The "Coffee Can Portfolio" is a long-term investment strategy that is characterized by low turnover and a focus on holding a diversified basket of stocks for an extended period of time, often with the goal of outperforming the overall market. The strategy gets its name from the idea of putting a portfolio in a "coffee can" and forgetting about it for a long time, much like one might put their spare change in a coffee can to save up for a future goal.
The key highlights of this investment strategy include:
Low turnover: The coffee can portfolio is designed to be held for a long period of time, with little to no trading or rebalancing. This helps to minimize transaction costs and reduces the risk of short-term market volatility impacting the portfolio's performance.
Diversification: The portfolio is constructed to be well-diversified, with investments in a range of stocks and other assets that have low correlation to one another. This helps to reduce overall portfolio risk.
Long-term focus: The coffee can portfolio is not designed for short-term gains, but rather as a long-term investment strategy. Investors who follow this strategy are focused on building wealth over the long term, and are willing to accept some short-term volatility in exchange for the potential for higher returns.
Value-oriented: The coffee can portfolio often has a value bias, with investments in stocks that are undervalued or out-of-favor with the market. The idea is to buy these stocks when they are cheap and hold onto them until they return to their fair value or become more popular.
Overall, the coffee can portfolio is a simple, low-maintenance, and value-oriented investment strategy that is designed for long-term investors who are looking to build wealth over the course of many years.
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