Let the profits run: The coffee can portfolio revisited

This paper examines the "Coffee Can Portfolio" approach within the contemporary asset management context, contrasting its long-term investment philosophy against modern financial risk management strategies. It delves into historical and behavioral finance perspectives, exploring the efficacy of holding stocks over extended periods, and the psychological barriers such as loss aversion and the disposition effect that often hinder investors from holding on to winning stocks. Through a literature review and case studies of the Voya Corporate Leaders’ Trust Fund and Berkshire Hathaway's long-term holdings, the paper evaluates the practical applications and challenges of implementing the Coffee Can Portfolio approach.. It addresses the role of diversification, Value at Risk (VaR), and portfolio construction in managing financial risks associated with a Coffee Can Portfolio approach. The findings underscore the importance of initial stock selection, patience, behavioral finance understanding, and the judicious use of risk management tools in crafting a resilient long-term portfolio. The paper’s comprehensive analysis aims to bridge the gap between theoretical investment strategies and real-world portfolio management, offering insights into achieving superior financial outcomes through disciplined, long-term investment practices.