6/9/16-Since our last entry, the following assets were sold from the High Quality portfolio:
QCOM, bought between 3/1/16 and 4/26/16, was redeemed on 6/6/16 for an average net gain of 7.31%.
VZ, bought on 3/3/16, was redeemed on 6/6/16 for a net loss of 3.30%.
UNP, bought on 1/18/16, was redeemed on 6/6/16 for a net gain of 25.08%.
And these were sold from the Low Trailing P/E to 3-Year Growth portfolio:
WETF, bought on 5/25/16, was redeemed on 6/7/16 for a net gain of 2.87%.
UTHR, also bought on 5/25/16, was redeemed on 6/8/16 for a net gain of 1.91%.
SWKS, bought on 5/31/16, was redeemed on 6/8/16 for a gain of 2.71%.
When the portfolios were rebalanced, none of the above assets met the current guidelines.
The indicated returns are after commissions but do not include any dividends. The buy/sell dates, amounts, and results have been added to our appropriate portfolio closed position spreadsheets and will be incorporated into the stats of our quarterly performance reports (the next such review due at the end of this month).
It has been noted that few, and sometimes no, candidates were occurring with the prior criteria for the Low Trailing P/E to 3-Year Growth portfolio. These criteria have been revised, yet the selection process remains stringent. Stocks will still be chosen for relatively low P/E to 3-year revenue and earnings per share growth. In addition, stocks with higher 5-year average returns on assets are given priority in the final picks. Previous criteria assets (as noted above) have been sold, with average returns in the short time they were held of 2.50%. The new assets are noted below. Under the revised guidelines, this category stocks will be rebalanced approximately weekly, with only the top (up to) five being purchased. Those in the portfolio which are then no longer in the top ten of candidates will be sold.
My present favorites for the different portfolios followed here are: RDS/B* and SVT* for our Dividend Value portfolio; SVT* for our Low P/Bk portfolio; UVE* for our Low Trailing P/E portfolio; RDS/B* for our High Quality portfolio; and ATRO*; BIIB*; IOSP*; MEI*; and TARO* for our Low Trailing P/E to 3-Yr. Growth portfolio.
Shares of all of these assets are in our nest egg already or being added to it.
(*a new recommendation)
6/17/16-Have given a lot of thought to our overall nest egg situation. Realize it needs a major makeover. Have been trying to adjust things around the edges, but there is too much deadwood built into the separate approaches and their portfolios. Considered how would handle it if someone came to me with this set of assets and asked my advice, for instance if an heir who had lost a loved one (the person in the household till then handling most all the financial affairs) were to ask me to revamp this set of equities to be more efficient and profitable. The answer was as obvious as if called upon to clean out the closets of a guy too much into collecting and who had done little or no spring cleaning in years: most of the holdings simply need to be disposed of. Only then could one properly start over.
The amount of reshuffling called for is too great to give an accounting of every asset sold. Suffice to say in the next several weeks I shall be redeeming the bulk of stocks held, that currently our nest egg equities are down 1.43% (net profits less a somewhat larger amount of net losses), and that I shall use the quarterly reports to indicate which assets are still retained.
Once the purge is complete, I shall begin afresh with fewer strategies and a smaller number of assets. The good news is that more of the purchases made in the last year or so are winners than prior to that. Will write further later. Please understand that, though in future I shall continue a primarily value focus, the shift will likely be transformative.
6/30/16-Most of my redemptions among our nest egg's less appealing assets is complete. I had not intended it to work out that way, but since most of this purge had occurred prior to the "Brexit" vote, the overall portfolio was cushioned from the big reactive drop on 6/24. We lost 0.5% of our nest egg's liquid asset value by the close of trading that day.
Besides having fewer holdings, am simplifying things in a couple other ways. First, instead of keeping track of an average of our total equity shares' revenue plus book value, I shall simply use stock or mutual fund dividend income as the objective key to assuring growth in the portfolio. As of 12/31/15, the target for such income was $22,809. Goals will continue to be set based on an annual increase in equity income of at least 13.5%. For 2016, that raises the target to $25,888.
Second, rather than having a number of portfolios, our nest egg's tradable assets will be in just three categories. One is a set of stocks or mutual funds that are not to be sold under any normal circumstances (though, of course, my spouse may want to revisit this if I die first). The category includes a significant number of BRK/B shares plus shares of mutual funds and stocks bought many years ago for which the number of adjustments (from reinvested dividends, stock splits, mergers, etc.) would make their redemption too cumbersome at tax time to warrant their being sold. Unless one or more of these assets later meet the criteria of the other two tradable asset categories, they will not be followed here. (I shall still be inclined to buy BRK/B when it falls in price below P/Bk 1.2, but in that instance the stock probably will meet criteria for one of the other asset categories.)
The next tradable asset category will be Top 10 Stocks.
The final one will be Honorable Mention Stocks, the following 15 in current attractiveness, rounding out a core of 25 tradable holdings.
I hope to monthly update and rebalance both the Top 10 Stocks and then the 15 Honorable Mentions.
The current Top 10 are: AMZN; ATW; IQNT; LGIH; MCK; MEI; MN; PAYC; SANM; and SKYW. I'll endeavor to gradually increase the top 10 holdings to about 60% or our tradable equities total.
At present, the Honorable Mentions are: ANET; AVX; CBM; CRUS; CSCO; JEC; NLY; PETS; RDS/B; SHOP; SIR; SLB; TX; VER; and WSTG. I'll endeavor to gradually increase the Honorable Mentions to about 40% or our tradable equities total.
Shares of these 25 stocks not already held will be purchased over the next several days.
The best 25 are determined by first using a variety of value oriented or growth at a discount screens to find what look to be our top 50 candidate stocks. These then are whittled down to 25 by noting the performance over the past quarter plus their ratings from different stock services. From these criteria, the Top Ten are chosen based on superior stock price movement, the balance of 25 being the Honorable Mentions.
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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.