I have not thought of the Coffee Can portfolio in many years until I read a recent article on Daily Reckoning. This excellent article reminded me of the decades old investing philosophy. Basically, the concept is to buy truly excellent companies and then ignore the investment. The theory is that constantly worrying about the various movements in the market will only give you an ulcer. It will also ruin your return if you react at the wrong time. If you have enough diversity in your holdings, surely one of them will result in a huge gain.
We have all heard the stories about someone’s aunt that found her recently departed husband’s desk drawer full of stock certificates from IBM, Apple, or Wal-Mart that were bought many years earlier and then forgotten. These heart-warming stories are typically told that the aunt was destitute until the discovery but then was financially independent for the rest of her days.
There is a significant problem with the Coffee Can Portfolio. I believe I have solved this problem with my GOPM (Grow on Other People’s Money) strategy that I describe in my book, The Confident Investor. The basic problem is that most people do not have sufficient reserve funds to diversify their holdings appropriately. My strategy gives investors the ability to diversify their holdings and grow their investment at a more rapid pace. Once the investor accumulates a sufficiently significant position in a particular company, the Coffee Can principle starts. The investor can sit on that position of a great company and forget about the investment for many years.
Jump over to Daily Reckoning and read about the Coffee Can Portfolio. It is a good article and worth your time.
It is also worth your time to read my book, The Confident Investor, if you are interested in growing your portfolio. You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.