Postcards: How to Build Your Own Portfolio

DIY projects can end very badly... so let's take the risk out of Do-In-Yourself investing. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: How to Build Your Own Portfolio]( DIY projects can end very badly... so let's take the risk out of Do-In-Yourself investing. [Garrett {NAME}]( May 6   [READ IN APP](   Market Update: Volatility is ticking up, but the narrative centers around rate-cut expectations. Copper prices signal a healthier global economy, but oil remains weak. We’re back in the Green, and markets have shrugged off the bearish sentiment from April and taken us back into the range of all-time highs for the S&P 500. Once again, markets continue to do very well off oversold levels - as evidenced on April 19. All the stuff that does well when liquidity expands is doing well… technology… consumer cyclical stocks… and communications. --------------------------------------------------------------- Dear Fellow Expat: A nonstop parade of service professionals has been pouring into our Florida home. I’m spending a ton of money… and you’d never even know. Electricians are fixing breakers… plumbers are running new water lines in the wall… and some unfortunate soul has to crawl into the attic to clean the dryer vents. There’s real temptation - especially for an overconfident 43-year-old dad - to show one’s daughter that dad can fix anything. But I’ve stared into the crystal ball… and I know that I’d likely electrocute myself, flood the bathroom while changing a toilet, or crash through the ceiling into the tile floors. I am not a Do-It-Yourself guy regarding the things on the wall. The risks… well… they’re a bit high. But we shouldn’t dismiss the risks associated with Do-It-Yourself investing… an area in which I specialize. Sadly, I can’t barter with the electrician down the street. He doesn’t come to me and say… “I’ll rewire your laundry room if you tell me who the top insider buying stocks are…” Although… he should. The last thing we want to do as investors is put ourselves in a situation where we blow up our portfolios by making foolish errors fueled by the bravado I mentioned above. Today, I want to give you - for free - a simple portfolio structure that you can employ. This strong, defensive strategy includes four different types of assets. If you’re a Republic Risk subscriber, you'll recognize several of them. [Upgrade to paid]( Do It Yourself Investing I want you to think about investing as filling a series of buckets. This becomes your allocation model that can help you navigate any market conditions. There are many ways to allocate capital. We’ve talked about a 10-40-40-10 portfolio in the past, but let me give you one that’s a little more defensive and conservative. But let’s return to a bread-and-butter custom-built strategy for Republic Research. Building a Defensive Portfolio       “40-30-20-10” Yep… it’s a pyramid strategy. The 40-30-20-10 principal is one common for a household budget. [GoBankingRates describes it]( The most common way to use the 40-30-20-10 rule is to assign 40% of your income — after taxes — to necessities such as food and housing, 30% to discretionary spending, 20% to savings or paying off debt and 10% to charitable giving or meeting financial goals. Well, this can apply to your investing as well. So, let’s take a look at how this works. Republic Yield and Alternatives: (40%) An asset basket designed to provide substantial income with a long-term foundation for these assets. Credit opportunities, precious metals, and other long-term opportunities center on the growing emphasis on debt in the global financial system. In this bucket, we might even include a 5% allocation toward gold, an investment in an alternative asset manager like Blue Owl Capital (OBDC), short-term U.S. debt paying 4%, and investments into various Vanguard and PIMCO funds that kick off cash and ensure safety and protection against broader risk. Given the current state of affairs in the bond market - it’s not a bad time to take what the market is giving you. We can tap into the credit creation of traditional central banks and the massive shadow banking system, typically reserved for accredited investors. Republic Refuge Assets: (30%) The second bucket consists of stocks that provide strong dividends and income, with market growth potential due to their solid moats and competitive advantages. These are safe, secure investments that will kick off cash, pay reliable dividends, and are run by strong management teams. This bucket consists of great names - members of the S&P 500 like Altria (MO), Deere & Co. (DE), and Enterprise Product Partners (EPD). This is the foundation of any Portfolio. It provides balance and stability through uncertain periods of volatility or bear markets. We would also like to target S&P 500 names with solid insider buying, excellent cash flow, and strong capital efficiency. Republic Fortified Assets: (20%) This bucket consists of 20% of your allocation. These stocks have strong growth and income potential. But we want to go a step further. I want to see VERY strong cash flow, strong management metrics, and somewhat misunderstood industries trading at healthier valuations. Here, we also focus on capital efficiency since we don’t want to put ourselves into names that provide ample risk on the balance sheet. This is where our current Model Portfolio fits in, emphasizing limited downside but significant reversion upside. Here, we’d be looking at many of the names on our reversion portfolio, like PBF Energy (PBF), Gravity (GRVY), and many shipping names. This portion of the portfolio alone has outpaced the S&P 500 Weighted Index and the S&P 500 in 2024. Republic Risk Assets: (10%) The final 10% is where we take a shot at real fortune and upside. It might be on a hot AI company, an IPO, or a tech spinoff. These trades might be in alternative energy, a new battery technology, or a rare commodity that isn’t widely traded but has a massive demand for our future: Think helium, lithium, or graphite. Or, we might even tap into a small-cap value fund that can do very well as global liquidity expands. Don’t be afraid to take risks, but always have a plan for these names to ensure that you’re setting stops and preserving your capital. Conclusion This is just the start of a deeper conversation about managing your money in a fashion that suits your risk tolerance. Depending on your approach, there are many ways to tweak this portfolio structure. As you know, it’s easy to implode your portfolio without intelligent research and diligence. We play a lot of defense in the Florida Republic and surgically strike as opportunities emerge. Take the time to look at your portfolio and see where each stock or position fits into this strategy. If you’re too heavy in unprofitable, debt-ridden names, it’s time to rebalance. And if you’re not taking enough risk, it’s time to move some money into next-generation technology. You don’t need to pay someone else to manage your money. You can do it yourself. You can do it with less risk. You can forge your own future. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()