I - Income: This is the "guaranteed" portion of your portfolio that is meant to provide you with some stability as well as some income. The capital is guaranteed (by the issuer) and the term (or commitment) can range from 1 day to 30 years. The most common example is probably GIC's, but there are many other products such as money market funds, bonds, preferred shares etc.
C - Core: This is the foundation of the equity portion of your portfolio. It is made up of the top ten* stocks on the TSX which not only generate good income (dividends), but they are also very stable (even in down markets). As the name implies, the core is the initial building block of the equity portfolio upon which all other strategies are built.
E - Explore: This is the 'active' section of your portfolio. We divide this into two parts, namely Opportunity and Momentum.
A.G. - Aggressive Growth: This is a portfolio that is traded aggressively and may also take advantage of margin. It uses an 'All Cap' (small, medium, and large companies) universe of stocks including private placements when the opportunity arises. The concept with this portfolio is to find anomalies in stocks and take large positions in them. Anomalies include: buying opportunities due to a stock falling out of favour; take over opportunities; and short term trading opportunities.
E - Equity (US): We cheated here in order to spell AGE properly!
This is a portfolio made up of Buffett stocks. It usually has between 8 and 10 stocks chosen from a variety of Buffett portfolios, narrowed down to his 'Top 10'. Although the strategy here is to buy and hold, for various reasons (take-overs etc), there can be some degree of turnover in a year. Notwithstanding these special situations, the portfolio is re-positioned once a year.
* top ten as defined by using certain proprietary parameters.
** the 'Ice Age' Portfolio is a sample portfolio based on 10 core securities chosen by the Ice Age Team. The Ice Age Portfolio is not a fund or managed product.
Opportunity: Throughout a full 'market cycle' there are short periods of time (6 to 9 months) where the markets go straight up or straight down. Most of the other times, the market will 'climb a wall of worry' meaning that it will take 2 steps forward and 1 step back. These pullbacks are also known as corrections. In the opportunities section, we look to take advantage of these corrections to invest in top quality stocks (TSX 60) at low prices. We are not looking to invest for the long term here, once we see a near term top on this stock, we will sell it immediately. This is the "buy low-ish, sell higher" strategy and is used to enhance the returns of your core.
Momentum: This is a proprietary program we have developed that takes advantage of a three disciplined approach. We screen over 350 stocks for their fundamental qualities, their technical qualities and their momentum qualities. When all three of these characteristics pass the test, we choose the top ten (if there are 10 that pass). Once a month we run the screen again and adjust the portfolio. Those that no longer fit into the top ten are replaced by those that do. This is the most active portion of the portfolio, and has (in the past) produced superior returns.
Doug Penny started in the industry in 1987. A graduate from Queen's University (Engineering, 1984), Doug deals with the 'big picture'. He looks at the economy and the markets from the top down and determines the best investment strategies to implement.
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