Portfolio Three Performance Updated July, 2010

Portfolio three has been in existence for three years, during one of the roughest and most volatile stock market periods. This portfolio is worth $3539 and dropped about 9% during the quarter, which is mostly in line with US indexes. This portfolio has only four stocks, meaning that changes in individual stock prices will have a disproportionate impact on overall performance.

Over the three years of portfolio life this portfolio has lost 21% of its value; $3000 was invested by me and $1500 by the beneficiary, for a total of $4500, against a current value of $3539 above. The annual performance is about -11.5% / year.

This portfolio can be downloaded on the right side of this page, updated for July 2010.

While all losses are painful and teach real-world lessons the beneficiary has still more than doubled their initial investment and it is good that the investment plus match by the fiduciary is 2x their investment in order to provide a buffer for the swings of the market.

Of the stocks in the portfolio, like the others it is suffering with Nokia (NOK) that I am strongly considering selling since they have not been able to fix their core business to date and are getting killed in smart phones. The other three holdings seem reasonable – 2 are majors (Wal-Mart and Siemens) and Urban Outfitters is smaller which means more upside for growth and has zero debt and is managed very reasonably for our difficult environment.

We will continue to invest over the years and it will become more diversified as the number of stocks being added increases, which will make portfolio performance swing less period to period relative to the indexes. With only 4 stocks if one tanks (Nokia, in this instance) it is difficult to recover.

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