As regular readers, you all know I’ve struggled what to do with my investment strategy over the past weeks and months. I’m a contrarian at heart, I find myself attracted to names and sectors that other investors shun. Yet, as I’ve discussed numerous times here, do I really have the knowledge advantage to outperform the market?
After much deliberating, I’ve come up with my investment strategy. While I’m hardly sure I can outperform the market picking contrarian names, I definitely can’t if I don’t try. At the same time, I want the safety that comes with taking a passive approach. How can I accomplish both?
Basically, I’m going to split my portfolio in two. I will invest my RRSP and TFSA in passive index funds. I will split my money equally between 4 funds: XIC (tracks the TSX Composite), XSP (tracks the S&P 500) XIN (tracks the rest of the world) and XBB (Canadian bond index). This will give me a 75% equity and 25% fixed income weighting, which is fine for my age. Every year I will buy whichever one of these indices that is the worst performer for my contribution that year.
For my non-registered portfolio, I will continue to pursue contrarian investments. I will continue to try to outperform the market, and I’ll do a better job keeping you guys in the loop, via The Uproar Fund. I’ll actually start giving you the quarterly updates I’ve promised. I’ll actually start doing more analysis on individual stocks. You’ll still hear me talk about ETFs too, I’ll just usually make it about a beaten up sector. Look for some sort of analysis about once a week.
So that’s it. I’m not ready to admit defeat from active investing yet. What’s fun about this whole exercise is I can compare my results from passive investing directly to active investing. Will it be worth my time? Will the market kick my ass? Only time will tell.
Now I’m off to enter Moneyville’s Next Blogger Contest. See you kids tomorrow.