Building a portfolio from over 100 ETFs and 6800 stocks results in the following group of securities. Beginning with a base of over 100 commission free ETFs from TDAmeritrade and then adding in a few specialized, sector, and commodities plus several highly screen stocks, we narrow the list to the following 15 securities.
Tranche Momentum Recommendations: After the initial tranche momentum screens, we now the portfolio down to a possible 15 securities. Three stocks, PKG, XRAY, and UHS, make the list. For added diversification I increase the maximum number of tickers from two to three. The current recommendations are EWZ, SLV, and PKG.
Position Sizing Recommendations: The next screen is one of position sizing. Whereas the tranche momentum recommendations are nearly automatic based on setting up a few variables that survived a lot of back-testing, within the position sizing worksheet we have some control over what risk we wish to take with the portfolio. Setting the SD Multiplier to 1.6 and the Max Trade Position Risk to 0,9, the Suggested Portfolio Risk is 4.2% or at an acceptable level.
Manual Risk Reduction Recommendations: Using the Position Sizing worksheet as a springboard, the follow shares are set to put together this sample portfolio. Four ETFs (VNQ, EWZ, SLV, and VOX) and one stock (PKG) are the beneficiaries of this portfolio structure.
Discussion and comments are welcome.