WWII 083: How to Allocate Capital to Your Investment Ideas

Main Topic: How to allocate your capital across investment ideas

This podcast episode is part of a series about portfolio management and covers the topic of capital allocation on which I wrote an extensive blog post.

The different aspects of capital allocation covered include:

Ask JB: What happens in bidding wars, and can I time the market?

I'm a Whole Foods employee and have been hearing that other companies could be placing bids on WFM. If that happens, what would be a typical reaction to WFM stock prices? Go up more? Go down?

I'm leaving at the end of the week and have a few stock options left that I never exercised. I have 90 days after leaving to do something with them and wonder if it's worthwhile to wait a little longer?

JB SAYS: You are talking about a rumor about other suitors. There is no guarantee that another bidder will actually make a bid. You have a gain already in your options thanks to Amazon. The share price is actually above the $42 that has been offered, so it’s as if another bidder has already showed up. Is it worth holding on to in that case?

ASK JB Pulling Out of the Market at the Right Time (self.investing)

submitted 1 day ago by mominapan

I'm 40 and I started investing very early at the age of 19. I've always taken a mildly conservative approach to my 401K and investments. I have a balanced portfolio managed since I was 24 by a financial advisor. The portfolio has averaged over time about a 7% return. People are making indications that we're nearing a peak market and that we're likely due for a significant adjustment or even something more severe. I've seen two very large market declines. What are the implications of moving my money into decline proof investments and then reinvesting once it has stabilized? Why would my advisor tell me to just "ride it out" in situations of market peak and decline?

JB Says: You are talking about market timing again. You are forty and have 25 years until retirement. As long as you do not need the money for at least five years, stay invested. I always recommend 30% in cash, so at least have that much available, but leave the rest invested. What if we don’t have a bear market?

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About the Author

Jeremy Scott Bailey is an investor, author, entrepreneur and host of the "What Works In Investing?" podcast now available on iTunes. He is founder and Chief Investment Officer of Burgeón Group, Inc. an investment advisory firm that provides portfolio management services to families and individuals.

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