50% GAINS PORTFOLIO – APRIL 26
KEY RATIOS:
TECH – 16.5%
NON-TECH – 83.5%
CASH – 0%
OPTIONS – 2%
LARGE CAP U.S. STOCKS – 8%
SMALL/MIDCAP U.S. STOCKS – 10%
INTERNATIONAL STOCKS – 80%
FUNDS – 0%
IN: KNCRF (39.65)
OUT: HKSHF
REDUCED POSITION: None
ADDED MORE: AUREF
TOP TEN: BRKB, WNDLF, CLNGF, ETF, QBEIF, SZNTF, CVI, YARIY, ARVCF, IVTJF. **Percentage of total portfolio: 27.5. Top five holdings: 14%. Total portfolio: 59 companies (stocks, options, bonds, funds and shorts).
CURRENT SHORTS, SHORT ETFS AND PUTS: ZIXI August 5 puts (1.65)
LOSS REPORT: This week: 23 stocks/2 options in the red - losses equal 2.7% of the portfolio, market value 19% of the portfolio (Last week: 23 stocks/2 options in the red - losses equal 6.3% of the portfolio, market value 29% of the portfolio)
SECTORS: Energy 24.5%, Finance 21%, RE 9.5%, Communications Services 8.5%, Hardware 7%, Retail 6.5%, Mining 4.5%, Services 3%, Transportation 3%, Europe 3%, Broadcasting 2.5%, Asia 2%, Africa/ME 1.5%, Utilities 1%, Cash 0%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
ENERGY - ARVCF (502.75), BIP (20.91), BZP (5), CDDRF (7.35), CLLZF (.68), COP Jan 09 50 calls (22.8), CUAEF (1.86), CVI (25.75), CXEYF (.89), END (1.4), GTE (3.43), KOG (2.02), KPELY (6.8), MCF (30.07), MRO (50.91), OGZPY (47.1), PRC (1.75), SBEAF (23), STO (26.55), WH (5.8)
FINANCE - ACAS Aug 35 calls (3.2), AFSI (14.8), BRKB (3075), CLNGF (7.85), CPHL (10.26), CSE May 12.5 calls (.5), III.L (1058 pence), IVTJF (9.96), JRJC (13.96), NBG (9.17), QBEIF (3.35), SAXPF (31.5), SMPA.DE (21.35 euros), STD (18.16)
RE – ACNDF (.8), 0337.HK (HKD 7), BWEL (955), CLLDY (3.15), IMB (14.19), SZNTF (.39)
COMMUNICATIONS SERVICES – ETF (23.3), MICC (94.6), MTNOY (5.45), TNE (24.75)
HARDWARE - AAPL (167), NHYDY (12.9), SGLFF (27.18), TEX (67.63)
RETAIL - BRRAY (7.5), CIMHF (2.2), ORKLY (8), YARIY (47.55)
MINING/MATERIALS - AUREF (5.76), BVN (66.55), PLGOF (2.10)
SERVICES - TFFTF (7.95), TLVT (18.09)
TRAVEL/TRANSPORTATION - BCKBF (1.52), KNCRF (39.65)
EUROPE –WNDLF (37.5)
BROADCASTING AND MEDIA - NPSNY (17.7)
ASIA – VTOPF (3.78)
AFRICA/ME - TRAMX (12.56)
UTILITIES - DYN (7.03)
INTERNATIONAL STOCK LIST (42 stocks): 0337.HK/SGHGF, ACNDF, ARVCF, AUREF, BIP, BCKBF, BVN, BZP, BRRAY, CDDRF, CIMHF, CLLDY, CLLZF, CLNGF, CUAEF, CXEYF, ETF, GTRE, HKSHF, III.L, IVTJF, JRJC, KPELY, MICC, MTNOY, NBG, NPSN, ORKLY, PLGOF, PRC, QBEIF, SBEAF, SGLFF, SMPA.DE/SAXPF, SZNTF, TFFTF, TLVT, TNE, TRAMX, VTOPF, WH, WNDLF.
**Monthly update on YTD performance March 29, 2008: -12.7% YTD.
Dow -8% YTD, SP500 -10.5% YTD, NASDAQ -14.5% YTD.
**Last 12 Months: Portfolio +5.5%, SP500 -7.5%.
MARCH 2008 MARKET COMMENTARY
There is nothing to sugar-coat about the first quarter of 2008. It was the worst start for the markets in many years; the credit crunch locked up with full force and probably tipped the US economy into a recession. It is still much too early to predict a bottom for housing, consumer spending and related indicators.
The rest of the world may or may not follow suit in coming months. Certainly, world stock markets were no refuge from losses in the US. Many underperformed their American counterparts, as western money fled foreign climes to meet margin calls at home.
Good luck trying to find stocks with any consistent upward momentum. Those who made money this quarter jumped on stocks as they cratered, rode the rebounds then got out before the next leg down. Conversely, those who bought too soon lost more, often sold at the low and missed the rebound, bought back when the stock looked “safer” and may have lost again on the next slide.
Despite some big daily fireworks up and down, the indexes seem headed toward another small loss in March, or break even at best. The SPX dropped as much as 6% in mid-March and rebounded to plus 2% or more later, only to slide back to where it started again. Sound and fury, signifying nothing?
In short, this is a trader’s market. Profits go to the bold and the nimble in a high-risk game with plenty of chances to be wrong by a day or two. For investors, the daily action is both useless and frustrating. Even as companies reported solid results for late 2007, market momentum often pulled them lower. We are back to the age of single-digit PE’s for many quality names.
Ever since my portfolio first beat the S&P 500 in 1999, I have made beating that benchmark my goal. Most of the time, I succeed. This quarter was an exception, one that made me grind my teeth a lot lately. But any long-term investor who seeks to beat the markets by investing in non-index-style strategies has to accept that from time to time, that strategy will not work. The investor could try to change strategies dramatically with every shift in the market, but the most successful managers, like Warren Buffett, specifically reject that. They play the same game year after year, using caution and patience to limit their downside while the inevitable upward repricing of cheap value works in their favor.
At a time like this, such a plodding strategy is neither fun, sexy nor very rewarding. But given a choice between that and trying to chase trading stocks as they bounce around like a crazed pinball machine, the long-term value perspective is both saner and more suited to chaotic times. Bad times and crazy markets will pass; quality investing strategies tend to last.
For my personal portfolio, I have taken small positions in various stocks I would like to own long-term if they execute well through the downturn. I still think it’s best to keep my clients heavily in cash, until we see a genuine return of market confidence. Various technical observers of the market don’t see the signs of a solid recovery yet.
Last month I said that “stepping into what amounts to a random motion machine has a very high risk-reward ratio.” It is still not a good bet. Better to miss the lowest of the lows than risk jumping on board before the next big crisis takes us down another 10%.
Hope for the best and plan for the worst, like always. |
