A Lesson On Black-Box Investing: Kurt Lindner And The Lindner Dividend Fund

As you know, we begin with setting a master allocation for each of you. This allocation is based on the amount of your savings that are exposed to risky investments (common stocks), or relatively safe US Government obligation and FDIC insured deposits.

What you may not remember is the diversification requirement of our risky investments. You can easily see the security diversification from your statements. You also see the sector weightings at the portfolio level. We have always sought to keep the percentage of your portfolio invested in each major economic sector close to the overall market weight while taking the greater of risk at the individual company level.

Therein lies the problem today. It has become increasingly difficult to cheaply maintain a neutral sector weight with individual securities alone, especially for our newer clients. Our solution is not new, but one we have used continuously since 1998, the first year an ETF was available for each major economic sector. If you see a sector ETF show up in your holdings, you will know the reason for its inclusion – meeting our sector diversification targets.

I opened with a quote from Winston Churchill with extra credit to John Maynard Keynes and Paul Samuelson (because each of them has a version of the same quote), and I will end with another from the Dutch Philosopher Spinoza.

“All things excellent are as difficult as they are rare.”

-Baruch Spinoza

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Anderson Griggs & Company, Inc., doing business as Anderson Griggs Investments, is a registered investment adviser.  Anderson Griggs only conducts business in states and locations where it ...

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