Building the Quantigence DGI Portfolio

After analyzing each of the 11 GICS industries to determine which stocks to add to our Quantigence DGI Portfolio, we now have the 30 stocks we need to accumulate. Instead of just buying our positions in one sitting, we believe in dollar cost averaging which helps eliminate market timing. Our horizon to accumulate our entire portfolio is 24 months starting in July 2016. However, we’re not starting from scratch. For the past 5 years we’ve been investing in DGI stocks which gives us the current balances across our portfolio seen below:

Quantigence_DGI_Portfolio

The first thing to note here is that we don’t need to invest any more money in Realty Income Corp. (O) because it exceeds our target position size by over $2,000 as a result of strong stock performance over the past few years. Chevron (CVX) and National Retail Properties (NNN) are also nearly at our target position size as well. On the other end of the spectrum, we see that 9 of our stocks we’re just starting to invest in. In order to hit a target position size of $13,333 in 24 months’ time, we need to invest $550 per month in each of these 9 stocks.

We plan to spend $400,000 on our portfolio and so far have invested just 42.5% of that. That investment of $170,870 has appreciated by +16.9% which is great to see but is something we don’t really want if we’re buyers of these stocks. We would much prefer a bear market in the next 2 years so that we can accumulate our positions at a cheaper price.

For the next 24 months, we’re going to be buying $8,425 of stocks per month. As for the cash we need to continue buying our positions, we have somewhere in the range of $82,000 sitting in USD cash. We also have somewhere in the range of $24,000 in foreign currencies to hedge all our exposure to the large USD position we’re holding. The rest of our assets sit in some technology stocks (APPL, ILMN, QCOM), some odd smaller stock picks, and a position in gold which all amount to about $44,000 USD. This means that we have about $150,000 to invest in this portfolio leaving us about $80,000 short from what we need to hit our target portfolio size of $400,000.

We expect to make up the difference by saving around $5,300 each month. We’re also going to try and pull a planned exit from our prestigious jobs in finance and capture a nice big severance package. As we’re based in Hong Kong, the law requires somewhere around .75 months pay per year of service. We’ve been corporate slaves for 9 years now, so this could prove to be a major windfall if it all works out. In the meantime, we’ve automated buys for all these stocks except for 10 which we need to buy manually. In a future article, we’ll show you where we’re holding all of these positions.

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