Introducing the Coffee Can portfolio

Coffee Can Portfolio is a metaphor for 'buy and forget' investing. Before the existence of reliable banks in the US, people used to keep their valuables in used coffee cans without touching them for years at end. Financial researcher Rob Kirby discovered that keeping your stocks untouched in your portfolio for extended periods leads to higher performance. He called this strategy the Coffee Can Portfolio. 

Goal: capital preservation, even in the event of hyperinflation.

I only buy within my circle of competence:

1. Consumer staples ("The Coffee")
2. Infrastructure ("The Can")

About half of the portfolio is in consumer staple stocks, and the other half is in infrastructure-related stocks. Note that I do define these two categories somewhat loosely:

Infrastructure: telcos, offices, malls, business parks, ports, warehouses, toll roads, industrial and agricultural land. As much as possible in REIT structures. The key is that the invested company is the asset owner or long-term leaseholder, so the assets will function as an inflation hedge. 

Consumer staples: I look for suppliers of food & beverage products, household & personal products, tobacco, and non-prescription medicines catering to the end-consumer. The key is that these companies are the brand name owners of their products. Online retailers, supermarkets, and convenience stores that sell house-branded items are included here too. I also count branded fast-food chains that offer affordable meals. 

Approach: Make many small bets, take each of them serious and maintain a value-investing mindset. Although the intended holding period is forever, I do not literally forget my holdings. I keep track of the significant news events concerning them and occasionally replace poor performers with stronger candidates. I prefer companies where the total debt is smaller than the owner's equity value and where there are positive free cash flows and dividend distributions.

I avoid highly cyclical companies, consumer discretionary, residential and hospitality real estate, momentum plays, meme-stocks, micro-caps, SPACs, short-selling, IPOs, turnarounds, special situations, funds, crypto and other distractions. I generally avoid any investments where I am waiting on some dramatic catalyst, like a super-dividend, take-over or activist involvement. Such catalysts often do not happen; if they do, I have to search for another case to re-invest the proceeds. I prefer to focus on companies where I am happy with the dividends, the revenue growth or both. In short, buy, hold, forget and sleep well at night.

I will add conglomerates only with hesitation. This corporate structure is outdated but still commonly found in Asia. I will consider it only if management is exceptional and most of their revenues are in the two categories above.