Saturday, November 05, 2005
Enterprise Architecture and Modern Portfolio Theory
I have always been of the belief that enterprise architecture is not something one does simply at work but is part of one's daily life. Many of my peers attempt to manage large IT portfolios at work while the management of their own financial portfolio is fundamentally screwed. I figured that maybe one of the things that folks should think about is what does a good portfolio look like in terms of the stock market and that they may apply whatever they learn from the discussion to a work context.
Let's start with my own work portfolio in order to establish a point of reference. I happen to be a fan of Jim Kramer's and listen to him on the radio every night. Once a week on his radio show, he asks the question "Am I diversified". While I have never called him up to prove out my own portfolio, I know that I can rationalize every investment decision I make.
Here are my top five holdings for my investment portfolio:
- The Hartford: Top Ten diversified multi-line insurance and financial services companies in the United States. In 2004, they were listed as Fortune 102. In 2005 they were listed as Fortune 86. No sign that this positive trend will change.
- Sara Lee: Top Ten diversified food products company. Their products have more brand recognition than any of their competitors. Combine this with the simple fact that folks all over the planet are getting fatter and fatter every single day by consuming too much food, some of which is made by Sara Lee
- Johnson and Johnson: There is tons of potential in the pharaceutical sector with all these baby boomers getting to retire next year. They will need tons of medical products for all their ailments. JNJ though avoids the bad part of the sector by investing more in consumer oriented medical products and won't run into patent expiration issues like Pfizer nor lawsuits like Merck.
- Home Depot: Simply, American's have abandoned God and he will bring the wrath to those who do not praise him. God will grow increasingly frustrated with us from attempting to remove him from our daily lifes. He will bring down his wrath where laws contrary to his will exist and are promoted such as drinking, gambling, civil unions. He will continue to strike the likes of New Orleans, Florida and continue to destroy these places. Of course, the folks who sin will be determined to rebuild and will buy lots of building supply stuff from Home Depot. The folks who realize the error in their ways will also build houses of worship (i.e. churches, masjid, temples, etc) and will also need lots of building supplies.
- Nestle: All portfolios should contain international exposure. The problem is that Bin Laden and company in their next attack will go after many of the countries in Europe but will avoid attacking Switzerland since that is a great refuge to store money. Besides, who doesn't like Candy Bars, Cocoa and other sweets
Likewise, here are the top five holdings for my retirement IRA:
- ISHARES TRUST SELECT DIVIDEND INDEX FUND: Dividends are king. Getting a constant incremental payment every quarter is wonderful. The dividend payments were actually pretty close to the amount one could earn from interest based products but had the added advantage of the potential for capital appreciation.
- Vanguard Growth Vipers: While I know that George Bush is a big fat idiot who lies to the American public, I do believe that America has the potential to outgrow any other country on the planet if we simply get our act together. This fund primarily tracks growth oriented companies.
- IShares Latin America Fund: Latin America is blazin for several reasons. First, the folks over in Brazil and Venezuela has depressed currency over the last several years which has no choice but to go up. Two, they are the closest major source of energy that we SUV drivers could consume quickly if God keeps bringing his wrath to hell holes such as New Orleans. Third, tourism is growing by leaps and bounds. Have you seen the women there? This explains everything.
- Health Care Spider Index Fund: I previously mentioned baby boomers. They will need healthcare. If you have looked at your paycheck lately, you may have noticed that healthcare costs are going higher and higher with absolutely no one doing anything about it (well the GNU foundation is assisting but that is a topic for another blog). If healthcare goes up every single year double digits who do you think other than lawyers will receive it?
- IShares Trust S&P 500 Index: It is important that all portfolios have a common point of reference. This is mines
You may have noticed a common theme in my portfolio in that I respect brand, I do not engage in ceremonial strategies for investing and I respect keeping costs low by purchasing only exchange traded funds. These same practices can be applied to the discipline of enterprise architecture. Keep in mind, what may be a good portfolio for me, may not be for you...
Next week, I will continue this blog entry by bringing additional insight into how enterprise architecture and portfolio management should occur in large enterprises...
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