Hi Rob, I can't really give you a good reason to start a new account if you have something that satisfies your current needs! However, here's some thoughts:
If you've ever read in any of the financial publications about Investment Pyramids, it might be a good idea to look at your total asset base and see just what it looks like in comparison. The investment pyramid idea is that the base of the pyramid is big and the most sound. It includes such things as liquid savings, life insurances, equity in home and other assets, etc.
The next "layer" of the pyramid is where most investments would fall. It may actually be of greater value than the first layer, but has some risk involved and may not be of as constant value. It includes equity in a family business, a bond portfolio, stock portfolio, mutual funds and that sort of thing. None of this is small cap type of stuff usually.
The peak of the pyramid is the smallest in total size and includes the speculative investments one makes. This is where the small caps probably go. It's a great place for IPO's and other things.
A few years ago I found my pyramid getting a bit top heavy and had to do a bit of rebalancing. We all go through this once in a while. It really depends on which end of the pyramid is doing the best!
If you have an account that you like and want to add to it, I'd suggest that you use the existing account's Equity/Cash ratio as a rational way to divide up the new addition. Mr. Lichello asks that you add the same value to the Portfolio Control as you add to the Equity side of the account. Newport does this automatically if you use the TRADE window and the ADD STOCK or the ADD BOTH options. I've done this on occasion.
If you feel that you need a new class of investment or need to add to one particular layer of your Pyramid, you might have to chose a new investment vehicle. Many here get more fun out of selection than plain old management. I enjoy the management a lot and don't mind getting the chance to start something new periodically. My biggest problem has been weeding out stocks. I agree with Mr. Lichello that too many stocks just flattens out our performance. There's plenty of good mutual funds around for diversity, so having lots of stocks for diversity plus mutuals is not necessarily productive.
You might want to try to classify your holdings as to type. Large cap, small cap, domestic, foreign, sector, etc. Then see where they fit in the pyramid. If you see any holes in the bricks and mortar, maybe that's where the money should go. Or, as you've suggested, maybe you'll just beef up one part that's already doing well.
We want good return, but we might as well have some fun as well! So, I like to pick stocks in companies that are interesting to me. Hope this helps.
Best regards, Tom |
