What a Stock Market Rally Looks Like


The stock market has been on a tear since the election.  Initially, the stock rally was concentrated in a few industries where investors believed the new administration would assist their financial position (airlines, banks, etc…).  Recently, the rally has taken on a life of its own and is just going UP.  There are 21 stocks contained in Portfolio One, and today 20 of the 21 stocks went up (one foreign stock ADR went down slightly).  This sort of correlation amongst all the stocks is a sign of euphoria in the market.  I don’t have any particular insight into where stocks are moving next but this is an interesting sign for the market right now.

Portfolio One Updated January 2017 – Tax Time

Portfolio One is our longest lived portfolio, at over 15 years.  The beneficiary contributed $7500 and the trustee $17,000 for a total of $24,500.  The current value is $39,250 for a gain of $14,750 or 60% since inception with an annual return of just over 5%.  See the detailed spreadsheet at the links on the right or download it here.

In 2016 we had no sales for tax purposes and about $790 in dividends (the exact amount on the tax return will be different because this is net of foreign tax withholding).  Generally the stocks in this portfolio are doing well with just a couple on watch.

Looking back on all the 20+ sales over the years most have been good in hindsight, with the obvious exceptions of Amazon (AMZN), Microsoft (MSFT) and Southwest Airlines (LUV).  Hindsight isn’t 20/20 and likely as this portfolio transitions over to the beneficiary (I still will advise) at some point we will stop looking so far back into the past and just look forward.



Portfolio One Updated October, 2016

Portfolio One has a value of $39,064. To date the trustee has contributed $17,000 and the beneficiary $7500 for a total of $24,500.


The portfolio is well diversified. There are still some stocks on watch from the commodity crisis (fall in the price of oil) but they have mostly recovered.

Portfolio One Updated March 2016 – Tax Time

Portfolio One is our longest lived portfolio, starting right after 9/11 and is 14 1/2 years old.  The current value is $35,158 with the beneficiary contributing $7500 and the trustee $16,500, for a total of $24,000.  Thus the gain is $11,158 or 46%, which works out to about 4.5% / year over the life of the portfolio adjusted for the timing of cash flows.   The detail can be found on the links on the right or you can go here to download the spreadsheet.

There are 20 stocks in the portfolio, which is about the maximum I’d want to track in a single portfolio.  When we add new cash into the portfolio and / or sell existing stocks we are consolidating in order to keep at a maximum of 20 stocks.

We had three sales last year, with Garmin (GRMN), Yahoo (YHOO) and TransAlta (TAC).  We had four purchases with Box (BOX), Novartis (NVS), Tesla Motors (TSLA) and Tata Motors (TTM).

We had a net long term capital loss last year, driven primarily by TransAlta.  Up to $3000 in stock losses can be deducted against ordinary income so this at least should be helpful on the beneficiary’s tax form.  The portfolio earned $935 in dividends and had $70 in foreign taxes withheld (this can be deducted as a benefit on the US tax return).  It is important to realize the percent of total return that comes from dividends; while some companies like Tesla won’t pay dividends (because they are growing rapidly), the return on dividends from established companies is an important source of income growth for the portfolio.  I will be sending the tax information to the beneficiary from the brokerage company after completing this update.

Portfolio One After 2015 Stock Purchases and Sales


Attached is a screen shot from Google Finance for Portfolio One after the purchases and sales from Fall, 2015.  New purchases are Tesla (TSLA), Tata Motors (TTM), Novartis (NVS) and Box (BOX).  The remaining cash also is updated.  The % return by stock does not include dividends (only “raw” stock price appreciation or depreciation), so dividend payers have a higher return than is listed.

Portfolio One Updated October 2015

Portfolio One is our longest lived portfolio, at 14 years.  It started right after 9/11 and has tracked the ups and downs of the stock market since then.

The beneficiary has contributed $7000 and the trustee $15,500 for a total of $22,500.  The current value of the portfolio is $34,648, a gain of $12,148 or 54% since inception, at a rate of about 5.5% / year.  To date dividends have contributed over $5000 towards the value of this portfolio.  You can download the portfolio here or go to the links on the right.

For the year to date, the portfolio stocks are down about 7%, compared with the S&P 500 being up 2% and the non-US index down about 6% (in US Dollar terms).  The portfolio is roughly half US and half non US and the increased downturn is due to our concentration in resource stocks and some currencies that depreciated significantly vs. the US Dollar.

There are 19 stocks in the portfolio, with an average value of about $1700.  The largest position is Exxon (XOM) at about $3000 and there are 2 stocks under $1000, Statoil (STO) and Trans-Alta Corporation (TAC).  It isn’t a co-incidence that STO and TAC have been hit by the recent commodity price downturn (Exxon too, although not as much).  The goal would be to have less than 20 or so stocks in the portfolio.

There has been a lot of volatility in the market and we’ve been holding off on selling to see how the dust settles.  We may make some sales prior to reinvesting the new stock selections for 2015.  Items that we are considering for sale are TransAlta (TAC), Yahoo (YHOO), Garmin (GRMN), and Wal-Mart (WMT), although we don’t want to make hasty actions based on short term moves (this mainly applies to Wal-Mart).

Portfolio One Updated March, 2015 – and it’s Tax Time

Portfolio One is our longest lived portfolio, at 13 1/2 years. I remember the first day we invested very well – it was right after 9/11/01, and the markets were closed for a few days. The beneficiary’s mother asked me if investing was the right thing to do and I said that we had a long run out in front of us.

Portfolio One has a value of $34,875. The beneficiary contributed $6500 and the trustee contributed $14,500 for a total of $21,000. The gain has been $13,875 or 66% since inception, which works out to approximately 6.9% / year. You can see performance here or use the link on the right sidebar.

It’s tax time. The brokerage sends a nice form. Over the years this has gotten easier as they have the cost basis on the stock for each sale and whether it is a short or a long term gain. Apparently you have to buy the higher level Quicken if you need to do any individual stock sales which probably means that the average American filer doesn’t have much at all in terms of stock gains or losses (in a non-retirement account) and that is sad. Likely in the old days all you had to do was leave your money in a bank account and earn some interest but nowadays I don’t even receive a tax form for interest for these accounts anymore because we literally earn 2 cents / year for the cash on hand in these individual accounts.

We had dividends of $816.17 and long term losses of ($165) and short term losses of ($801). In 2014 we sold Twitter, CNOOC, Urban Outfitters, Yandex, Philip Morris and China Petroleum. Not that we have the benefit of hindsight at the time we make sales like this but of the 6 we sold all but one (Twitter) are below the price right now of where we sold them.

Of the stocks we currently hold, most are pretty far above their cost basis, except for Statoil (the Norwegian oil company) which was hit like all oil companies by the fall in the price of oil and then there was a double whammy because the US dollar appreciated against the Norwegian Kroner which means that the stock price hit is magnified in US terms (it did better on the local exchange if you were a Norwegian holding your investments in Kroner). Our most recent tranche of Exxon is also down but overall that is a good stock to hold for the long term with a nice dividend and a ruthless and focused executive team.

The dividends number is nice. Every year this portfolio earns almost $900 in dividends, on about $34,000 invested in stocks of average, (the cash returns interest, which is zero),for about 2.6% yield. Since cash returns zero as we discussed above this is how you earn any sort of income anymore – you need dividends back from your stock. Qualified dividends receive a lower tax rate – it doesn’t impact the beneficiary as much as it impacts us – but for some reason not all dividends qualified. It turns out that you have to hold the stock for 60 days to receive the tax benefit and often there is a first dividend payment before we hit that date.

I pass on all this information to the beneficiary and now they are adults and they need to do their own taxes. That is a sign of adulthood when you finally realize how much taxes you pay every year to social security, medicare, the Federal government, the State government, etc…