RF's Long Portfolio Model

(click to enlarge)

Above is how I construct a "long" portfolio model. Note, your portfolio would probably have to be at least $50,000+ or so, which some people have or some may just have a $1,500, which is fine because I started out a long time ago with less than that. With the market the way it is now, I would have at least a 25-50% cash position, just incase we fall to 825 or so you can buy some good stuff cheap and make a sharper profit. Anyways, here is my model and I allocate them in my proportions. On the left, you see the S&P weights, however, I would be careful about going "all-in" here. I would buy about 2 or 3 names per sector but no more than 6. So for example for Tech (18%) I would buy (for illustration) Dell (3%), MSFT (3%), TQNT (3%), CSCO (3%) INTC (3%), and IBM (3%). Every so often I would rebalance that but always keep technology at 18% and once it exceeded the value, I would trim the exceeding balance and move to another sector or cash account. I believe Financials are more of a 2 year investment sector but Tech, Materials, Industrials, and Energy will be the hot sectors for the rest of the year. Utilities will be tough longer-term but in the short-term should do ok. I believe many fund managers will sell utilities (buy them for dividend) and buy bonds instead as interest rates rise, plus the the Cap & Trade deal could harm profits for no reason.

As for traders with limited capital, it is much harder to diversify but I will continue to give you my ideas. I love shippers in EXM and GNK but if economic fears come, the sector will be hit since the Baltic Dry Index is weakening and fears of recovery collaspe (shipping is major economic indicator). GLW is a great buy at $14 and even better below. It's fair value for this year should be at least $17+ and could max out at $20. TQNT is another chip that makes semiconductors for the iPhone. It's had a huge run but the stock could easily hit $6+. Energy names like COP, HES, and CVX are dirt cheap; however, may get cheaper. I own alot of the ERX which is a triple levered index fund on the sector. In time, once oil stablizes, these names all have +30% upside..just don't rush in and have a little time.

If you have a longer-term horizon, say 2 years, I like Financials the best, via BAC and I am studying Life Insurers. The sector is VERY RISKY because of TARP obligations and capital requirements; however, if you believe they are out of the woods, the sector could ROAR. I will add more in time but these are risky (however, implied volatility has decreased). If we catch a rally, these names could move 30% in 10 days, no problem. LNC is a good one but let me study the rest first and provide research on my findings, so you can read it for yourself.