“No one ever thought a show about business could ever become this popular,” Kevin O’Leary told the crowd in Las Vegas.
O’Leary was Wednesday’s keynote speaker at our annual Stansberry Conference. You probably know him as “Mr. Wonderful” from the Shark Tank television show. But he’s also a knowledgeable investor in the markets, with his own line of exchange-traded funds (called O’Shares).
Shark Tank brings business owners together with potential investors – or “Sharks” – like O’Leary.
He has built a portfolio of more than 40 businesses from the show.
But on Wednesday, he explained to the audience that Shark Tank-style investing isn’t how to build a long-term portfolio.
“It’s not my Shark Tank persona, but the real dough is in this philosophy,” he said.
O’Leary told the crowd how to build their own portfolio like he does. And the good news is that his method is simple. Anyone can do it.
Here are the details…
Every successful investor needs a set of ground rules – principles they plan to follow no matter what.
For O’Leary, the rules are simple…
First, every investment must pay a dividend. Cash is king, so you want to own investments that pay cash.
O’Leary looks for investments that pay a monthly or quarterly distribution. And only his gold and personal real estate holdings (homes he lives in) don’t fit this requirement.
Next, you need to diversify. There are plenty of ways to make that happen. But Mr. Wonderful follows two simple ideas: Never invest more than 5% in any company. And never invest more than 20% in any sector.
Those two diversification rules mean you’ll never own too much of one company or group of companies. It means diversification will allow one part of your portfolio to zig while the other zags.
With those rules in place, O’Leary explained how he invests for the long term in his family trust. The simplicity might surprise you…
Stocks, bonds, cash, and gold. Simple, right?
His one additional idea is moving a good portion of your stock holdings outside of the U.S. He does it by investing 60% in the U.S., 20% in Asia, and 20% in Europe.
O’Leary has built a conservative portfolio. But it’s one that should perform well for decades.
He told the crowd, “Preservation of wealth is all that matters.” That means he’s more interested in not losing money than shooting for the moon. And most investors are smart to listen to that advice.
Again, to echo O’Leary, “This is where the real dough is.”
You don’t have to be a genius to build your own portfolio like this Shark. Just follow Mr. Wonderful’s simple rules…
Own investments that pay dividends. Diversify. And follow the simple, long-term asset allocation outlined above.
Good investing,
Brett Eversole
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Source: Daily Wealth