Robust Returns With A Low Degree Of Uncertainty

Robert Kirby first introduced the concept of Coffee Can Portfolio. Kirby, an investment advisor, had an incident involving a client's husband. The gentleman purchased stocks recommended by Kirby in the nomination of $5,000. But unlike Kirby did not sell anything from that portfolio.

This process (of buying when Kirby bought but not selling thereafter), led to enormous wealth creation for the client over a period of about 10 years. The wealth created was mainly on account of one position transforming to a huge portfolio value of over $8 million, which came from holding shares of Xerox over a long time. 

Impressed by this approach of 'buy and forget', Kirby coined the term “Coffee Can Portfolio”, a term in which the "coffee can" harks back to the Wild West when Americans before the widespread advent of banks, saved their valuables in a coffee can and kept it under a mattress.

The core takeaway behind this portfolio is that, in order to become rich, one has to let a sensibly constructed portfolio stay untouched for a long period of time. 

In addition to this, an intelligent and hardworking investor tries and optimises a portfolio periodically, usually once a year.

“It is very hard for investors to leave a Portfolio untouched for 10 years. A retail investor will be tempted to intervene whenever he sees stocks in the portfolio sag in price.” 

“A professional investor will feel that he has a fiduciary responsibility to intervene if parts of his portfolio are underperforming.”. Kirby's counter-intuitive insight is that an investor will make way more money if he leaves a portfolio untouched.