Moofolio Vision: Here Are Our 3 Strategies and How We'll Manage Them

One of the greatest teachers in investing is practical experience. Until people “get their hands dirty” in the markets any understanding of the practical challenges of successful wealth building is limited. One concern is that practicing and learning with real money can lead to costly mistakes. Instead, newer and more experienced traders can learn how to trade, and test investment ideas, without risk, by utilising moomoo’s paper trading module.

The portfolios constructed in the paper trading unit are known as Moofolios. This article introduces three moofolios I constructed to illustrate some of the important principles involved in creating and managing a successful investment portfolio.

The three stock moofolio is true to label. It comprises just three Australian blue-chip shares which between them broadly represent the composition of the Australia 200 index. The investment principles it highlights are that successful investing does not have to be complicated or complex, and that quality counts.

The core and satellite moofolio is an illustration of the way many modern investors use ETFs as a central component of their portfolio, generating broad market returns and employing diversification as a way to manage risk. It aims for higher overall returns by making smaller investments in more speculative companies. Investments were selected with regard to the ETFs and stocks that are highly popular with moomoo’s customers.

The US super ten moofolio is built around the most sought-after US stocks. The increasing influence of individual investors on market performance has meant that businesses with well-known names, brands and products are outperforming. This portfolio comprises of the magnificent seven stocks and three of the best-known consumer businesses in the USA.

The details of the moofolios are below, including why the stocks were selected, when the portfolios will change, and the investment principles they are tracking. The idea is to report to the moomoo Community weekly on the performance of the portfolios, detailing any changes and issues that may arise. Follow me (Michael McCarthy CEO) and my moofolios in the moomoo Community to receive updates in your feed.

This portfolio is a simply constructed approximation of the Australian share market. The Australian index is heavily weighted towards finance stocks and resource (mining and energy) stocks.

In buying one bank, one global miner and an industrial conglomerate like Wesfarmers (owners/investors in retail, chemicals, industrial supplies, health etc) the moofolio moves with the local market.

Single stock risk is higher, but transaction costs and management time are significantly lower. A similar approach is sometimes used to create a starter investment portfolio.

This moofolio harnesses the risk reduction power of diversification while offering an opportunity to increase portfolio returns through individual stock selection. The core holdings are ETFs that track the Nasdaq 100 index, the ASX 200 index, and the gold price. The fourth ETF is a higher dividend basket of stocks.

This core is diversified across industries and national borders, and across asset classes, and along with the 5% cash holding provides a long-term base of investment. Holding through years and decades offers the opportunity to ride out market turbulence and benefit from compounding returns over longer time frames.

The rise of individual investors has brought an interesting phenomenon to markets. Companies that are well-known, and / or whose products are popular, draw more support than less publicly exposed stocks.

The Magnificent Seven stocks are among the most traded on the moomoo platform. To this group is added Disney, McDonalds and Walmart, companies that are famous around the globe. These ten US stocks are widely held, and often subject to dip-buying. The momentum in these stocks means bad news is sometimes quickly forgotten or shrugged off. This portfolio attempts to profit from that momentum.