Follow Up To Stein and Siegel

I had several comments left on the Stein and Siegel model portfolio post. I'll try to address some of the comments and try to add one or two more useful tidbits.

One comment asked if these were long term or what looks good now? I took both to be long term portfolios that might need to be tweaked every now and then. In general I would love to be able to implement a portfolio and never have to make another trade again. Lower turnover with no tax considerations would be nice but of course its not realistic. With that in mind, only a couple of tweaks a year is nice to shoot for. Some years this will be easy and some years changes may need to be made every month.

One comment seemed to sort of defend Ben Stein. Hopefully my post did not read like an attack on him. I too am a big fan of Mr. Stein and his drive to try to help people. He has an good idea for a portfolio and it has flaws. Any idea I could come with for a model a portfolio would have flaws. The portfolios I manage have flaws. This goes with the territory of assembling any type of portfolio. Mistakes and flaws happen and that is OK.

One comment asked what three sectors I thought would lead for the next five years, a tie in to part of Professor Siegel's portfolio. I don't know. I have spelled out my thoughts about energy many times and the theme seems very obvious. I have not written about healthcare anywhere near as much but that also seems obvious. So if these themes are obvious they should not in fact end up leading, if you know what mean. The consumer staples sector the Siegel references, and was supported in a reader comment, is not clear to me. I understand the logic but if you watch a little CNBC Asia you will see that Proctor & Gamble has plenty of local competition in a lot of emerging markets. Not that the domestic staples idea can't work but it is not shooting ducks in a barrel either.

I forgot to mention in the original post that both portfolios may come up too short on emerging markets and natural resources, excluding energy. Resources could be an area that continues to lead for several more years. I think this means needing more than just oil stocks. More and more products will be created to accommodate these markets very soon. This then gets us into the debate about too much supply of investment products but that is still a ways off.