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October, 2013: 9 30
Disclaimer - IMPORTANT - Read this first!
| 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. |
10/9/13- Since the last entry, there have been no assets sold off completely among holdings in the portfolios followed here. We have reduced the number of shares held in some profitable stocks, as the rhetoric in Washington, D.C., reminds again that our nation has not for some time been well run. This inevitably has a deleterious effect on the country's long-term fiscal viability, without which the health of the economy is in jeopardy.
Although bargains are available, I am tending now to hold more cash reserves and to limit or avoid new purchases. Just as occurred in 2011, there is a possibility that good price to value assets will look even more attractive later, given that our leaders are doing their mutual best not to come to badly needed responsible agreements and instead to blame each other for their failures.
Though I prefer to not be a market timer, realizing that I am not that great at it, the circus going on (and on) "inside the beltway" encourages a more cautious stance than usual. It is likely I am not alone in this. Surely many around the world are concerned about how long America can remain the largest economy when those in charge are this small-minded.
Meanwhile, the following is my regular quarterly summary (statistics through 9/30/13) of the asset approaches followed here:
| Portfolio or Market Index | Date Began Monitoring | Average Asset Hold Period | Average Change | Annualized Performance |
|---|---|---|---|---|
| Berkshire Hathaway, Class B | 6/3/05 | 2.48 years | 34.20% | 12.58% |
| Dividend Value | 5/20/11 | 1.17 years | 12.10% | 10.25% |
| Low Price to Book Value | 5/14/09 | 1.02 year | 19.54% | 19.18% |
| S&P 500 Index (SPX) | 5/14/09 | 4.38 years | 88.35% | 15.55% |
Observations:
As mentioned previously, I am on target for year-end total dividends and book value of at least $17,706 and $885,300, respectively. Our portfolio's total equity book value is raised by a minimum of 13.5% a year, and the dividend yield on that book value is maintained at 2.0% or more. Increases in book value usually over time result in increases in market value. Our total net asset value (the sum of all holdings, such as bond and stock assets, reserves, and real estate equity) has risen to $1,266,000. We are definitely not wealthy, yet with luck can weather the financial storms that often affect the post-retirement elderly.
On the whole, our monitored strategies/holdings are competitive with the major market averages as represented by the S&P 500 Index. Assuming their inceptions were identical, the returns of an equal investment (33 1/3% each) in our BRK/B shares and those of our Dividend Value and Low Price to Book Value strategies would have averaged an annual performance of just 14.00%. However, with dividends added in (greater than 5%, at time of purchase, for the securities held in Dividend Value), the combined total return would have been over 16%. I am not trying to hit the ball out of the park but to provide us with reliable, relatively low risk profits and income. Assuming our representatives do not do more serious harm to the economy in the interim, this approach should take us next year to a book value total in excess of a million dollars, with dividends totaling at least $20,000.
For those interested, these are the present Low Price to Book Value Portfolio open positions: ABLT; ACAS; AEG; AOSL; BBOX; BDR; BIF; CDE; CEP; CNA; COCO; CRV; CUO; DIT; HMY; HWG; IAG; KCLI; KMPR; LM; LUKOY; MANT; MLNK; MSN; MT; NTT; NWLI; PBR; PFIN; QCCO; RFP; RGA; SCHN; SCX; SGMA; SSRI; STLY; STM; STRL; TDS; TX; UMC; VLCCF; and VOXX.
And here are our Dividend Value Portfolio equities: AZN; BGCP; COP; CSPI; DTEGY; EC; ESV; IAG; INTC; PSEC; RDS/A; T; TICC; VIV; and WSTG.
This month we wish everyone a Happy Halloween, with plenty of investment treats to follow. Given more luck than we have enjoyed recently, maybe we shall also avoid any of the huge tricks our ghoulish elected officials have lately been threatening.
10/30/13-LM, a Low Price to Book Value equity purchased on 12/4/12, was sold today, 10/30/13, for a net gain (counting commissions but not dividends) of 52.15%. It has been removed from the record of open position Low Price to Book Value assets and the 12/4/12-10/30/13 performance for this security has been added to our closed position spreadsheet.
Alphabetically, though in no particular order of merit, my current top-five low price to book value stocks are: ELP; HNR; MSN; PFIN; and UMC.
My new featured Low Price to Book Value equity is Companhia Paranaense de Energia (ELP) (recent price $14.13). ELP meets Benjamin Graham's bargain stock value and safety criteria.
Companhia Paranaense de Energia will be added to our nest egg at its market price in early morning trading tomorrow, 10/31/13.
In my entry of 10/9/13, I accidentally omitted RFIL from the listing of our still open Dividend Value positions. Purchased on 7/16/13, RFIL, was sold on 10/29/13 for a net gain (counting commissions but not dividends) of 65.13%. It has been removed from the record of open position Dividend Value assets and the 7/16/13-10/29/13 performance for this asset has been added to our Dividend Value closed position spreadsheet.
Alphabetically, though in no particular order of merit, my current top-five dividend value stocks are: CAJ; UVV; GLNG; IAG; and UVV.
My new featured Dividend Value equity is Universal Corporation (UVV) (recent price $53.93). UVV meets Benjamin Graham's bargain stock value and safety criteria.
Universal Corporation will be added as well to our nest egg at its market price in early morning trading tomorrow, 10/31/13.
In some of the recent entries I have mentioned caution concerning political dysfunction and the possibility of its affecting stock market returns. While in the short-term that situation appears now to be a bit improved, there seems no lack of extremist position-taking and brinksmanship by our two major parties, rather than the cooperative spirit required for the major issues facing our country fiscally and otherwise to be provided with real long-term fixes. Accordingly, while I shall continue with our household's target of total equity book value increasing by 13.5% annually, with a yield on that book value of at least 2%, I shall also be keeping a larger than usual prudent reserve, for use in the event of the major market downturns that can be expected given ineffective leadership "inside the Beltway."
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.