This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

George Washington and Portfolio Diversification

By Carl Delfeld

NEW YORK (TheStreet) -- When I lived in Washington D.C., one of my favorite places to visit was George Washington's Mount Vernon estate.

Washington was an avid student of the neoclassical architectural style and you can see his salute to balance and symmetry everywhere at Mount Vernon. For starters, 32 equidistant poles surround the ellipse in the front courtyard, with a sundial placed at its exact center.

The uniformity continues inside the mansion. Even as the British were closing in, the general issued these instructions to his manager, written in 1776 from Harlem Heights: "The chimney of the new room should be exactly in the middle of it -- the doors and everything else to be exactly answerable and uniform -- in short, executed in a masterly manner."

If only our approach to money management was so clear and precise.

But it turns out we can learn a thing or two from George Washington when it comes to investing and portfolio diversification.

Apply the "Washington Balance" to Your Global Portfolio: In today's highly uncertain and volatile climate, do you have a balanced investment approach that marries capital preservation with growth?

For starters, consider one of the portfolios that I use as a building block for my private clients. As you can see, it's divided equally into two main sections.

1. "Safer" Investments: This includes 20% in long Treasuries, represented by the iShares Barclays 20+ Year Treasury Bonds (TLT); gold and silver, with 5% allocated to the SPDR Gold Shares (GLD); and iShares Silver Trust (SLV); the Swiss franc, represented by its CurrencyShares Swiss Franc Trust ETF (FXF); plus 15% in cash investments.

2. "Aggressive" Growth-Based Investments: The other 50% of the model portfolio is divided among strong equity positions and emerging markets. This includes 10% in the iShares S&P Global 100 Index (IOO), an ETF that tracks the performance of 100 large-cap multinational firms; and 5% in the PowerShares International Dividend Achievers (PID), which seeks to replicate the performance of U.S. and foreign stocks that have consistently raised their dividend payments to shareholders over the past five years.

The remainder is divvied up into more speculative emerging market equity positions -- the broader WisdomTree Emerging Markets Small Cap Dividend Fund (DGS) -- and a more aggressive tilt toward specific markets like China, Germany and Singapore.

OK, so now that you've got a balanced portfolio, what else can you learn from George Washington?

Pick Your Battles but Seize the Day: By nature, Washington had an aggressive personality. But he learned to temper it in the face of a formidable foe (the Brits), knowing that he possessed meager resources and an army that could be wiped out in the blink of an eye.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs