Investing in the stock market can be a complex and confusing process, especially for those who are just starting out. However, with the right strategies and tools, it's possible to achieve impressive returns and grow your wealth over time. One such strategy is the Dragon Portfolio, a unique and powerful approach to investing that has been proven to deliver strong results.
What is the Dragon Portfolio?
The Dragon Portfolio is a combination of several investment strategies designed to maximize returns and minimize risk. It was first introduced in the book "The Hawk and the Serpent" by investment expert and author, Joel Greenblatt. The portfolio is named after the mythical creature, the dragon, which is known for its power and agility.
The Dragon Portfolio is based on a simple, yet effective approach to investing. It combines value investing, momentum investing, and quality investing to create a well-rounded and diversified portfolio. By incorporating these three strategies, the Dragon Portfolio aims to provide investors with the best of both worlds – strong returns and low risk.
How to Create Your Own Dragon Portfolio?
Creating your own Dragon Portfolio is relatively simple, and can be done with just a few basic steps. Here's what you'll need to do:
Identify the stocks, ETFs you want to include in your portfolio. To do this, you'll need to research stocks that meet the criteria for value, momentum, and quality investing. You can use a variety of tools and resources to help you with this, such as stock screening tools, financial websites, and investment blogs.
Determine the weight of each stock in your portfolio. This will depend on a variety of factors, such as the size of the company, the expected returns, and the level of risk associated with each stock.
Create a balanced portfolio. To ensure that your portfolio is well-rounded and diversified, you'll need to allocate your investments across multiple stocks and sectors. This will help to minimize risk and ensure that your portfolio is well-positioned to achieve strong returns.
Note: My Small case Custom (Dragon) Portfolio return of past one year as on 12.02.2023
The Dragon Portfolio is a combination of several investment strategies designed to maximize returns and minimize risk. It was first introduced in the book "The Hawk and the Serpent" by investment expert and author, Joel Greenblatt. The portfolio is named after the mythical creature, the dragon, which is known for its power and agility.
Dragon Portfolio = Stocks + Commodity trend + Gold + Fixed Income Asset + Long Volatility Assets
The Dragon Portfolio is based on a simple, yet effective approach to investing. It combines value investing, momentum investing, and quality investing to create a well-rounded and diversified portfolio. By incorporating these three strategies, the Dragon Portfolio aims to provide investors with the best of both worlds – strong returns and low risk.
How Does the Dragon Portfolio Work?
The Dragon Portfolio works by combining three different investment strategies: value investing, momentum investing, and quality investing. Each of these strategies focuses on a different aspect of the stock market and aims to identify undervalued or overvalued stocks that are likely to perform well.
Value investing looks for companies that are priced lower than their intrinsic value, based on a variety of financial metrics such as earnings, revenue, and assets. Momentum investing focuses on stocks that have performed well in the recent past and are expected to continue to do so. Quality investing looks for companies that have a strong balance sheet, high profits, and a solid track record of success.
By combining these three strategies, the Dragon Portfolio aims to provide investors with a well-rounded and diversified portfolio. This helps to minimize risk and maximize returns, as each strategy brings its own unique strengths to the table.
The Dragon Portfolio works by combining three different investment strategies: value investing, momentum investing, and quality investing. Each of these strategies focuses on a different aspect of the stock market and aims to identify undervalued or overvalued stocks that are likely to perform well.
Value investing looks for companies that are priced lower than their intrinsic value, based on a variety of financial metrics such as earnings, revenue, and assets. Momentum investing focuses on stocks that have performed well in the recent past and are expected to continue to do so. Quality investing looks for companies that have a strong balance sheet, high profits, and a solid track record of success.
By combining these three strategies, the Dragon Portfolio aims to provide investors with a well-rounded and diversified portfolio. This helps to minimize risk and maximize returns, as each strategy brings its own unique strengths to the table.
How to Create Your Own Dragon Portfolio?
Creating your own Dragon Portfolio is relatively simple, and can be done with just a few basic steps. Here's what you'll need to do:
Identify the stocks, ETFs you want to include in your portfolio. To do this, you'll need to research stocks that meet the criteria for value, momentum, and quality investing. You can use a variety of tools and resources to help you with this, such as stock screening tools, financial websites, and investment blogs.
Determine the weight of each stock in your portfolio. This will depend on a variety of factors, such as the size of the company, the expected returns, and the level of risk associated with each stock.
Create a balanced portfolio. To ensure that your portfolio is well-rounded and diversified, you'll need to allocate your investments across multiple stocks and sectors. This will help to minimize risk and ensure that your portfolio is well-positioned to achieve strong returns.
Modified Dragon portfolio
I Have prepared the Modified dragon portfolio in context of Indian investors as shown in table below.
I have included Gold, Real Estate(REITs & InviTs), Equity ETFs( Quality, Momentum, Midcap etc) with geography wise diversification as seen in table.
Return Achieved by Modified Dragon Portfolio vs Equity
As you can see, In past one year, Dragon portfolio outperformed equity by large margin whereas during market drawdown, it remained relatively stable due to combination of various asset class with geography diversification without compromising return.
Benefits of the Dragon Portfolio
There are many benefits to using the Dragon Portfolio as your investment strategy. Some of the key benefits include:
Strong returns: By combining value, momentum, and quality investing and various asset classes with geography diversification, the Dragon Portfolio is designed to deliver strong returns. This is because each of these strategies brings its own unique strengths to the table, allowing you to benefit from the best of each approach.
Low risk: By diversifying your investments across multiple stocks and sectors, ETF types & commodities, the Dragon Portfolio helps to minimize risk.
There are many benefits to using the Dragon Portfolio as your investment strategy. Some of the key benefits include:
Strong returns: By combining value, momentum, and quality investing and various asset classes with geography diversification, the Dragon Portfolio is designed to deliver strong returns. This is because each of these strategies brings its own unique strengths to the table, allowing you to benefit from the best of each approach.
Low risk: By diversifying your investments across multiple stocks and sectors, ETF types & commodities, the Dragon Portfolio helps to minimize risk.
Though one year return does not guaranty future returns but analysing past 50 year trend of US market, one can conclude that this strategy works amazingly and there is a high chance that it might replicated in indian market in future. This portfolio is just for learning purpose and one should note take it as investment advice.
!! HAPPY INVESTING !!