6/11/12-On 6/6/12, our portfolio tracking site showed zero value for the Jim's 10 for 10 portfolio asset, AOBI (the original purchase, AOB, having had a reverse split and new stock symbol given, AOBI, a few months earlier). It turned out its volume had declined below the level that would register on the tracking site. To avoid a situation of the shares declining to zero, I sold them for a net loss (including commissions but not counting any dividends) of 93.41%.
In keeping with the portfolio strategy, the net from the sale of the greatest current loser was to be used to purchase shares of the then greatest portfolio gainer. While this normally would not occur till roughly the next anniversary of the original portfolio purchases, since the unscheduled sale brought the issue up at this time, the proceeds from AOBI's sale were used to purchase a share of V, at the time ahead a bit more than 49% from purchase. This set of trades will be in lieu of the trades that would have occurred in May, 2013 for this portfolio.
On 6/7, I sold the Selective Six Percent Plus (SSPP) portfolio asset, MDP, purchased 11/18/11, since its dividend had fallen below the 5.6% portfolio buy criterion, for a net gain (taking into account commissions but not the liberal dividend yield received in the intervening months) of 10.53%. The asset's buy and sell stats have been recorded in the SSPP closed positions spreadsheet, and MDP has been deleted from the open position records.
My current top-five low price to book value stocks are: CENX; CKP; SCHN; SCX; and TX.
My new favorite from among them is Schnitzer Steel Industries, Inc. (SCHN) (recent price $25.12). It meets Benjamin Graham's bargain stock safety and value criteria.
Schnitzer Steel Industries, Inc. will be added to our nest egg at its market price in early trading today, Monday, 6/11/12.
In addition, in early trading today I plan to purchase a new B. Graham Div. with Value portfolio asset, Eaton Corp. (ETN) (recent price $41.24). ETN has a 3.7% dividend, a debt to equity ratio of 0.47, and a dividend payout ratio of 0.35. It meets Ben Graham criteria as a bargain equity based on its high dividend (2/3 or greater the AAA corporate dividend rate) and its reasonably low debt.
6/17/12-Happy Father's Day to all pops and granddads out there, as well as any helping their dads and granddads (or even great granddads, etc.!) to celebrate this holiday, not to mention all who are taking time today to remember and appreciate our fathers who are no longer able to enjoy such times with us.
Among the stocks and portfolios followed here, there have been no sales or sell signals since the last entry.
As noted before, I have been, with certain exceptions (for instance OMVKY, at first, which was suggested in October, 2004) rather leery of individual stock picks among foreign companies. Yet, the majority of the growth in equity investments over the next several years or decades seems likely to come from abroad. In the past, I have used certain closed-end funds (CEFs) or exchange traded funds (ETFs), i.e.: EPI; HAO; PLND; and BRF, to take advantage of the higher overseas potential for profit.
Currently I still prefer to focus more on kinds or regions of investment rather than on specific foreign stocks, though some of my favorites have changed: Here is the present list, in order of preference: 1. the Templeton Russia and East European Fund (TRF); 2. the Central Europe and Russia Fund (CEE); 3. the Templeton Emerging Markets Fund (EMF); 4. the Templeton Dragon Fund (TDF); and 5. the Wisdom Tree India Earnings Fund (EPI).
I also like a couple Templeton bond CEFs: the Templeton Emerging Markets Income Fund (TEI) (top pick) and the Templeton Global Income Fund.
Volatility can be high among any (or all at once) of the above cited CEFs and ETFs. I therefore prefer a dollar-cost-average method of putting my money to work in these financial instruments.
While I am not in a big way a market timer, there are occasions when I feel it particularly tactical to have plenty of reserves and to keep one's powder dry. This approach certainly came in handy for us in 2002, 2008, and again last year, allowing for a significant increase in total book value while equities were down, yet without sacrificing as much market value as was lost among the averages. Today again I believe extra caution may be appropriate. As a result, I am assuring that at least a third of our liquid assets are in reserves or short-term bond assets. The combination of lowered growth in Asia, uncertainty in Europe, plus political gridlock and dysfunction in Washington, D.C., makes it not unlikely that, over the short- to medium-term, there will be significant further equities selling, probably leading to abundant Ben Graham type opportunities in the balance of 2012 or in 2013. It is quite possible the trend will be just the opposite, for the level of pessimism now extant has often led to performance surprises, but I prefer to err on the side of lower short-term risk.
A danger is that one will too often be gun-shy, unwilling to commit assets in any meaningful way, because there are always some clouds to be seen on an equity horizon. Personally, I offset the cautiousness of higher reserve levels on occasion with a commitment to increase total equity book value by at least double digits a year (lately a minimum average of 13.5% annually).
As mentioned previously, I also assure I am getting a 2% or better yield on that book value, in other words, that the total equity portfolio dividend increases on average by at least double digits annually as well.
Since both a company's book value and dividends can fluctuate, these measures do not guarantee ongoing total return superiority relative to the market. They do appear to increase the odds of that result.
A generally productive way of investing in the past has been to focus on assets that have good dividends as well as reasonably low price to earnings ratios and at least modest performance over the previous 12 months. Assets chosen this way and rebalanced after one, two, or three months tend to significantly outperform the market. Here are some recent examples: CASC; CPA; PDLI; RGR; and STX. Among them, my favorite is RGR. It also would meet Ben Graham bargain criteria, based on its forward dividend (greater than 2/3 the yield of AAA corporate bonds) and its very low debt.
Disclaimer and Disclosure Statement
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.