September, 2014: 13
9/13/14-The following assets have been sold since the last entry:
Alphabetically, my current top-five Low Price to Book Value equities are: ELP; NE; PT; RIG and VOD.
My new featured Low Price to Book Value security is Portugal Telecom (PT) (recent price $2.17). PT meets Benjamin Graham's bargain stock value and safety criteria.
Portugal Telecom will be added to our nest egg at its market price in early morning trading on Monday, 9/15/14.
If all goes according to plan, I shall be leaving on a three-week vacation next Wednesday, and so would not be here to provide my quarterly review at the usual time, normally on 9/30 or 10/1. Who knows what the next couple weeks or so will bring, but for now suffice to say our monitored portfolios are doing reasonably well, overall book value and dividend totals are on target to achieve year-end targets, and my wife's and my nest egg (net asset value) is at record levels. Whenever this occurs, I begin getting more nervous about how much farther up the market can take things before a significant pullback. I have seen assessments by Warren Buffett and others suggesting that when the ratio of total U.S. equity market value to gross national product is significantly above one, equities are likely to be overvalued and vulnerable to a major correction or bear market.
Though I am generally not a market timer - not being that good at it - I think the ratio's current level is about 1.25, the implication being that most of this bull market's profits have already been achieved. My response to this is to sell off some assets on days when our portfolio is up and so raise money market reserves.
I have as well a relatively small investment in TWM, an exchange traded fund (ETF) equivalent to shorting the Russell 2000, but with twice the up and down performance of a Russell 2000 short. This is definitely not an asset, in my view, for long-term hedging. However, while the aforementioned ratio is above 1.2, I think this a reasonably safe security for short-term trades. In any case, we have done fairly well buying TWM when it is down more than 5% since the just previous transaction and then later selling when it is up over 5% from the prior buy transaction. To avoid wash sales, it is best to use this approach only in tax-deferred accounts, I think. On average the round-trip (both buy and sell) trades of this type have occurred about every 6-7 weeks, with typical net gains around 7%, providing a decent annualized return (combined open and closed positions thus far having shown net annualized profits between 30-40%). This sort of strategy is only for about 5% or less of our N.A.V., and is also done only so long as we have plenty of cash reserves and no debt.
I expect to give a more detailed assessment of Low Price to Book Value and Dividend Value portfolio performances after my return in the second week of October.
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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.