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Robert Bezede has been an investor since the age of 13.
Robert Bezede has been an investor since the age of 13.

me and my money

Why this investor uses a core-satellite portfolio Add to ...

Robert Bezede

Occupation

Economics student at Ryerson University.

Portfolio

About 35 per cent in equities, including Liquor Stores N.A. Ltd., Pollard Banknote Ltd., Waste Management Inc. and TransForce Inc.; about 65 per cent in the following index funds: Vanguard Total Stock Market ETF, iShares Transportation Average ETF and Vanguard REIT Index Fund.

The investor

Robert Bezede started investing at the age of 13 through his parents’ trading account, guided by numerous investment books and blogs. His savings and investing generated enough money to pay for his university studies, he reports.

Coding skills recently landed him a job at a wealth-management firm. He also uses these skills to develop trading algorithms at quantopian.com, a website run by a crowd-sourced hedge fund. It provides free resources and a cut of profits to coders whose algorithms make money for the fund.

How he invests

Mr. Bezede follows a core-satellite investment approach in his portfolio. The core contains passively managed index funds and the satellite contains his stock picks.

The satellite part allows him to indulge his passion for researching companies and exploring ideas that at least earn market returns. The core part provides steady income and smooths the volatility associated with individual stock picks.

In his satellite portfolio, a top-down approach is followed to “identify the top performing industries from a macro perspective, and then select the top competitors within the sector.” For these companies, he analyzes their business lines, management, costs and other variables to formulate a discounted cash flow model that tells him if their stock is undervalued or not.

He purchased Alberta-based Liquor Stores N.A. in early 2016, when it sold off owing to fears that falling oil prices would torpedo Alberta’s economy. But Mr. Bezede’s thesis was that consumption of alcohol should hold up, if not increase, during a recession.

Another holding is Pollard Banknote, a manufacturer of lottery tickets and related products. The industry has growing and consistent earnings during boom and recessionary periods, growth potential in emerging markets and high barriers to entry because of licensing and startup costs.

Mr. Bezede has also published analyses of other stocks on seekingalpha.com.

Best move

“Realizing that stock picking should not be the core driver of value for my portfolio,” he declares. “While my passion for equity research is fun to pursue and publish, my core investment holdings remain index funds.”

Worst move

When he first started investing, he bought stocks recommended by investment professionals on media channels such as the Business News Network, “without fully understanding the companies.”

Advice

If you can’t explain why you chose a particular stock to someone with no previous investing experience in less than 10 minutes, don’t buy it, he recommends.

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his website

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Also on The Globe and Mail

What is an ETF and how do I use it? (The Globe and Mail)

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