A stock I like

Berkshire Hathaway, B series (BRK.B)

This is Warren Buffet's company.

It's not really a great stock, it pays no dividend and probably never will and it will probably have a growth rate that's below market. But what growth it will have is likely to be very steady. A steady growth is superior to a slightly higher growth that's choppy. The ups and downs of a choppy growth path cuts down on the benefits of compounding of your investment.

It's worth putting a few shares of this one is pretty much any portfolio.

A stock I like

After reading The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility"
I convinced myself that every portfolio should have a collection of research oriented bio-pharmaceutical stocks.

Crucell (CRXL) is a dutch bio-pharmaceutical company that specializes in vaccines for infectious diseases. It was founded as a research lab and they merged with another company that had rights to many vaccines about 4 years ago, giving them a steady cashflow to finance their research. I think they're well positioned to hit a homerun.

Goldman

The guys at Goldman are just weasels.b Stay far, far away from anything that they have anything at all to do with -- they misrepresent as a matter of ordinary business, you can't trust anything they touch at face value.

LONDON (AP) -- The practice wasn't secret and it wasn't illegal, and some of it happened 10 or 15 years ago. But the practice of European governments reportedly using complex financial transactions to move debt off their books is getting closer attention from markets and the European Union.

The deals, known as swaps, let some governments shrink the apparent size of their debts, unsettling news at a time when markets are taking stock of Europe's struggle with rising budget deficits.

Greece has until Friday to disclose to the European Commission how it used complex currency swap deals and whether they were used to conceal the real scale of its debt -- specifically a 2001 deal that Greek officials said they did with U.S. investment bank Goldman Sachs.

Under the deal, known as a currency swap, Greek dollar and yen debt was reportedly exchanged for euro debt for a period at an advantageous rate to be reversed at a later date. The effect was to show less debt in the near-term.

The deals carry some of the hallmarks of the financial crisis -- such as off-balance sheet liabilities and highly complex financial arrangements.

Christine Lagarde, France's finance minister, said the EU statistics agency Eurostat would examine how Goldman Sachs ''helped Greece structure, postpone a certain number of debt repayments.''

''You have to know first of all whether it was doctoring the accounts and if this was legal or not at the time it was done, and if it was legal, it will be necessary to find out whether it was favorable for stability. Probably not. And in that case, how we can avoid a repeat, if those measures already were taken,''

Greece wasn't necessarily doing anything new -- Italy did something similar in the 1990s while Belgium has also been mentioned by analysts as using financial derivatives to improved its reported fiscal position.

Professor Gustavo Piga of the University of Rome has warned for years that more and more governments were using the complex financial instruments that mushroomed during the 1990s.

Piga is amazed that in the nine years since he wrote an analysis about the growing involvement of governments in the derivatives markets that no one at the European Central Bank or Eurostat, the EU's statistics office -- even journalists -- got in touch with him to discuss his findings.

However, he hopes that the current concern surrounding Greece's deal with Goldman Sachs finally triggers belated reforms of this opaque practice.

Piga told The Associated Press that governments should not be banned from using trading in complex financial instruments as part of their debt management -- he said Sweden and Denmark appear to have done so in according with good practice. But such deals should be more transparent and comply with accounting standards.

''The scandal needs fixing; it was never done before but I hope it will be now,'' said Piga. ''This creates further confusion about the state of the accounts and investors will be asking higher risk premia as things start to unravel again.''

Geographic Diversification

Not all diversification is related to sectors of the economy, geographic diversification is also important. You want a portfolio with some global exposure, not just United States stocks, and you want a mix of regional stocks spread out across the United States.

Some stocks to consider for geographic diversification are:

Ohio Valley Banc Corp (OVBC) a regional bank in Ohio.
Tara Moters (TTM) an auto and truck manufacturer in India
Dover Downs Gaming (DDE) a deleware racetrack and casino
Sabine Royalty Trust (SBR) an oil and gas trust centered around the gulf states
Essex Property Trust (ESS) A california residential REIT
Rocky Mountain Chocolate Factory (RMCF) Canadian specialty retailer

A diversified high yield portfolio

Looking for stocks with above average yields in these investment sectors I found.

Genuine Parts Company GPC, 4.57 yld, auto parts distributor
Pengrowth Energy Trust PGH, 13.42%, oil and gas trust
Paychex PAYX, 4.5%, payroll services
Rocky Mountain Chocolate Factory RMCF, 4.88%
Espey ESP, 5.88%
Essex Property Trust, ESS, 5.48%
Psychemedics Corp PMD, 7.25%, consumer drug test product
World Wrestling Ent WWE, 6.6%
Monarch Community Bancorp MCBF, 9.56%, a rural bank in SW Michigan
BlackRock California Insured Muni Income Trust (BCK) , 6.4%
Great Northern Iron Ore, GNI, 12.54%, Mining trust
Ship Financial International SFL, 9.51%, Shipping company w/diversified inventory of ships
Nicor, GAS, 5.1%, natural gas utility

A diversified portfolio of dividend paying stocks

Automobile Sector.
It's hard to find an automobile manufacturer that pays a dividend, but the industry isn't all manufacturs. Penske is a diversifiedPensk automobile and transportation industry company, owns retail dealerships, truck leasing operations, parts distribution and other automobile and transportation services.
Penske, PAG, Div yld 1.8%

Energy
Exxon-Mobil is a really obvious choice here. Large and stable with a very good dividend yeild.
Exxon-Mobil, XOM, Div yld 2.4%

Business Services
One way to target an investment in small companies is to invest in companies that provide services to small companies. One such example is Paychex who provides payroll and other human resources services
Paychex, PAYX, Div yld 4.5%

Retail
It's hard to go wrong with WalMart.
WalMart, WMT, Div yld 2.2%

Technology
Espey Mfg. & Electronics Corp. engages in the development, design, production, and sale of electronic power supplies, various transformers and iron-core components, and electronic system components primarily in the United States. They have a toe in the technology sector, but they are not sexy. The dividend yeild is solid -- very high, but solid.
Espey, ESP, Div yld 5.88%

Housing
Essex Properties is a high risk REIT, investing primarily in West Coast apartment complexes. West Coast residential real estate isn't exactly a stable market these days. But sometimes a little risk can be a good thing.
Essex Properties, ESS, Div yld 5.48%

Health Care
Pfizer is a large, stable drug company.
Pfizer, PFE, Div Yld 4%

Recreation
World Wrestling Entertainment produces cheap to produce TV wrestling that provides family entertianment which is cheap and isn't impacted by the price of gasoline.
World Wrestling, WWE, Div yld 6.6%

Financial
Some banks are solid and well management no matter what happens in the market. Northern Trust is one such bank.
Northern Trust, Bank, TNTB, 1.8%

Government
One way to take a gamble on the recovery of the California economy is a closed end munie fund of insured California Municipal bonds.
BlackRock California Insured Municipal Income Trust (BCK), Div yld 6.4% (mostly nontaxable)

Basic materials and commodities
You can't get much more basic than an oil and gas trust.
Sabine royalty trust, SBR, div yld 6%


Transportation
United Parcel Service, UPS, Div yld 3.33%

Utilities
Nicor is a utility company in the Chicago area that is diversified into some transportation industries.
Nicor, GAS, 5.1%

Food and agriculture
Monsanto is one of the biggest players in agriculture
Monsanto, MON, Div yld 1.3%

Consumer products
Proctor and Gamble is still going strong in consumer products
Proctor&Gamble, PG, Div Yld 3.4%

Diversification

The key to a successful investment program is diversification. Investment typically involves risk-taking and diversification is a spreading of the risk. You do this with investment in securities or inst5urments that aren’t positively correlated with each other. For examp0le, Ford and GM tend to have correlated results - -- when consumers are buying cars both manufactures willtend to do well. So a portfolio fully invested in some combination of stocks in those two companies is not diversified. But the performance of GM and Humana probably don’t tend to follow each other, their personance is pretty much unrelated. So a portfolio evening divided between GM and Humana stock is said to be diversified.
There are multiple dimensions of diversification
1. Sector diversification (automotive, transportation, energy, etc).
2. Geographic diversification (international
3. Income certainty (fixed income v. growth v. speculative)
4. Actiive management v. program trading
5. , Large cap v. small cap
6. Term diversification

Too much of a good thing
Mathematical research suggests that an ideal level of diversification is a portfolio of between 25 and 30 uncorrelated investment instruments. More than that doesn’t really tend to reduce your risk much, since the likelihood that an additional investment will correlateat least somewhat with an investment already in the portfolio is fairly high.
But empricial evideince – looking at actual performance of real investors – suggests that improvement in results peaks out after somewhere between 5 and 9 investment instruments.
The reason for that is probably that competent active management can yield a meaningful improvement in both risk and return but the human brain doesn’t really do well
with more than about 7 independent pieces of information. We can’t really follow more than 5 to 9 uncorrelated investments in a portfolio.
How much diversification is enough depends on hw much effort you’ll be putting into active management of your portfolio and how good you are at that task. The more efforts, and the better you are at it, the closer you should limit the number of investment instruments to about 7 – it you’ll be passively managing the portfolio you should spreaqd your investments over about 25 instruments.
If you’re going to be paying close attention to your portfolio performance then go ahead and put your eggs in just a few baskets.
Chapter 1. Sector Diversification
Some sectors
Automobile
Energy
Business Services
Retail
Technology
Housing
Health Care
Recreation
Financial
Government
Basic materials and commodities
Transp;ortation
Utilities
Food and agriculture
Consumer products