Your Complete Guide to Index Investing with Dan Bortolotti

The U Portfolio

2018-06-17T20:41:54+00:00February 9th, 2011|Categories: Behavioral Finance|Tags: , |23 Comments

I recently received the following article from an investment advisor in western Canada. It contains a proven strategy for achieving outstanding returns, and the advisor has agreed to share it with readers of Canadian Couch Potato:

Recently, a small group of investors has unlocked the secret to investing success. It is called the U Portfolio. People who use this strategy invest only in stocks that start with the letter U.

Although stocks that start with the letter U comprise only a tiny fraction of the world’s equity markets, by a strange twist of fate they primarily include energy, materials (gold, copper, zinc, etc.) and financials.

Because of these fascinating qualities, investors in stocks that start with the letter U have enjoyed some of the best equity returns over the last eight years. It is true that in January 2000 gold was hovering around $280 an ounce and oil was averaging $11 dollars a barrel, and since then the price of gold has increased by five times, and oil by eight times. In addition, the banks in the U Portfolio did not to have exposure to the US housing market, though we cannot determine if this was mere luck or a function of their relatively small size. Either way, it is clear that investors who were fortunate enough to have a portfolio skewed to the letter U are now enjoying the fruits of their intelligence.

Although U stocks did not fare as well in previous periods — the J Portfolio dominated the 1980s, while the E Portfolio was the clear winner during the 1990s — there seems little doubt that the next decade will also be brought to you by the letter U.

Any investor can now buy the entire U Portfolio through an ETF that allocates 26% to energy, 23% to materials and 28% to high-dividend financials. However, the most popular strategy is to limit the number of stocks that start with the letter U to just 20 or 30, preferably ones that pay a high dividend.

Some academics warn about the risk of such a portfolio: their data show that it is unwise to restrict your investments to a small number of stocks that start with only one letter, while ignoring the other 96% of the alphabet. But many investors are comfortable with their U-focused holdings, and they feel their strategy is the safest way to go, with the alphabet being such a dangerous place right now. Others are simply loyal to the letter U and feel that investing in other letters of the alphabet would be unpatriotic.

U investors will hear nothing of the academic gobbledygook: they have done well in U, and investments outside U did not do well for a couple of years, and that’s all the evidence they need.

Recently there have been many debates on blogs and television about the best way to capture the fantastic returns of U, but all agree that U is the only way to go.

P.S. Replace “U” with “Canada,” and then read Meir Statman’s book.


  1. Michael James February 9, 2011 at 10:20 am

    I had to make a quick check of the date — I thought it might be April 1. Personally I think the next decade will belong to either M or J.

  2. David February 9, 2011 at 10:26 am

    That is my thought too. April 1st comes earlier???

    Was the blog hacked or something? Or maybe something weird happened after the dividend series.

  3. Canadian Couch Potato February 9, 2011 at 10:27 am

    For the record, I really did receive this from an advisor. I didn’t make it up myself.

    @MJ: I have most of my money in the emerging vowels.

  4. Michael James February 9, 2011 at 10:33 am

    The key to vowel-based portfolios is to take advantage of the risk-moderating effect of including “w”.

  5. Canadian Couch Potato February 9, 2011 at 10:38 am

    @MJ: Perhaps there should be leveraged ETF that returns “double U.” Ticker symbol W, of course.

  6. Ben February 9, 2011 at 10:42 am

    Call me a conservative, but I think I’ll just stick to my proven large-caps: ‘E’, ‘R’, and ‘S’…

  7. Dan February 9, 2011 at 11:15 am

    While I wish “U” continued success, I don’t want to get burned if it tanks. I also don’t want to miss out on the future successes of the other letters.

    I simply invest in a fund that tracks the whole alphabet.

  8. JM February 9, 2011 at 1:15 pm

    It’s true, sarcasm is dead in North America. This was brilliant. Please burn all your Monty Python and Benny Hill VHS tapes.

  9. Echo February 9, 2011 at 2:19 pm

    Too funny Dan, you are on quite a roll lately! Don’t forget that if you plan to live and retire in “U” and support the strong “U” currency then you should avoid the rest of the alphabet as well :)

  10. Tweets that mention The U Portfolio -- February 9, 2011 at 2:31 pm

    […] This post was mentioned on Twitter by Ray, Dan Bortolotti. Dan Bortolotti said: New post: The U Portfolio: I recently received the following article from an investment advisor in western Canad… […]

  11. Sustainable PF February 9, 2011 at 3:07 pm

    It is obvious you should only allocate 20 into U. GCP tells me so.

  12. Steve February 9, 2011 at 5:07 pm

    I’d rather go 100% Unilever instead of that U portfolio.

  13. Gaby A. February 9, 2011 at 5:40 pm

    I prefer a non-correlated portfolio of the five vowel ETF’s each at 20%. I don’t include the Y etf as it uses derivatives and therefore isn’t really a vowel anyways.

  14. My Own Advisor February 9, 2011 at 8:15 pm

    Awesome! Finally, all my investing questions have been solved :)

  15. Dave@50plusfinance February 9, 2011 at 10:50 pm

    I recommended to a friend the U portfolio. He responded that I left out the F part.

  16. The Dividend Ninja February 9, 2011 at 11:33 pm

    Good article Dan. I’m with My Own Advisor, forget about P for potatoes and D for dividends, that’s too much work. I’m selling everything tommorrow morning! Its U for me all the way :)

    Dave@50plusfinance, your friend is correct, a blended portfolio of FU works best.

  17. Canadian Couch Potato February 10, 2011 at 11:10 am

    The comments on this post are funnier than the piece itself!

  18. The Dividend Ninja February 10, 2011 at 12:32 pm

    As well as the FU Portfolio, I am now considering a WTF position since I really don’t know which way the markets are going! (That’s W for Wisdom, T for Timing and F for when you pick the wrong stock). Hmm something to be said with P for Potato!

  19. Squawkfox (Kerry) February 10, 2011 at 3:10 pm

    I’m waiting for a list of Model U Portfolios. :)

  20. Melissa February 11, 2011 at 1:40 pm

    This gave me a much-needed laugh. Thanks!

  21. Pacific February 12, 2011 at 7:20 pm

    I gotta hand it to U…


  22. Peter February 13, 2011 at 10:52 pm

    I’m going with G stocks for growth. But like to hedge that with 25% in H.

  23. Weekend Reading | Credit Wise Info February 14, 2011 at 4:29 am

    […] should we park all of your investments? The answer is utterly simple: The U Portfolio.  Canadian Couch Potato takes a tighten demeanour during a U Portfolio and a morality behind it.  […]

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