Hi Spekulatius - How are you positioning your taxable portfolio in this recession (slow recovery) environment? What is the general breakdown of your holdings and are you holding a lot of cash (money market, bonds etc)?
You seem to be quick to take your gains and move to other opportunities which might be the appropriate strategy in this fickle environment. Since March, I have followed you into several of your utility picks which have performed quite well. This group has held their gains and seem like a safe place to hide. Here are some of my buys since March that I still hold but it's a bit discouraging to have these one day hits strip me of my recent gains.
finance.yahoo.com
I have also positioned more bond & money market funds into REIT preferreds (5%) but still hold the largest amount of my cash in Vanguard GNMA and credit union accounts (16%), and a small amount in laddered Treasuries (2.5%). My total Fixed Income is around 23.5%.
I am trying to set up the portfolio to generate income for the next 18 months as I see this recovery to be quite slow in developing. Based on David Einhorn's recent discussions, I am a bit concerned of a remote "Black Swan" type of systemic event but not too sure how to defend against it. I have tried to focus on core equity holdings that contain "real" natural resource assets that should maintain their purchasing power in case of (1) debasing US $ or (2) super high interest rate event in Japan or US. Therefore, 4% of the portfolio is invested in gold and platinum mining stocks which is my insurance policy of hyper inflation or depression. Even though gold is trading at an all time high, my mining companies are still selling around 2002 levels (AU, GFI, AGPPY).
My biggest sector holding continues to be with the integrated Oil, NG & Canadian Oil Trust companies (27%). The group generates an average annual 4% dividend and has shown good overall growth over the last 20 years. However, as oil prices bounce around, the portfolio's net value changes too.
Schwab recently prepared me a Sector Portfolio analysis report designed for moderate safety & growth. The report said I owned too many small cap stocks and is out of balance by 6% (which is comprised mainly of the smaller utility companies listed above). My International Equity holdings is out of balance by 24% and comprises my largest positions in both Oil (PBR) & Canadian Oil Trusts (ERF & PWE) and Mining ADR's (BHP AAUKY & AU). The report also said I needed to own more Fixed Income (as high as 35% of the total).
The income generated by my taxable portfolio is what I use to live on. I need consistent monthly & quarterly dividend streams that I use to pay my bills. Monthly health care premiums now represent my largest expense (about 15% of the portfolio income before taxes). I try to calculate the total amount (by month) a year out based on the current payments announced by each company. I have raised the taxable portfolio income payout from 3% to almost 6% (comprised of qualified dividend income, non-qualified preferred dividends and interest income).
That's the big picture overview of my set up. It's almost like managing my own mutual fund. Your simple valuation observations has helped me a lot in structuring my holdings. I appreciate your stock picking suggestions and think your focus on the utility sector over the last 8 months has been right on.
What's on your radar screen for the next 18 months?
EKS |
