DWI - Security Style Analysis
So far today, the Dollar Wise Index (DWI) seems to be in sync with the S&P500 and, in fact, moving just slightly ahead of the S&P which makes me wonder about the beta* of each stock as well as the average beta of the DWI portfolio as a whole.
Initially though, i'm curious about the distribution of these companies within the morningstar Stock Style box and have derived the following information;
Large Core Stocks
So, this portfolio is biased towards Cor & Growth in both the Large & Mid-Cap sectors.
Overall and generally speaking I like this basket of stocks. I've seen many of them touted by different publications and analysts. Fastenal and Wrigley both had a video recomendations by Pat Dorsey, CFA and Director of Equity Research for MorningStar. Fastenal is also under accumulation by the NAIC's investment clubs around the country. It's hard not to find Microsoft and Wal-Mart toted all over the place and companies like Johnson & Johnson & Home Depot (among others) appear in Jubak's Journal among the 50 greatest stocks to own.
One other thing I may add to the mix is actually investing in the portfolio with my own money. At first I was considering plunking down $1,000 to buy $100 worth of each of the ten stocks but being acutely aware of the benefits of dollar cost averaging I am now considering monthly investments of $25 per stock for a total of $250/month. A $10/month level seemed too low and then I realized I already have DRIPs in place with Anheuser-Busch and Johnson & Johnson which require minimum deposits of $25/month so, I figure we'll go $25 across the board.
I like this scenario because I'm considering an initial time frame of two years which will give a total of principle invested of $6,000 after that time period. We'll have to establish a few rules governing the portfolio and for now, I'd like to add the suggested selling price of each stock for reference. Portfolio rebalancing is another aspect that should be addressed but, we'll get to that in due time.
From TheFreeDictionary.com -
*Beta - Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta less than 1 means that the security will be less volatile than the market. A beta greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2 it's theoretically 20% more volatile than the market.
Many utilities stocks have a beta of less than 1. Conversely most high-tech Nasdaq-based stocks have a beta greater than 1, offering the possibility of a higher rate of return but also posing more risk.
Initially though, i'm curious about the distribution of these companies within the morningstar Stock Style box and have derived the following information;
Large Core Stocks
- Anheuser-Busch Co.
- Home Depot
- Johnson & Johnson
- Microsoft
- Wal-Mart
Large Growth Stocks
- Medtronic
- Wrigley
Mid-Cap Core Stocks
- Washington Post Co
Mid-Cap Growth Stocks
- Biomet
- Fastenal
So, this portfolio is biased towards Cor & Growth in both the Large & Mid-Cap sectors.
Overall and generally speaking I like this basket of stocks. I've seen many of them touted by different publications and analysts. Fastenal and Wrigley both had a video recomendations by Pat Dorsey, CFA and Director of Equity Research for MorningStar. Fastenal is also under accumulation by the NAIC's investment clubs around the country. It's hard not to find Microsoft and Wal-Mart toted all over the place and companies like Johnson & Johnson & Home Depot (among others) appear in Jubak's Journal among the 50 greatest stocks to own.
One other thing I may add to the mix is actually investing in the portfolio with my own money. At first I was considering plunking down $1,000 to buy $100 worth of each of the ten stocks but being acutely aware of the benefits of dollar cost averaging I am now considering monthly investments of $25 per stock for a total of $250/month. A $10/month level seemed too low and then I realized I already have DRIPs in place with Anheuser-Busch and Johnson & Johnson which require minimum deposits of $25/month so, I figure we'll go $25 across the board.
I like this scenario because I'm considering an initial time frame of two years which will give a total of principle invested of $6,000 after that time period. We'll have to establish a few rules governing the portfolio and for now, I'd like to add the suggested selling price of each stock for reference. Portfolio rebalancing is another aspect that should be addressed but, we'll get to that in due time.
From TheFreeDictionary.com -
*Beta - Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta less than 1 means that the security will be less volatile than the market. A beta greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2 it's theoretically 20% more volatile than the market.
Many utilities stocks have a beta of less than 1. Conversely most high-tech Nasdaq-based stocks have a beta greater than 1, offering the possibility of a higher rate of return but also posing more risk.
posted by Scott at
1:39 PM
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