50/50 (BDC And MREIT) Update, New Stock-Tracking Tool Update POT2.0

Portfolio Concept Design…

The premise for my 50/50 portfolio design is based on the concept that BDC (Business Development Companies) outperform when the markets are flat or going up and mREIT (mortgage Real Estate Trusts) outperform when the markets are flat or going down. This concept implies that BDCs performance rely on company loans in their portfolio having the ability to repay their loans in good times, but go non-accrual or default during economic downturns. Agency mREITs on the other hand are leveraged securities that are backed by the US government. During bad economic times investors begin to invest in treasuries and MBS securities that are backed by the US government to protect against the loss of principle; and the result for the underlying securities is strong performance.

In essence, Im always hedging my bet with the tug-of-war between bull and bear markets while collecting over 10% yield on my portfolio. Im not in the camp that always tries to trade in the direction of the market; Ill leave that excitement to traders. I would rather try to select companies that fit in just two sections of the economy. This simple method lets me SWAN just fine, since this seems to be a concern for most investors.

Click to enlarge


Since my last portfolio update I added a few shares of three companies to bring my income allocation value to 72.5% of my gross employment income. My goal for the end of this year is 75% and Im on track to achieve this benchmark. For convenience I have normalized the portfolio balance to about $500,000 as of May 19, 2016. The very next day Friday when I nailed down this article the portfolio jumped once again by almost 1% and sits at about $505, 000 with a projected income of $63,700 and a yield of 12.6%. My previous article introduced you to POT1.0, 50/50 Portfolio Update, And Introducing A Brand-New Stock-Tracking Tool. I have since made incremental enhancements and decided this was a major update and have named the revision to POT2.0. The Excel 2010 application downloads Yahoo data and I have manipulated the data to display the information in graphical bar-chart form so investments can be compared on a relative basis. The changes are described below and the download link is in the conclusion section. Please see important disclaimers at the end of this article.