We just completed stock selections for the six portfolios. It takes a few weeks, from the time the stock selections are posted, collecting the $500 contribution from each beneficiary, matching the $500 and contributing $500 more, and then following up to actually get the selections from each beneficiary.
These decisions to pick stocks are not taken lightly. This represents a significant amount of money for each beneficiary, and it is a lot of babysitting or mowing lawns or saving allowance to save up for the purchase.
The results of the stock picks were…
Yahoo 4 (selections)
Yandex 4 (selections)
Cliffs Natural Resources 1 (selection)
Devon 1 (selection)
Seaspan 3 (selections)
This totals 13 instead of 12 because portfolio five sold Alcoa (endless Chinese competition) and purchased 3 stocks instead of 2.
No one picked:
– Philip Morris, cigarette manufacturer (they only sell overseas)
– Infosys, Indian software developer / outsourcer
– IBA, a Mexican poultry producer
It makes some sense because cigarettes seem socially awkward to buy and the Indian outsourcer and Mexican poultry producer don’t seem very exciting. In the future I will work a bit harder to “promote” some of these investments better. However, in the end, it is their money and their stock selection (from the list).
Fees and Expenses:
It is amazing how cheap it is to setup and run these portfolios. They are under the trustees “umbrella” account so they each get a number of free trades each year (far more than they actually use, since we mainly “buy and hold” unless there are exceptionally large gains or losses). The portfolios have been free to set up and run the last few years, and many of them have ZERO expenses since inception (OK, there is an SEC fee on purchases or sales, but that is a few cents).
From an expense perspective you can’t beat these portfolios. The “real” expenses that they pay is as close to zero as it comes.
On the other hand, the funds essentially earn no interest. Many months it rounds to less than one cent. They don’t even send the 1099-int (interest) because it isn’t needed if you have less than $10 or so (this is from 2008, maybe it has changed a bit). There is nothing to say anymore about “compounding” interest. Thanks to ZIRP interest is effectively nil and irrelevant on checking and savings accounts, along with money market accounts (unless you buy bonds, in which case it usually is just very low).
Tools To Select Stocks:
The tools to purchase and select stocks have gotten immensely easier to use. It was originally primitive to purchase stocks online and when you sold it didn’t even tell you how many shares that you were selling on the “sale” page (you had to remember from the previous page). The purchases didn’t “net” against your available cash so you had to check manually to see if you were going to exceed available funding.
We started these trust funds right after 9/11 and it has just gotten better and better over the years.