As we are no longer to process the data required to complete the screen for this portfolio, we will be ceasing following it. We hope to find a new system of generating some quantitative portfolios to follow, but this one has to end. However, we can give it one final look. Since the portfolio required rebalancing and re-screening once a month and we were unable to keep up with that during our break, we can’t give a complete record of where it would stand today had it been continued accurately, but we can look at how the companies that were included in the portfolio’s last update have performed.
As a whole, the portfolio has not done as bad as some would have anticipated with its low diversification away from the homebuilders. It is down only 21.22% since it debuted, in spite of losses greater than 50% on 8 of the 15 current holdings. This can be a testament to the power of diversification. Even though we were in just a couple of industries, our risk was significantly reduced by simply holding a greater number of companies.
Things would likely have ended in better results had we continued to update as we would have sold companies when they were no longer suitable for the defensive investor (only 3 of the 15 pass the requirements today) and replaced them with better investments. We also would have sold some as the PE rose as they were no longer in the lowest 15 PE’s among the defensive investor’s list.
There are a few interesting things to note about some of the companies in the portfolio, and we will explore that in another post.