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  • Luis G. ha respondido al debate Ted SeeksQuality en el foro Estrategia hace 8 meses, 2 semanas

    Conversación acerca de tener un porcentaje de 15% o mayor de REIT en cartera.

    » While sector classification is clearly an oversimplification (and somewhat arbitrary), there are real correlations between similar companies. Owning PG, UL, CL, CLX, and KMB is not true diversification, because their product lines overlap heavily. They are all subject to similar market forces.

    Quality is important, but quality is largely the ability to survive troubles. It is not a guarantee that you are unaffected by those troubles. If you own several quality companies that are all exposed to a single risk, they can all be hit at the same time — and you are leaning VERY heavily on the quality. Even quality companies can cut dividends, they just have a wider margin of safety before that happens.

    So nothing against owning 15%+ in REITs, if you wish, but consider if they all share some risk factor? What happens if 15% of your portfolio hits the skids all at the same time?

    On the other hand, it is a broad category. Perhaps their risk factors are substantially different? That is for you to decide — don’t lean too heavily on arbitrary sector classifications.»

    Responde Chowder:

    «You speak about diversity against market forces, so old fashion in my view. When I’m looking for diversity, I’m looking against company specific forces. I want to have sector exposure but want to be protected against any of the companies I own going bankrupt.

    I don’t care about market forces hitting a sector, that’s temporary. Tough times don’t last, tough companies do. Let the sector get hit, as long as I own the best of the best, I firmly believe I’m okay over the long run. I can deal with temporary drawdowns, I simply want to avoid the permanent ones.»

    Ahora Ted:

    «I am a firm believer in owning the best of the best, but there are some people who also invest in companies with BBB- credit ratings. Those are NOT the best of the best, and in fact are in danger of a dividend cut if faced with sufficient adversity. There are only ~25 companies with a 50+ year dividend streak. All other companies have cut or frozen their dividends in my lifetime.

    And in fact we were talking about REITs, not a defensive sector, where credit ratings tend to be lower and dividend cuts are much more common than in Consumer Staples. Most REITs cut their dividend in the last recession, and while owning quality biases the odds in your favor, I definitely don’t see it as a guarantee.

    If somebody wants to have over 15% of their portfolio in triple-net REITs, who am I to object? But economic pressures affect sectors as groups, and dividend cuts tend to come as bunches. There were not many energy companies cutting their dividends in 2008-2009. There were not many banks cutting their dividends in 2015. Sector classification is imperfect, but the concept of shared risk factors is meaningful.

    I prefer not to have more than 15% in any of the sensitive sectors, and aim for diversity of risk even WITHIN the sensitive sectors. Quality, yes, but also diversity. And I know you practice this in your own investing, especially in the sensitive sectors. You do not concentrate all of your Industrial positions in Aerospace, for example.

    All I am saying is know your risk. Avoid anything that could do real damage to your portfolio goals.»

    […]

    «In my own sector diversification, I begin by deciding what kinds of business I want to own in what balance, and then aim for the «best of class» representatives of each. Thus my approach to diversification never keeps me away from quality! I suspect the greater danger is to those who go heavily after a sector because they feel it is a «bargain». If they are right, then they do very nicely. If they misjudge the sector dynamics, they can end up holding a whole lot of cheap junk that was NOT selected on the basis of quality.

    All investments have risks. The concept of diversification isn’t to eliminate these risks, but to limit the exposure of the portfolio to any SPECIFIC risk, whether company-specific or sector-wide.»