 Good day fellow investors. I have recently announced that alongside my 10,000 initial stock market portfolio where I add 1000 every month, I will be launching an 100,000 lump sum portfolio, value investing core portfolio that will be also the base for the fund I hope to manage in the next few years. And there has been a lot of commotion, especially of on my stock market research platform, was the difference between the two portfolios, the lump sum portfolio and the small portfolio with monthly additions. So I decided to really make a video focused on that and then give a better indication on what and why goes into one to the other portfolio. So in this video I'll explain the small portfolio with monthly additions, you can call it the dollar cost averaging portfolio and then also the lump sum portfolio. And I will also add an example of two companies that fit one but not yet the other portfolio and this will be also be the core difference which is in risk management. The lump sum portfolio is 100,000 of money I do not accept risk, that's it. The growing portfolio it will also be more than 240,000 of my money over 20 years but given that I add money every month, every month I can manage that risk differently. So let me start by discussing one portfolio then the other and also give you a few examples. So in May 2018 I started a portfolio of 10,000 where I add 1,000 per month and we'll be doing that for the next 20 years. Adding 1,000 per month made the portfolio grow from 10,000 to 18,000, 18,200 by the end of this year a bit more than 18,000 because we made two profitable trades and some stocks where went up unfortunately so that happens sometimes. There are two powerful forces behind this portfolio so starting 10,000 and adding 1,000 per month. The first one is adding 1,000 per month. Buffett usually uses to say the key is to invest to true thick and thin and especially invest through thin. If I invest 1,000 per month constantly into my portfolio no matter what I know that whatever happens with the stock market with stocks with my holdings if they go down I can buy simply more and more of them because every month there will be new money coming in. So whatever happens I know I can okay I can even take a little bit more risk so for example a company is at 100 I know it's a good buy but I know it can fall to 50 I simply know okay at 50 I can buy more. Similarly as I said yesterday in the stock market news episode stocks can go either up or down and can really go down by adding on a monthly basis you can buy what's cheap at the moment no matter what you bought in March of 2009 it was probably the best investment in your life but few bought then therefore by adding a thousand per month it allows us to buy really really on the cheap and increase our long-term returns. What I don't like are ETFs because those are market cap weighted usually and the more a stock goes up the more they buy off that stock even if a dollar cost average into them what I like doing is doing the opposite if something that has value over the long term goes down I like to buy more of that and I like to buy less of that that goes up and is even perhaps overvalued so that's the first strategy and the monthly additions allow me to do that constantly over the very long term for example in June of 2018 I was researching Brazil we went through all the stocks in Brazil and bought one there the dividend was good the earnings yield was also good and the risk reward was acceptable since then the stock has appreciate significantly which is not good for me because I would always like to buy more but okay then it was cheap so that is what we bought back then we bought Brazil on the cheap last month I added a little bit of Facebook because it's getting cheap and this is my goal for example look at the cost I don't know when the cost basis was made depending on accounting probably 1991 or something but if you invest in businesses over time you don't care about what happens with the fluctuations on those stock prices 20 years from when you invested look at American Express Company if it's 15 billion or 20 billion the first row in this chart for Buffett it doesn't really matter because those fluctuations are really big now but the core is the cost at what he bought them which was in this case it's written 1.2 billion but I think it was even lower so 1.2 billion the current market value is 15 billion so Buffett focuses on the business on the dividends on the earnings that he can reinvest and that is what leads to long-term returns market valuations those will always be fluctuating and this is my core this is what I want to build a similar portfolio over the next 20 years where I buy more of the great businesses or I invest big when something is cheap that allows me to compound dividends over the long term it will be even better if we had something like this but unfortunately for small investors is not possible these are all stakes that Buffett has into not traded companies from GEICO, reinsurance, electricity, manufacturing businesses, Duracell, Lubrizol, NetJazz, Precision Steel Warehouse and a lot of companies that Buffett has bought over the years he doesn't have a market valuation for them because those companies are not traded only the only thing he cares about the earnings about the dividends and how he can compound them this is what would make much easier would make my job much easier because then I really have to focus on the businesses and in this small portfolio I hope to end up with something like this over the next 20-30 years but it takes time to end up like this the key is to accumulate good businesses when those are cheap and given that I want also portfolio diversification I want to build a good diversified portfolio over the long term something in the line of this 20% developed markets and global 8% Latin America 8% China I think we are even more in China now because I considered some stocks there as really cheap we'll see how that evolves over the next 10-5 years Asia, Hedges, Gold still doing a lot of research to get that exposure but by buying 1000 per month a little bit more some month a little bit less other months I think I will build something really really nice over time so the goal of the small portfolio is to reach an investment exposure of at least 80% like here so 80% investment 20-25% in cash to take advantage of the opportunities and then also the additional investments will allow for averaging down if necessary of buying more of the great businesses the key difference between the 10 000 portfolio with monthly additions and the lump sum 100 000 portfolio is risk with this small portfolio if some stock goes down I can simply buy more because there is more and more money coming in every month and then if the business is bad I can see simply stop adding to it and with the big portfolio I am really making it a core investing portfolio which means that you cannot find the core value investment anytime in life sometimes you will have to wait two three years to find a core value investment that fits all my investment criteria let me show you so these are my questions 10 questions that I want to be answered with a yes before investing in a core portfolio position be it in the small portfolio or in the lump sum portfolio is it a business I can understand well squarely within my circle of competence some of the questions are borrowed from pubrye do I know the intrinsic value of the business today and with a high degree of confidence how it's likely to change over the next few years is the business priced at a large discount to its intrinsic value today and in two to three years over 50% margin of safety large discount this is something extremely rare to find in this market but in the small portfolio want to be invested and therefore I have to loosen up on this criteria if stocks go down and there is a margin of safety I'll simply buy more would I be willing to invest a large part of my network into this business is the downside minimal does the business have a mode is it run by able and honest managers does the business offer a 15% earning sealed over the long term is it a sector with positive tailwinds how does this compare to other possible investments in the sector by answering those 10 questions you really have to be an SOB because you really say no no no no no no a lot and all the time and only when something really fits all the 10 questions with a big yes only then you buy in 2018 nevson at 2 was an SOB investment because okay everybody's capitulating nobody wants to touch it I was buying big and I had my largest position in nevson in January 2018 further now I have only found one that's still a maybe for me I'm still looking okay whether it's all a yes yes yes yes waiting for it to go even lower hopefully and then it will be my first portfolio position if I don't find anything in the next two years but then I find three investments in 2022 I'll be extremely happy by the way SOB means Svens opportunistic buying portfolio I don't know what you were thinking about so with such opportunistic buying I'm really going to the core of value investing margin of safety limited capital loss limited possibility of permanent capital loss high earnings yield dividends compounding etc etc with the small portfolio I can be much more flexible I don't know whether for example another company that I own ping and insurance the big insurer in China I still don't know whether it is a great business I'm covering the stock I'm looking at it I'm following the earnings conference following the news that come out and seeing how that fits the long scheme of things because such a company might do great over the long term might compound earnings it is investing in FinTech and everything that is big in China so and it's giving me exposure to China to health care in China etc but I still don't know whether it's a great business so I have invested I think on the 18 000th portfolio 500 is invested in ping and if the business continues to develop greatly if I see okay this is getting better and better and then the stock market gives me better entry opportunities I might buy more more and more of that business and if it gets so low that it is traded at a margin of safety that it is a crazy buy good management mode and everything then I might include it in the lump sum portfolio so this is the difference if it ends up badly I just have 500 euros invested in that company which in the grand scheme of things will be nothing let me show you so this is the current portfolio 18 000 in this case I've put dollars just to make it more easy to watch yearly additions will be 12 000 for the next 20 years 19 and a half now and I have discounted the yearly additions to a present value with a discount rate of 10 the sum of the money that I will be adding does what I have to still add 234 000 to the portfolio 1000 per month for 20 years the sum of that 240 000 addition is around 100 000 the current portfolio is cash 10 000 as a lot of research awaits me in 2019 to really have a diversified portfolio the present value of the future inflows is 100 000 the total portfolio now is should be around 120 000 and ping an insurance is 500 of that 120 000 portfolio so if I see that developing to great business it might get bigger bigger and bigger so let's say that ping an doesn't develop into great business and the portfolio keeps growing stocks do good some stocks do not that good I add on the ones that do really good in 20 years I have hoped to have a portfolio of a million dollars why a million because if I add 12 000 annually I add 20 years to grow if the compounding rate is 12.5 which is my target then I get to one million as a result so let's say ping an isn't a good company doesn't develop into a good company I have 500 euros in it now what is the effect of 500 euros on a one million dollar portfolio some stocks will compound at 25 percent some stocks will not compound like if ping an is bad so that's how I balance this that's how I learn because investing is a long term lifelong process you learn you see you compound your knowledge and that's what I do with the small portfolio with the big portfolio only what I am 100 convinced the difference shouldn't be that big over the long term 100 000 no additions 20 years compounding at 12.5 the future value should be again around a million so I hope that these two portfolios lead me to two million in value over the next 20 years so the risk exposure difference is the key between the two portfolios with the small portfolio with monthly additions I can manage that monthly additions allow me to manage add more of the good businesses and stop adding of the small businesses which become a smaller smaller and smaller part of the portfolio with the lump sum portfolio I really have to focus on managing risk value investing core value investing and there the key is to be patient wait for opportunities to come to me and the more I learn the more I compound my knowledge the more opportunities I will have and perhaps one a year I have started with the Buffett punch card 20 opportunities over the next 10 20 years will be plenty and enough for me for now I have found one that might fit that portfolio Navson was a great set as I said fit for that portfolio in January 2018 it was my largest portfolio position so that's what I do please check my stock market research platform to see all the portfolio everything what I do there is really a lot of reports my portfolio everything and the 40 day money back guarantee so you have nothing to lose and therefore check it out it's not for everybody so you might learn something it's not for you just ask your money back no questions asked you get your money back on to your bank account thank you for watching looking forward to a comments any questions please let me know in the comment sections and I'll see you in the next video