One good thing about The Bedokian Portfolio is that it gives you a choice to be either a passive or active investor. A passive investor would just look at his/her Bedokian Portfolio once or twice a year, do the necessary rebalancing, and off he/she goes until the next rebalancing cycle. An active investor (like myself) would keep tabs with the goings-on in the financial markets and rebalance his/her Bedokian Portfolio any time.
Whether you choose to be in the passive or active camp, here are some pointers that you could follow should you opt for either.
As the passive Bedokian Portfolio investor looks at his/her holdings once or twice a year, the safest recommendation would be index investing through ETFs.
If you want to have additional yield and returns, and decided to add in individual equities, bonds or REITs, then select those with strong fundamentals using fundamental analysis, which I had described in Chapters 11 and 12 of The Bedokian Portfolio. Companies and REITs with strong fundamentals would have lower risk and thus you could afford to relook at them in the next rebalancing cycle without having to worry too much. Although this is not fully passive as you would need to conduct analysis, but it could be done during the rebalancing stage, to see if the equity/bond/REIT could be kept or sold off. To make things easier, you could also adopt a “core and satellite” Bedokian Portfolio1 in managing your passive investments.
I had mentioned quite a bit about being in the active camp for The Bedokian Portfolio2, and I want to specifically bring up the point about being connected often to the financial market information. This means you would have to read news and information on the economy, markets and maybe even individual companies and REITs at least once every few days in order to have a “feel” on the overall picture. Also, there is this issue with managing your transaction costs and not degenerating active investment into trading.3
The main gist of being an active investor is the interest of all things related to investment, like a hobby. You must see things holistically and with a macro view, so as to piece the various snippets of information together to form a picture.
So Which Is Better For Me?
The only person who could answer that question would probably be you. My take is; if you think your investment knowledge and time are limited, then passive may be suitable for you. If you think you are up for the challenge in managing your Bedokian Portfolio and an interest in the world of investment, then the active route may be the one.
1 – The Bedokian Portfolio, p 122-123
2 – ibid, p 93-94
3 – ibid, p 103