Chowder rule

I have just realized about this guy named Chowder. He has a guidance method to guide your investments and create habits that enable you to increase the value of your equity.

It starts with basic rules and they increase their complexity with respect you go in deep.

Portfolio diversification

Use the Morning Star classification based on economic sensitivity and divide the equity as follows:

  • Defensive = 50%
  • Cyclical = 25%
  • Sensitive = 25%

High Total return

Chowder defines the concept of “high total return” that is calculated as follows:

High Quality Stock + High Current Yield + High Growth of Yield = High Total Return.

This total return you take the current yield, the minimum value of 3 years, 5 years or 10 years dividend growth and ideally the total return should be at least over 10%

Current Yield + Min(3 / 5 / 10) Year Dividend Growth = Total Return.

The 10% threshold is an initial threshold that can be increased depending on the market situation.

Compound Annual Growth Rate (CAGR) Calculator

He uses this calculator to define objectives: https://investinganswers.com/calculators/return/compound-annual-growth-rate-cagr-calculator-1262

 

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