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Monday, January 25, 2010

Kirk Lindstrom's Two Investment Letters

I write two different, but related, newsletters.

#1 "Kirk Lindstrom's Investment Letter" is $155 a year and uses the "core and explore" method to invest. It has two core portfolios plus an explore portfolio of individual stocks. My aggressive core portfolio has 80% equities while my "conservative" core portfolio has 50% in equities. My core portfolios are made of index funds and ETFs for the very lowest expenses.

Since 12/31/98 "Kirk's Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

Update:  For 2010 through December 21, my “explore portfolio” is up 20.0% YTD vs. S&P500 up 14.6% & DJIA up 10.6% YTD. The explore portfolio was roughly 70% equities for the year so the stocks in the portfolio had a banner year!  Click for a full performance table here.  

I recommend people start by getting their proper core portfolio created THEN add individual securities (Stocks, ETFs, Specific TIPS and even specific fixed income investments) I cover in my explore portfolio to build your own explore portfolio for 5 to 20% of your investment portfolio total.

"Kirk Lindstrom's Investment Letter Explore Portfolio" gained 33.5% in 2009 with 75% in equities and 25% fixed income with an overall portfolio beta of 1.0. For 2009, the DJIA gained 19.2% and Warren Buffett's BRKA only gained 2.4% (FREE Sample Issue - More Info - Return Data )

I have target prices to buy and sell my explore stocks so I find I almost look forward to market declines to get really great prices for stocks I can sell later at higher prices. Of course, following this explore portfolio is more work than buying index funds and rebalancing once a year that I recommend for my core portfolios. Compared to "other newsletters" costing more, my core portfolios and general stock market coverage in the first 11 pages of the 35 page monthly letter offer significant value even for those who don't dabble in individual stocks. I do (so far successfully) a small amount of "market timing" with a small portion of my explore portfolio but it mostly follows my "asset allocation strategy" as explained in "Using Asset Allocation to make money in a Flat Market."

#2 I write "The Retirement Advisor" with David Korn. We sell this for a very modest $99. We offer three model portfolios. We do not recommend individual stocks but we have articles that discuss current financial events such as economic data and Social Security COLAs. We also have articles to help you save money plus we find CDs with FDIC paying the highest rates. Our most aggressive portfolio has 50% in equities. Our most conservative portfolio contains no equity exposure.

Difference: The conservative (50:50) core portfolio in "Kirk Lindstrom's Investment Letter" is slightly more aggressive than the aggressive model portfolio #1 in "The Retirement Advisor." Over the very long term, you should expect the most aggressive portfolio to have the highest returns but at a price of higher volatility. When we started the "The Retirement Advisor" in 2007 we thought people like Bob Brinker were far too aggressive with equity exposure recommendations for retired people at such a risky time for the markets. If you recall, Brinker's Model Portfolio #3 was nearly 2/3rds in equities when the markets peaked. As our great returns show, we were right.


"Kirk Lindstrom's Investment Letter" is for those who want to use individual stocks in an attempt to enhance their core portfolio returns. Some like to buy or trade individual stocks for extra return as they try to beat the markets over the long term as they build their investment portfolios to retire someday in the future. For those people, I recommend they place 120% less their age of their investment portfolio in my "core aggressive" portfolio and use remainder to follow some or all of my explore portfolio. For example, someone 40 years old would have 80% in my core aggressive portfolio and 20% in my explore portfolio.

For those at critical mass in retirement, there is no need to take a lot of risk so I recommend 95% of investment assets in my "core conservative" portfolio and the remaining 5% in some or all of my explore portfolio for "entertainment."

In sharp contrast, "The Retirement Advisor" has no individual stock advice. The portfolios are designed not to try and beat the markets but to help you sleep better at night in retirement with lower portfolio volatility. "The Retirement Advisor" also helps you manage your "living expense" or "emergency" account that is outside your investment portfolio. In addition to portfolio and living expense management help, "The Retirement Advisor" has articles to help you save money, understand Social Security, follow the basics of the economy and how it relates to our advice.

Many of my readers subscribe to and enjoy both newsletters.
"Kirk Lindstrom's Investment Letter Returns"

From 1/1/1999 Through 12/31/09:

My "50:50 Conservative Core Portfolio" was up 70.1%
or 4.9% compound annual return.

==> $100,000 invested 1/1/99 became $170,054

My "80:20 Aggressive Core Portfolio" was up 54.6%
or 4.0% compound annual return.

==> $100,000 invested 1/1/99 became $154,596

My "70:30 Explore Portfolio" was up 159.2%
or 9.0% compound annual return.

==> $100,000 invested 1/1/99 became $259,177

80% in “Core Aggressive” plus 20% in “Explore” was up 79.5%
or 5.5% compound annual return.

==> $100,000 invested 1/1/99 became $179,503

95% “Core Conservative” plus 5% “Explore” was up 77.3%
or 5.3% compound annual return.

==> $100,000 invested 1/1/99 became $177,279

100% in VTSMX was up 21.6%
or 1.8% compound annual return.

==> $100,000 invested 1/1/99 became $121,587

VFINX (S&P500) was up 10.2%
or 0.9% compound annual return.

==> $100,000 invested 1/1/99 ONLY became $110,195

Vanguard's Money Market Fund was up 41.3%
or 3.2% compound annual return.

==> $100,000 invested 1/1/99 became $141,337

"Kirk Lindstrom's Investment Letter"
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The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007

The Retirement Advisor Portfolios
Dollar Value on 12/31/09
Model Portfolio 1
Model Portfolio 2
Model Portfolio 3
DJIA 12,501.52 on 1/1/2007
S&P500 1,418.30 on 1/1/2007

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FREE SAMPLE issue of The Retirement Advisor newsletter in pdf

Kirk Lindstrom's Investment Letter Performance

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