Portfolio One is our longest portfolio, with a duration of almost 11 1/2 years. It began immediately after 9/11, an auspicious time for stocks.
Portfolio One has a current value of $28,635. The beneficiary contributed $5500 and the trustee contributed $12,500 for a total of $18,000. Thus the fund has gained $10,635 or 59% vs. the original investment, or 7.4% when adjusted for the timing of cash flows (annual contributions). You can see the portfolio here or on the right side of the links.
During the year we sold 2 stocks that were headed the wrong way – Exelon, the utility and large nuclear operator that came under question of whether they’d have to reduce their dividend due to lower profitability caused by cheap natural gas (a competing fuel), and Canon, a Japanese company that was seemingly well run and a long term holding which just kept falling.
With those 2 gone there is nothing really on our watch list right now, since Urban Outfitters has turned it around and is actually above our initial purchase price. We will watch that stock and probably sell if it seems to trend down.
Right now a bigger concern is over-valuation. We will watch stocks that have had strong gains in the recent market rally and we aren’t going to stand by and watch them go way down if we don’t feel that they are good long term investments.
We sold too soon on some stocks – one is Amazon which continues to DEFY LOGIC and climb even while essentially profitless. Oh well, that is a bit defensive, but we bought at $14 and sold at $90, and re-invested that money in other stocks that did well (like P&G which has returned very well especially when dividends are factored in). Today the stock continues to defy gravity and is at $284. When you do the math we left > $8000 on the table depending on assumptions by selling when we did.
If you look at other stocks we sold, a lot of them continued downward (some into bankruptcy), but others have come back a bit in the recent market rally, some even above the price we sold it at. No broker would typically “look back” like this but I want to be clear and transparent and learn (if possible) from our own investing history.
For taxes this year, we had almost $700 in dividends. Dividends are rising because companies are paying out a higher proportion of their cash and we also often select stocks with strong dividends. We sold 2 stocks with capital losses (long term) this year, as well. We didn’t sell any winners so this can be offset against income (up to $3000 / year), to the extent that the trustee has sufficient income.