My model portfolio is composed of securities from across the world that I discover, and write about on my blog, The Mirandolan. The rules are simple:
- The security must be publicly listed and, if a stock, have a market capitalisation of at least $100 million.
- For stocks and corporate bonds, after making the appropriate accounting adjustments to the financial statements, I use my stock rating or credit rating methodology to determine if the security is very attractive or attractive. If so, it goes into the model portfolio.
- From inception to the end of Q1 2025, I weighted them by contribution to portfolio return on invested capital (ROIC), but from then on, the portfolio is managed according to a combination of Kelly optimisation and the central asset pricing model (CAPM).
- If the stock or corporate bond reaches a neutral rating, I assess the economics of the business against that of its peers and the rest of the market, to see if I can find a better risk/reward proposition, otherwise, I close the position.
- The performance of the portfolio is measured against that of the S&P 500 or the risk-free rate, depending on which is the greater.
The portfolio at present is extremely concentrated, as the table below shows.
Performance is assessed at the end of every quarter.