Ruminating on the 10-stock portfolio discussion, I got a great idea. It's not a scientific idea at all, but I went and looked at my top 10 positions for the last two years and thought what would have happened if they were my whole portfolio.
First of all there was a significant junk/pref income security component that may never be replicated in the future. The prefs were a large percentage of the portfolio and gave huge return. This may not be repeatable in the future.
The time period is too short for conclusions: last two years was bull market, so it's clear that most of my top-10 positions appreciated.
I did not calculate a return that would have resulted from only these 10 positions. This might have been enlightening, but it is very hard to do correctly. :( I would have to decide what to do with buys/sells, their dates and what to do with positions that fell out of the top-ten or got into it through appreciation, what to do with cash component, etc.
With that said, here are my top-10 position flat-ters and losers:
UVIC - so far flatter if divies are not counted. With divvy it's somewhat up.
COPJF - Loser so far. It seemed cheap and full of potential when I bought it.
CSGH - most Chinese small caps are losers last year. Still keeping this one.
WH - another Chinese small cap, this one killed by import restrictions. Gone in 2009.
UEPS - a cheap South African e-pay/e-commerce company that had such a promise, but having a government agency as a big customer is always a risk. I guess no government contractors should be in 10 stock portfolio. ;) Partial position still around, not in top-10 anymore.
CRDN - government decided to buy less armor inserts for soldiers. Poof goes the company. Position gone in 2009 or so.
RIG - well, deep water drilling is not as moat-protected as it seemed at the time... Position gone in 2010.
HOG - such a great brand and moat and such underperformance. Shows that even great brands hit a dirt(bag) :P sometimes. Position gone in 2011.
NOK - another great brand that just managed to spiral down so far. This one could have been predicted and avoided though. I was too focused on the past and expected a faster competition with Fruits and Droids. Position gone in 2011.
GRMN - another great brand being killed by commoditization and phones (somewhat). Very small position still around.
Notes:
RINO - I sold out before the shit hit the fan.
NBG-A - I flip flopped out of it with minimum loss.
EDIT: It's interesting how person's mind works. ;) I see that I actually made money on HOG and GRMN although in my mind they are losers. ;) I guess this just reinforces how much bull market and buying at the bottom of crash (March 2009) helps. Still neither HOG, nor GRMN has taken out the pre-crash highs and unlikely to do so.
Winners: I won't go through exact winners unless someone is very interested (if so, post and I will do it). General themes that worked well were: prefs, oil/resource companies. I don't think I would have wanted to have even more weight in either category though. :)
Conclusions:
- I might have survived with 10 stock portfolio. The number of blowups is somewhat disconcerting though. ;) I don't use any stops and I don't plan to.
- Avoid declining brands, they usually have tough time turning around. (Apple is such a huge exception... ;)).
- Avoid government contractors.
- Avoid Chinese small caps? |
