7/2/11-The following is my regular quarterly summary (statistics through 6/30/11) of the asset approaches followed here:
A few observations about the above results:
I have routinely provided info on the Low Price to Book Value investments and have mentioned as well those currently held in the B. Graham Dividends w/Value Port. In addition, the assets in the Jim's and Phil's combined 10 for 10 portfolios are fixed, not subject to any change for awhile. Here are the current positions in the other two portfolios being retained:
Concerning our personal nest egg, the vast majority of our holdings are in the strategies mentioned above. I do have holdings from several years ago that it is too much trouble to sell, for instance shares in companies that have had stock splits, mergers with other companies, etc., so that the trail is now hard to follow and it will be easiest just to let my wife or other heirs update the cost bases for tax purposes once I kick off (when cost basis is bumped up to assets' market value upon my being deceased).
There is also a small portion of our holdings invested in recommendations from a nephew who is keen to try his hand at investing but, alas, as yet has not mastered a value-plus-safety orientation. In bull markets the suggestions of his I have followed tend to do a bit better than my other holdings, though in bear markets they fall harder.
Further, I have an interesting little allocation in each of two strategies featured in the "Mechanical Investing" Motley Fool discussion board, Canslim 26 and YearEarningsYield (YEY). The total of all these extra holdings is currently only about 10% of our net assets and is not being followed here because they are somewhat aberrant and do not fit well into the value investing philosophy I most appreciate. While the YEY approach does emphasize stocks that have low P/Es and/or high dividends, for instance, it does not necessarily screen out equities with relatively high dividend payout ratios or debt.
An ongoing fundamental of portfolio management for me is to raise the level of total equity book value each year. Over the past six years, through 12/31/10, for example, total book value has been increased at an average annual rate of over 10%. (See the 4/2/11 entry for a longer discussion of this topic.) The annual minimum book value increase target for the next several years, however, is 13.5%, which makes this year's goal a bit over $680,000. Currently our total equity book value stands at $606,500, so I have a ways to go to achieve the intended 2011 book value amount. The challenge is greater since I feel the need to reduce risk in the nest egg because of incompetence in the nation's capital and an anticipation that before year's end there may well be better opportunities for picking up bargains. Thus I am selling into such rallies as we have enjoyed this past few days.
Meanwhile, our equities as of the close of trading on 6/30/11, the end of the second quarter, stand at $695,730 (and are a few thousand higher effective the following day, 7/1). It is hoped but by no means assured that if I can get our total book value up to $680,000 or above by 12/31/11, the total market value of our equities may grow substantially from here as well. Unfortunately, our overall nest egg has not as yet seen much rise this year, up only 1.5% through the end of June.
As always, I wish everyone good personal finance statistics over the next three months!
7/4/11-Since the last entry, our Low Price to Book Value asset, SYMS, purchased on 11/1/10, is up 55.71% (through the close of trading on 7/1/11) and so is eligible for sale. I have placed an order to redeem its shares early on Tuesday, 7/5/11. Info on both its cost basis and its performance from 11/1/10 to 7/5/11 will be added to the Low P/Bk closed positions spreadsheet, and SYMS will be deleted from the record of open position holdings.
My latest selection for the Ben Graham Dividends with Value Portfolio is RTN. It meets Graham's criteria for value and safety, based on its high dividend and low debt. We shall be adding RTN to our nest egg early tomorrow, at its then market price, and recording it among our Ben Graham Dividends with Value Portfolio open positions.
My current top-five low price to book value stocks are: BBOX; KTCC; SKX; STC; and SYA.
My new favorite among the current top five low price to book value stocks is Black Box Corp. (BBOX) (recent price $31.76). It also meets Benjamin Graham's bargain stock safety and value criteria.
Black Box Corp. will be added to our nest egg at its market price in early trading tomorrow, 7/5/11.
While I like BBOX a bit better on a risk-adjusted basis, I am also rather partial toward STC, which has a dividend as well as a low P/Bk (0.45). I am tempted to buy shares of both these equities, though it will mean having to sell more of other shares in our nest egg (that currently have less appeal and a higher price to book value).
We hope everyone has had a super 4th of July Weekend.
7/10/11-Since the last entry, our Small-Cap Momentum with Dividends Portfolio has been rebalanced again twice. When generating profits, this strategy turns out to involve fairly frequent trades. With the latest buys and sells, the method's stocks as of early Monday, 7/11/11, will be comprised of: CV; INTX; SPTN; SMP; and VPFG. Its open positions are now up almost 9%. Including both open and closed positions, after subtracting commissions, while not counting the dividend income, this portfolio is so far up over 2% since its March, 2011, inception, for an annualized gain of over 7%, about 8-9% if dividends were included.
My latest selection for the Ben Graham Dividends with Value Portfolio is INTC. Based on its high dividend (currently 3%) and low debt, INTC meets Graham's criteria for value and safety. We shall be adding this asset to our nest egg early tomorrow at its then market price and recording it among our Ben Graham Dividends with Value Portfolio open positions. Effective 7/11/11, this technique's equities will include: INTC; JNJ; NVS; RTN; and T.
My current top-five low price to book value stocks are: BBOX; LAKE; MLNK; STC; and SYA.
My new favorite among them is ModusLink Global Solutions, Inc. (MLNK) (recent price $4.64). It also meets Benjamin Graham's bargain stock safety and value criteria.
ModusLink Global Solutions, Inc. will be added to our nest egg at its market price in early trading Monday, 7/11/11.
7/12/11-Considering the potentially high and long-term costs of our elected officials' continued irresponsible behavior, and in view of the ongoing partisan brinkmanship games inside the Beltway, over the normally routine raising of the country's debt ceiling to cover expenses Congress has previously approved, I do not think it wise to expend additional reserves on new investments until the nation's politicians finally resume acting like statesmen serving the citizens' genuine interests (rather than as several hundred squabbling egos), and so come to a meaningful agreement that overcomes the current impasse. Such reserves will almost certainly be required for bargain purchases to restore our gutted portfolios if the debt limit is not raised by the looming deadline.
Accordingly, I shall not be making further purchase recommendations over the coming few weeks, unless the S & P 500 has already fallen at least 10% from its current level (1314) and/or a debt ceiling compromise is at last enacted.
Meanwhile, if not for the fact that the very people who deserve indictment would have to pass such an action, I would be calling for the impeachment of members of Congress on grounds of treason, their inaction on this crucial issue being a greater threat to United States' economic strength and America's standing in the global arena than any possible selling of its secrets to a hypothetical enemy.
7/14/11-Have been alarmed, on further reflection about the state of the nation's finances, that my Small-Cap Momentum with Dividends Portfolio is too vulnerable to a substantial downturn in the market. Certainly it has good upside potential during bull markets. However, it also drops like the proverbial stone when the average investor is throwing in the towel on equities. After multiple trades and over three months now of watching these big ups and downs, I have in fact decided to throw in the towel on this volatile portfolio. As of today, its performance is up, overall, including closed as well as open positions, but only about 1%. With dividends, the total return has been about 1.5% since inception, yet with way too much drama along the way. Accordingly, I am selling the current portfolio (INTX, LAD, SMP, SPTN, and VPFG) and using these assets as a way to further bolster our nest egg's reserves, in case the actions - and inactions - in Washington continue to be dangerous for investors' wealth.
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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.