fundamental worth. Value investors seek businesses trading at a share price that's considered a bargain. As time goes on, the market will properly recognize the company's value and the price will rise.
Additionally, value funds don't emphasize growth above all, so even if the stock doesn't appreciate, investors typically benefit from dividend payments. Value stocks have more limited upside potential and, therefore, can be safer investments than growth stocks.
A blended strategy
As the name suggests, The Antagonist Blend Portfolio will blend growth and value investing. I will select stocks that are trading at a great value but also offer significant growth potential.
This blended strategy is sometimes referred to as growth at a reasonable price (GARP). It focuses on growth companies but with an emphasis on traditional value indicators.
What kinds of companies will the Blend Portfolio include?
The portfolio will not have any restrictions on market cap or sector. As long as a company meets my GARP criteria, it’s a candidate for the Blend Portfolio. This means that the portfolio can include mini-caps (very small businesses) to mega-caps (extremely large businesses) from any sector and industry.
What kinds of trades will you make?
The Blend Portfolio will be comprised of stocks and ETFs that a typical retail investor can buy through an online discount broker.
I’m a big fan of Fidelity because there are no commissions, and you can buy and sell fractional shares. This means that even if you have a very small account, you can invest. With fractional shares, you can put as little as $1.00 into a stock!
Other brokers offer similar services. Not all of them allow fractional shares, however. Whichever broker you choose, you should absolutely be able to buy and sell stocks and ETFs for zero commissions.
How long is the “long term”?
As I mentioned above, the Blend Portfolio is designed for long-term investors who prefer stocks and ETFs over options.
Given the blended growth/value strategy of this portfolio, you should plan to keep each holding for a minimum of 1 year. It can take at least that long for the market to recognize the company’s value and for the stock’s price to rise accordingly.
Exceptions to the 1-year guideline
I may recommend holding some stocks for longer than 1 year if they still offer growth at a reasonable price.
I will also use trailing stops to manage risk. This means that if one of the portfolio’s holdings drops by a certain percentage, I will recommend selling it. This strategy serves a dual purpose of protecting the profits of winning trades and minimizing the losses of losing trades.
How will you evaluate the performance of the Blend Portfolio?
Transparency is one of the key values of The Antagonist. Therefore, I will share every detail about the portfolio’s performance, including trade entry prices and the profits/losses of each position.
I’ll also benchmark the Blend Portfolio’s performance against the S&P 500. This means that you’ll be able to not only see the returns of this portfolio, but you’ll also be able to compare it to to the performance of the overall market. My goal is to significantly beat the S&P. Depending on the make up of the Blend Portfolio, I may add other benchmarks as well.
For tracking and evaluation purposes, I will use the mid-point of the opening and closing prices on the first trading day of my recommendation.
For example, if I send a recommendation on Monday, I will record the entry price as the mid-point price of that day. If the stock/ETF opens at $100 and closes at $102, I’ll record the position’s entry point as $101.
Since stocks and ETFs fluctuate throughout the day, it’s impossible to list a price that every Antagonist member would have paid. Using the mid-point between the opening and closing prices is therefore the most transparent and honest way to track performance.
To build a similar portfolio, how much money do I need?
If you have an account with Fidelity or another broker that offers fractional shares, you don’t need much money at all. As I mentioned above, you can invest as little as $1.00 into each recommendation.
The Blend Portfolio will eventually hold 20-30 stocks/ETFs. If you wanted to put, say, $50 in each position, you would need an account balance of at least $1,500.
But, again, you can set up a similar portfolio for far less money if you have access to fractional shares. You can, of course, start with significantly more money as well.
Is the Blend Portfolio suitable for all investors?
NO!
No portfolio is suitable for all investors! Everyone has different financial goals, timelines, and risk tolerances. There is no such thing as a one-size-fits-all portfolio.
Before you invest any of your own money, it is essential that you carefully conduct your own research and determine if a trade is right for you. That holds true whether you follow the Blend Portfolio or any other model portfolio. Please read the full disclaimer at the end of this post for more details.
How will you manage the Blend Portfolio?
I will only recommend stocks and ETFs that are easily accessible to retail investors. You’ll be able to open and close the positions online without the assistance of a broker.
I will announce new recommendations once per month on or after the third Sunday of the month. This will give you a chance to perform your own due diligence and determine if the trade is best for you. The first set of recommendations will be an exception, however, since I will announce them this week.
Every member of The Antagonist will have access to a report card. You’ll be able to track the performance of each trade as well as the overall portfolio. (See above for a description of how I will log the opening and closing prices.)
Are you open to ideas, questions, and/or feedback?
Yes! I love hearing from the Antagonist community! You are always welcome to contact me by replying to these emails, DM-ing me on Twitter, or leaving comments at the end of each post.
Invite others
I’m extremely excited for the Blend Portfolio, and I’m also so grateful that you have chosen to make The Antagonist part of your investing strategy.
If you know anyone else who would be interested in this new portfolio, the Challenge Portfolio, or other Antagonist content, please invite them to join!
And for additional updates, market news, and commentary, follow Antagonist_News on Twitter.
Good investing!
Jason Milton
Disclaimer: I’m not a stock broker or financial adviser. I cannot and do not provide personal investment advice, and The Antagonist should never be interpreted in such a way. This newsletter is intended for informational and educational purposes only. My recommendations represent the actions that I plan to take or have made based on my analysis and what works for me. I do not make any warranties about the completeness, reliability, and accuracy of the information I share. I will not be liable for any losses and damages in connection with the use of my content. Any investments that you make are your responsibility. Therefore, it is imperative that you perform your own due diligence before replicating any of my trades.
getting busy ☺️ excited to see what's in store for us.