As promised the other day here is my updated Investometer. I introduced the investometer back in November and like many things due to the frenetic pace of the market I have not maintained it as originally promised. We have continued to raise cash and reduce the number of positions we own, particularly in the US. As I’ve commented before I was sucked into the path of diversification a few years ago and have been slowly extricating myself ever since. I am determined to return to my concentrated ways, which for me means 20 or less equity positions. My favourite quote on diversification remains, you concentrate to accumualte wealth and diversify to perserve wealth.

Next time I decide to swap into preservation mode I will use index funds or ETFs rather than increasing equity positions. I am not sure how any individual fundamental or fusion investor could possibly manage over 20 equity positions. The main proponents of diversification through increased equity positions are monthly newsletter writers who are compelled to offer new investments each month to their subscribers.

There is a couple changes from the from the first time I presented this chart. The growing account with regular cash flows is our superannuation account which I manage as a self managed superannuation fund (SMSF). While it is now possible for SMSFs to borrow, I do not currently use any form of leverage on this account. Thus I’ve removed the 150% invested.

For the large account with no cash flow I’ve added a view of the possible impact of options positions. This is rather arbitrary as it depends on what is going to happen in the future and unfortunately my kids broke my crystal ball. I have included options which are close to or in the money, i.e. options which are likely to affect the cash balance of our accounts.

For the smaller account we were recently 100% invested and were only selling to take up SPPs on offer. The larger account got up to 110% invested or there abouts, IIRC.

Disclosure: We are trimming our US stock and Australian share portfolios. I will continue to trim my equity positions if this rally continues.

Related posts:

1. Investometer and Portfolio November Update
2. Investometer and Portfolio October Update
3. Investometer August Update
4. Investometer March 2010
5. Introducing the Investometer
6. Investometer 2009 Year End