# 2 Minute Portfolio



## doitnow! (May 28, 2011)

Anyone using Rob Carrick's 2 minute portfolio for the bulk of their Canadian equities portfolio content? 

http://www.theglobeandmail.com/glob...ards-simple-patient-investing/article1862307/

Your thoughts on this option over Canadian equities ETF's?


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## andrewf (Mar 1, 2010)

Smacks of back-casting. There is something to be said for not investing solely in the TSX, which is not a very diverse market.


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## doitnow! (May 28, 2011)

andrewf said:


> Smacks of back-casting. There is something to be said for not investing solely in the TSX, which is not a very diverse market.[/QUOTES]
> 
> The 2MP seems to have outperformed Canadian equity ETF's over the past 25 years?
> 
> http://www.theglobeandmail.com/globe...rticle1862307/


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## larry81 (Nov 22, 2010)

i dont need this, i have XIC


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## doitnow! (May 28, 2011)

I understand, maybe XIC is a better option for you. 

What I gathered from looking into the 2MP is that it has managed to consistently outperform the XIC over time. 

Wondering what others think of 2MP as an alternative to XIC or similar?


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## andrewf (Mar 1, 2010)

By backcasting, I mean going back through history and finding a strategy that happens to work well. A good strategy will work in other markets as well. Does this same strategy work when applied to the S&P 500, the ASX 200, etc.? If not, it sounds like you're just rolling the dice.


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## doitnow! (May 28, 2011)

This strategy applies only to the Canadian portion of the portfolio (limited to Canadian stocks).

I believe he began the 2MP back 25 years ago.

He describes the strategy and stock here:

http://www.theglobeandmail.com/globe...rticle1862307/


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## Eclectic12 (Oct 20, 2010)

doitnow! said:


> This strategy applies only to the Canadian portion of the portfolio (limited to Canadian stocks).
> 
> I believe he began the 2MP back 25 years ago.
> 
> ...


Hmmm ... was it really 25 years ago?

I remember seeing articles around the 1998 time frame so it's had at least ten plus years.

BTW, I tried to use the URL but get a "404age not found".


The earliest I could find in the first four pages of google is 2001:
http://www.globeinvestor.com/portfolio/gam/twominute.html


Cheers


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## doitnow! (May 28, 2011)

Try this...

http://www.theglobeandmail.com/glob...ards-simple-patient-investing/article1862307/


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## Andre112 (Apr 27, 2011)

> The two-minute portfolio was devised by me in 1999 as an experiment in quick and easy stock picking. For the past several years, the portfolio has been maintained by CPMS, a Toronto-based equity research and portfolio analysis firm owned by Morningstar Canada.


So it's from 1999


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## doitnow! (May 28, 2011)

Ok, 12 years, not bad...what do you think as a alternative to the Canadian portion of a portfolio? Seems to have worked for the past 12 years...not a predictor of that it will do so in the future, but we can't predict that the XIC for an example will do better given that it hasn't in the last 12 years.


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## fatcat (Nov 11, 2009)

this portfolio appears to be even simpler: 

http://www.theglobeandmail.com/glob...ly-simple-must-have-portfolio/article1806745/

he picked seven stocks and had a return of 305% over ten years when the TSX returned 72%


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## gibor365 (Apr 1, 2011)

I just checked YTD abd 2 min portfolio performed much better than XIC..
1.7% gain vs 0.2% gain


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## doitnow! (May 28, 2011)

Hey fatcap & gibor,

So why are others on this forum not discussing these portfolios as lucrative alternatives over XIC and other Canadian equity funds?

I am asking because I am new at this and think that there probably is a very good reason but I've yet to hear about it?


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## Ethan (Aug 8, 2010)

fatcat said:


> this portfolio appears to be even simpler:
> 
> http://www.theglobeandmail.com/glob...ly-simple-must-have-portfolio/article1806745/
> 
> he picked seven stocks and had a return of 305% over ten years when the TSX returned 72%


My Dad forwarded me that article when it came out. I found it funny, my girlfriend and I combined own 5 Canadian stocks:

TD
ENB
TRP
CNR
VT

The only one not included in the "blazingly simple" must have portfolio is VT. My girlfriend holds that through an employee share purchase program as she works there (employer matches half of employee contributions and she can sell twice a year, so it would be stupid to not be involved in the plan). The funny thing is we did our research independently of this article, the only one on the list that I hadn't thought of before reading the article was CNR.

Similar to Mr Henderson, I feel that rail, pipelines and banking are all essential to the Canadian economy and the barriers to entry are high. The stocks I picked are the ones I feel are best positioned within those industries.

I don't like the 2 minute portfolio for the simple reason that it looks strictly at dividends. A company could pay a high (trailing) dividend, but have negative earnings and a poor outlook. That stock would be included in the 2 minute portfolio. I buy dividend stocks to get a portion of that companies future earnings, not to deplete their balance sheet. I think the 2 minute portfolio would generate better returns if picked the top 2 dividend paying stocks per sector with payout ratios under 75%, not the top two dividend paying stocks per sector.


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## doitnow! (May 28, 2011)

Ethan said:


> My Dad forwarded me that article when it came out. I found it funny, my girlfriend and I combined own 5 Canadian stocks:
> 
> TD
> ENB
> ...


How well is your portfolio doing? Maybe it takes more time than I have available to keep track of these on a daily/weekly basis. 

Do you also invest in ETF's?


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## larry81 (Nov 22, 2010)

IMHO, a ~20stocks portfolio don't offer enough diversification, also most people would simply panic sell when 1 or 2 of their holding goes in the red...


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## Sampson (Apr 3, 2009)

larry81 said:


> ~20stocks portfolio don't offer enough diversification


It is a game of diminishing returns. I believe the academic research shows that 20 (if diversified over different economic sectors) is a fairly sweet spot with reasonably low portfolio beta, but anything beyond 30 yields little benefit.


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## Ethan (Aug 8, 2010)

doitnow! said:


> How well is your portfolio doing? Maybe it takes more time than I have available to keep track of these on a daily/weekly basis.
> 
> Do you also invest in ETF's?


I don't hold any ETF's.

I hold all my Canadian stocks in my TFSA. I've contributed the max each year, ($5,000 contributions in August 2009, January 2010 and January 2011). My XIRR is 14.08% as of todays close. That's not totally representative of the portfolio, I've held other stocks in there that are probably a wash.

I also don't understand the need to diversify beyond 20 stocks. To quote Warren Buffett:

"Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing."

I don't expect to generate the returns Buffett has, but I think I can at least match the market. Besides, I enjoy picking stocks and dabbling in real estate.


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## Eclectic12 (Oct 20, 2010)

doitnow! said:


> Hey fatcap & gibor,
> 
> So why are others on this forum not discussing these portfolios as lucrative alternatives over XIC and other Canadian equity funds?
> 
> I am asking because I am new at this and think that there probably is a very good reason but I've yet to hear about it?


*grin* - there isn't necessarily a good reason. It may have been discussed at some point and without recent posts, disappeared.

That's the benefit/risk of a forum such as this. As long as the post is relatively on topic, it's a free for all of what's popular instead of a complete overview.


I have seen a few discuss the couch potatoe portfolio and asset allocations at various points.


Also - if I've reading the article posted and Andre112's quote correctly, the 2 minute portfolio was created in 1999 but has been analysed against twenty-five years of data.


Cheers

Cheers


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