Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing.
6/16/10-Since the last entry, there have been no new portfolio sales or stocks ready for sale among assets followed here. So, no redemptions are indicated at this time.
My top-five current low price to earnings stocks are: AOB; CRXX; NE; PLPC; and PTP.
My favorite among them is Platinum Underwriters Holdings, Ltd. (PTP) (recent price $37.56). It meets Benjamin Graham's bargain stock safety and value criteria.
Platinum Underwriters Holdings, Ltd. will be added to our nest egg at its market price early tomorrow, 6/17/10.
6/29/10-Since the last entry, there have been no new portfolio sales or stocks ready for sale among assets followed here. So, no redemptions are indicated at this time.
My top-five current low price to book value stocks are: AGII; AWH; PRE; RE; and SVT.
My favorite among them is PartnerRe, Ltd. (PRE) (recent price $70.06). It meets Benjamin Graham's bargain stock safety and value criteria.
PartnerRe, Ltd. will be added to our nest egg at its market price early tomorrow, 6/30/10.
6/30/10-Here is the Classic Value, Low Price to Book, Low Price to Earnings, Five-Star Stocks, and S&P 500 Index performance summary, through the second quarter of 2010:
|Portfolio or Blend||Average Asset|
|Classic Value (10/8/04-4/29/10)*||0.99 year||7.21%||7.25%
|Low Price to Book Stocks**||0.55 year||<8.28%>||<14.54%>
|Low Price to Earnings Stocks***||0.25 year||<13.53%>||<44.61%>
|Five-Star Stocks**||0.71 year||24.46%||36.18%
|SPX (10/8/04-4/29/10)****||5.56 years||7.58%||1.32%
(The statistics combine portfolio open and closed position results and are effective as of the end of trading today, 6/30/10. Dividend income has not been included in the table's performance figures. Commissions, though, have been subtracted from the portfolio asset results, but not from the SPX performance.)
( *since inception, 10/8/04)
( **since the Five-Star Stocks and Low Price to Book Value Portfolio inceptions, both on 5/14/09)
(***since Low Price to Earnings Portfolio inception, 1/14/10)
(****SPX is used as a proxy for the S&P 500 Index.)
Observations about the portfolios:
- As usual, despite the results being shown for the newer portfolios (those begun after the Classic Value Portfolio), please note that those stats, especially the annualized performance figures, are not as meaningful as if the portfolios had been ongoing longer. However it turns out, the results should be clear, for these are our actual investments, not hypothetical holdings or trades.
- It seems reasonable for Classic Value, due to its longer history, to calculate the potential total returns based on the above figures plus a very conservative estimate of an average annual dividend of 1.0%. This shows an overall CV annualized total return of 8.25%, a respectable record given the recent performance of the market averages and considering that the indicated period has included the worst economic crisis and recession since the Great Depression.
- Since the last CV asset has now been sold, the Classic Value hypothetical portfolio will not be followed here further.
- Note that the applicable dates for both the Classic Value and S&P500 Index stats are not to the present but simply cover the approximately 5 1/2 year period since the first Classic Value asset was selected, on 10/8/04, through when the last CV asset was sold, on 4/29/10.
- While the caveat is still needed that it represents a small sample and that its holdings were kept for only a rather short average period (about 259 days), the performance thus far of the 5-Star stocks is noteworthy. These are assets which at the time of purchase both possessed Ben Graham classic value qualities (of low debt plus low P/E and/or P/Bk) and were rated with 5 stars by the MSN/Motley Fool CAPS rating system. These assets' absolute return of almost 25% in 0.71 years is at least interesting.
- Unfortunately, I did not after the first several months find enough assets meeting both sets of criteria to readily construct a portfolio. Nonetheless, it may well be worthwhile to continue emphasizing in one's low P/Bk or low P/E asset purchases securities which have as well high MSN/Motley Fool CAPS ratings.
- The short-term results for both the Low Price to Earnings and the Low Price to Book Value portfolios have been especially disappointing in this just ended quarter. Each has fallen from positive to quite negative in the last three months.
- A significant consolation, however, has been that more bargains have been available during the market downturn which had taken our assets with it into negative territory. Thus, the average price to value of our portfolios has improved in this period. Once the market turns around, this should give them greater "buoyancy."
For those curious about how the Jim's and Phil's Ten Stocks for a Decade portfolios (begun 5/14/10) have been doing, on average, after just a few weeks each, they are performing a little above the S&P 500 Index, together down about 7.5% while that index has lost 9.2%.
Meanwhile, our nest egg has suffered with the market downturn as well. Our net asset value has retreated to just over $850,000. Our total equities' price to book value has, however, fallen to only 0.84, approaching bargain territory. If the correction persists, we should easily lower it to 0.80 or below in the next few months.
Since 12/31/09, our annual total book value increase target (of at least 12.5%) has already almost been achieved. We are within about 3-4 trades of having a total equity book value of $700,000 or above.
Our only debt remains the small mortgage on our house, at a 5.5% rate, representing less than 2.0% of our net asset value.
We wish everyone a more rewarding third quarter of 2010.
Disclaimer and Disclosure Statement
Much as I'd love it to be otherwise, I receive no payment of any kind for disseminating investment information unless, by some fluke, millions of folks, on the strength of these entries, start buying shares of stock I own, a possibility only slightly less likely than our being destroyed by a large meteorite. Do not follow any suggestions made in Investor's Journal as if I were a professional.
Neither I nor Investor's Journal will be responsible for losses by anyone who obtained ideas from this site.
This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.
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