Portfolio Update April 2020

The markets have moved up and down since the lows hit in March, 2020. The government has taken a number of moves to shore up the market, including reducing interest rates, back-stopping some industries, and even buying some corporate debt instruments and ETF’s. After some incredible moves up and down, the markets are back to about where they were at the end of Q3 2019.

Portfolio April 12, 2020
Portfolio April 12, 2020

Our stocks mostly went down with the overall market, although some performed better. Specific sectors, like energy and airlines, were particularly hard hit. The Coronavirus is making us reconsider our core assumptions in light of how the market has been performing recently. We may sell out of some sectors to avoid potential further declines.

Portfolio One:

  • Exxon Mobil (XOM) – while well run and with a good dividend, the energy sector is facing significant challenges with reduced oil prices and this stock has been stuck and declining for a decade.  Consider selling.
  • Toronto Dominion (TD) – this is a well run Canadian Bank with trading exposure.  However, banks face unknown challenges with debt defaults and trading commissions have recently evaporated.  Consider selling

Portfolio Four:

  • Oracle (ORCL) – Oracle is famous for being ruthlessly well run and has held up well in the market turmoil.  However, they piled on debt to keep up earnings per share through stock buybacks and are generally passed by in most areas of Technology.  Consider selling
  • Nucor (NUE) – A good company with a good dividend that hasn’t risen in many years even in a favorable regulatory environment.  Consider selling
  • Royal Dutch Sell (RDS.B) – large European oil & gas producer hit hard by oil price downturn.  Consider selling
  • Westpac Banking Group (WBK) – large Australian bank hit by recent market turmoil and other issues.  Has been stagnant or falling for many years.  Consider selling

Portfolio Five:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • Canadian Imperial Bank of Commerce (CM) – Canadian bank with high dividend that has been down more than the market.  Consider selling
  • General Motors (GM) – US car maker hit by reduced demand for cars and fight with the president.  Consider selling
  • Siemens (SIEGY) – German industrial company that is spinning off components and hit with market events.  Consider selling.  May look at buying pieces of the company later post restructuring

Portfolio Six:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • Royal Dutch Sell (RDS.B) – large European oil & gas producer hit hard by oil price downturn.  Consider selling
  • Exxon Mobil (XOM) – while well run and with a good dividend, the energy sector is facing significant challenges with reduced oil prices and this stock has been stuck and declining for a decade.  Consider selling

Portfolio Seven:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • General Motors (GM) – US car maker hit by reduced demand for cars and fight with the president.  Consider selling

Portfolio Eight:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • General Motors (GM) – US car maker hit by reduced demand for cars and fight with the president.  Consider selling


Portfolio Review December 2017

For our portfolios I created a summary view in Google Sheets that updates automatically.  I also “save” performance every month or so (per above) so that you can see performance across time.  Note that this performance also includes additional investments and withdrawals so it isn’t “apples to  apples” but is still useful.  Generally we’ve gone up a lot in total since May along with the total market, and been pretty steady for the last couple of months.

Since moving portfolios to Google Sheets, I also centrally review “all stocks” and update yield (which cannot be determined via a Google Finance formula) manually.  At this time I also go through the stock news and review some of the stocks that may be performance outliers, as well as remove information on stocks that we no longer track (like TTM and SAVE).

Some of the stocks noted:

  • Dow Dupont (DWDP) – the merger has been completed.  The stock is likely to split into three separate companies.  I think we will sell now and take our gains and review the companies later that spin out.  This also saves us from having just a few fractional shares (Portfolio 3)
  • Juniper (JNPR) – there were rumors of a buyout for this network equipment maker.  This company is at risk of remaining independent due to the migration to the cloud.  It went up with the speculation (and back down when it didn’t occur).  Would like to get the sale premium or see it embedded in the stock price.  The problem is that if the sale doesn’t happen, the price usually goes back down (Portfolio 5D)
  • Siemens (SIEGY) – the European conglomerate has held up better than GE in the face of the power meltdown (companies are not buying turbines as often anymore they are moving to solar and wind).  They are likely to spin off their health care business in Europe.  May be a time to sell (Portfolios 3, 5D)

Portfolio Three Updated August 2017

Portfolio Three is 10 years old.  The beneficiary contributed $5000 and the trustee $10,000 for a total of $15,000.  Current value is $19,143 for a gain of $4143 or 27%, which is 4% / year across the life of the fund.  See the details here or in the links on the right.

We have added some new, central analytics to this portfolio.  There are 3 stocks that we are looking at right now for being 80% – 89% of their 52 week high…

  1. ConocoPhilips (COP) – COP is an oil and gas company with a strong dividend.  It is at risk due to continuing low oil and gas prices.  We will consider selling it now
  2. Siemens (SIEGY) – Siemens is a successful European conglomerate with a strong dividend.  The stock is not far off 5 year highs, but down about 10-15% off recent peaks.  We will likely hold onto this stock
  3. Exxon (XOM) – Exxon is a lightning-rod political stock.  They are a well run company near their 5 year lows, hit by low prices for oil and gas.  We will consider selling it, but less likely than COP (above)

Portfolio Three Updated October 2014

Portfolio three is our third longest lived portfolio, at seven years.  The beneficiary contributed $4000 and the trustee $8000, for a total of $12,000.  The current value is $13,638, for a gain of $1638 or 15%, or 3% / year adjusted over the life of the portfolio.  Go here for the spreadsheet detail or click on the link on the right.

The portfolio has almost half turned over in the last year, as 5 new stocks were added, out of the 11 total.  A recent purchase LinkedIn has had some turmoil with the tech stock issues but is a good longer term play, but we will watch it.  We are also watching Weibo, a Chinese internet stock hit by the same tech turmoil.

From the more traditional stocks, Siemens has been hit as the Euro has fallen vs. the dollar recently.  We will also watch Yahoo to see what happens with the Alibaba stock they own post IPO.

Of the stocks we’ve sold, mostly it is good riddance.  In particular Cliffs’ Resources went off a cliff since we sold it, down from $18 to $7.  The stock perhaps could be a good candidate for a purchase in the future as a value play.  We are trying not to ride stocks like that too far down.

Portfolio Two Updated October 2014

Portfolio Two is our second longest lived portfolio, at over ten years.  The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500.  The current value is $25,036 for a gain of $8536 or 51%, which works out to about 7% over the life of the fund when adjusted for the timing of cash flows.  See the details here or the link on the right.

We will be watching a few stocks.  Transalta has declined and has a dividend that might be unsustainable.  Yahoo went up on the Alibaba IPO and we will watch what they do in the future.  Both Diageo and Siemens have been hit by the fall in the UK Pound and the Euro vs. the dollar and we will keep them on watch as well.

On Sponsored and OTC ADR’s

In the accounts I attempt to offer a mix of US stocks and foreign stocks, under the theory that most of the world’s economy is outside the USA and for beneficiaries with a long time horizon, it is important to go where the growth of the future will reside.  In addition, this gives us some upside (and downside) if the US dollar rises or declines because foreign currencies do not always move consistently with our dollar.

Generally I have offered as stock selections ADR’s sponsored on one of the major US exchanges, either NYSE or NASDAQ.  These sponsored ADR’s must conform with US accounting rules (called GAAP) and other requirements, such as Sarbanes Oxley, which add additional auditing and compliance costs and supposedly provide offsetting assurances that the financial statements are correct and free from some sorts of defects.

From the perspective of the issuer, the foreign company listing in the USA, this provides additional avenues to reach potential stock holders outside of their local market.  ADR’s are easy for US citizens to purchase because they trade just like US stocks and do not cost extra to purchase, and don’t have any “direct” currency risk because it is always quoted in US dollars (although there is implied currency risk since as the host country’s currency moves against the US dollar, this affects the price).

However, not all firms find it worthwhile to issue ADR’s to reach US stockholders, and many do not want to pay the additional costs to comply with US accounting and regulatory rules.  Thus you cannot purchase many popular stocks, such as BMW, via an ADR that is traded on a major US exchange (NYSE or NASDAQ), because it does not exist.

Another alternative is to buy an “unsponsored” ADR, meaning one that trades on the over-the-counter (or OTC) market, which is also called the “pink sheets”.  OTC stocks can be seen because they have different ticker symbols, usually ending with a “Y”.  The OTC markets have traditionally had a bad reputation because they don’t have the same listing requirements as NASDAQ or NYSE and have been areas of “penny stock scams” and the like for years.

There is nothing inherently wrong with being in the OTC markets, however, and recently one of our ADR’s, Siemens, de-listed from the “sponsored” markets and became an OTC or pink sheet stock.  It received a new ticker symbol SIEGY.  The old stock symbol ticker was SI.  The volume transitioned over seamlessly.  This article, from the Siemens company website, describes the delisting process rationale and how it impacts US stockholders.

1) What is the impact of the delisting of Siemens ADRs from the New York Stock
Exchange (NYSE) on ADR holders?
Until May 15, 2014, Siemens American Depositary Receipt (ADR) facility was a so called
“sponsored Level II ADR program” which meant that Siemens ADRs were traded on the NYSE and
that Siemens was subject to periodic reporting obligations with the U.S. Securities and Exchange
Commission (SEC). Since May 16, 2014, i.e., after delisting from the NYSE, Siemens ADRs are no
longer traded on the NYSE or any other stock exchange in the U.S. This does not mean, however,
that Siemens ADR facility was closed down. To the contrary: Siemens converted its “sponsored
Level II ADR program” into a so-called “sponsored Level I ADR program”. This means that investors
are still able to purchase, sell and trade ADRs, although trading is no longer on-exchange, but solely
off-exchange (over-the-counter).
On May 16, 2014, Siemens filed a Form 15F to deregister its securities with the SEC. As a result,
Siemens reporting obligations were suspended with immediate effect (e.g., Siemens will no longer
be required to submit reports on Form 6-K or annual reports on Form 20-F to the SEC) Siemens
expects that its reporting obligations with the SEC will finally terminate in mid-August. Irrespective of
the delisting, high standards of transparency in financial reporting and first class corporate
governance will continue to be top priority at Siemens.
2) What was the reason for delisting from the New York Stock Exchange (NYSE)?
The goal of the delisting and planned deregistration was to address the change in the behavior of
our investors. The trading of Siemens shares is nowadays conducted predominantly in Germany
and via electronic trading platforms or over-the-counter. Trading volume of Siemens shares in the
USA was low, amounting to significantly less than 5% of its global trading volume in the year 2013.
As a consequence processes of financial reporting are simplified and efficiency is improved.

Thus from Siemens’ perspective, it cost extra money to do US based accounting reports but there was only 5% of its trading volume in the US.  Since the German accounting rules are likely as useful to investors as the US accounting rules, there is little additional risk in a stock such as Siemens moving to the OTC market from the “sponsored” ADR market.

This doesn’t mean that OTC markets aren’t riskier or less regulated than Sponsored markets (like NYSE and NASDAQ) – they are and the instruments that trade there are generally riskier, as well.  In the case of Siemens, however, it likely makes little to no difference.

Depending on your brokerage firm, however, OTC stocks can cost more to buy than listed stocks.  You need to look at the fine print in your statement.  It may involve extra charges or a higher cost / trade.  I am not planning on buying “new” non-sponsored ADR’s as of now but I am interested in seeing how this ADR trades on the OTC markets and what sort of extra fees (if any) that I might encounter when selling it.

Another option is to buy directly in foreign markets.  For instance, my brokerage firm probably would allow me to buy BMW in Euros on the German exchange.  To do this my statement would become more complicated because I would have currency gains and losses and instruments quoted in multiple currencies, the US dollar and Euro (and then this would get more complicated as I added currencies of other countries, such as the British Pound, the Australian Dollar, etc…).  For now I am not doing this but I will watch it and as the costs get further reduced at some point this will be a likely option.

I always learn a great deal by going through brokerage statements and details and noticed the ticker symbol changing on Siemens and then investigating “why”.  I also learned a lot about currency withholding on foreign ADR’s.  I can also see the explicit fees that my brokerage accounting is assessing.  This information has made me a better and more informed investor and I hope to pass these insights on to the beneficiaries of these trust funds.


Stock Selections for 2014 and Diversification

Every year we select stocks right about the time when the summer ends and the kids go back to high school or college.  Doing this at the end of the summer gives them time to earn their $500 for the match and sets up a consistent annual pattern for how we make incremental investments.

Due to Stop Loss orders and other sales there is additional money that we need to put back into more stocks.  Many of the beneficiaries will have to make more selections.

Diversification and the Number of Stocks in Each Portfolio

As the portfolios get bigger, we also try to pick fewer stocks and put more money into each individual stock.  As a rule of thumb you have a “diversified” portfolio if you have about ten or so stocks equally weighted.  This only applies if the stocks themselves are diversified, however, across industries and countries.  Since most of the portfolios have stocks concentrated in a few sectors or countries, my “rule of thumb” is to try to go up to 15-20 stocks to get additional diversification.  At that point if we are buying newer stocks, I will recommend making larger single purchases and we can bring up the average value of stocks in the portfolio.

For example, Portfolio one, which has been growing for almost 13 years, has 17 stocks and about $34,000, with $2000 cash on hand.  Thus of the $32,000 invested in stocks, the “average” balance would be just under $2000 per stock.  While that is true, we still have a few closer to the $1200 mark and some that are larger than $2000.  New purchases will be made in excess of $1500 and as there are sales we will try to keep the portfolio at 20 or less stocks, and even 15 or so is probably about right.

Portfolio Two is also at a level where we have begun consolidating and buying in larger blocks, with 15 stocks, $22,000 invested in stocks, and about $3000 in cash.  Going forward we will also be buying in larger lots of $1500 / each and consolidating through stop loss orders and the like.

The other portfolios, three through six, are still at a level where it makes sense to make smaller purchases to get beyond the 10 or so stocks in the portfolio so that if there is a big drop in a single stock it won’t totally dent the portfolio.

Stock Selection for 2014 – Where to Look?

I follow the markets in general due to my line of work in finance and am aware of most sector trends.  I have some knowledge of foreign markets and macro economic trends but less so the further you move away from the USA.

I use Google stock screeners to look for stocks in the US and abroad, by looking at stocks with certain market caps (above $1B) and with other characteristics like price performance and dividend yield.  Much of the time I am looking for negative performance (i.e. stocks that have declined 0 – 25% over the last 12 months) because I believe that some portion of the portfolio should be tied to “regression to the mean” (i.e. what’s down comes back up) and some on growth stocks.

For foreign stocks I look at those that trade ADR’s in the US, generally on the bigger exchanges (NYSE or NASDAQ).  I usually don’t buy ADR’s on the “pink sheets” or OTC markets, although Siemens recently moved away from US accounting and consequently was de-listed from NYSE and picked up on the OTC markets, so I ended up buying one, anyways.  I don’t think it will trade that much differently than on NYSE but this is something to watch.

I have a lot of friends in the markets and ask them about stocks or types of areas that they find interesting.  Sometimes they laugh at me and tell me everything is overvalued but I usually can get some good ideas.

Barrons and some of the online sources also have interesting information, although I would never just buy something based on a single article.  No one should just buy based on something that they’ve seen on the Internet or based on a “tip”.

The standard boiler-plate warning is to “read the financials”.  This is true, although slogging through 10-k and annual reports with footnotes can be mind numbing.  They have to make so many disclosures of potential risks and there are reams of footnotes and much of this doesn’t directly impact the stock price.  On the other hand, I will look at their power point presentations available that the company makes to investors on quarterly calls or conferences where the company actually tries to explain “in english” what their strategies are and why their company is strong (which indirectly goes to valuation).  I also will look at various analyst reports on stocks, although once again this is more about sentiment in the market than any particular insight since those reports are often notoriously un-correlated with investor success.

In the end I thing through all this information, pick a bunch of stocks to watch for a while, and then cull this down to my list.  Sometimes I even re-recommend stocks’ I’ve previously had on the list, since many of the beneficiaries don’t pick them (if there are 8 stocks on the list often they only take 2).


Valuation is difficult right now with the markets hitting new highs.  For an individual, I wouldn’t recommend putting all of your money into stocks (especially individual stocks) like I do in this portfolio.  However, this money is different than a standard “nest egg” in that it is an investing vehicle for kids where they put in some money with additional money added that is designed to teach them about saving, investing, and the stock market.  It is “real” money and they either win or lose depending on what happens in the market, just like real life.  These lessons are sound and something that they will take with them through their whole life going forward.

While the portfolios have benefitted from rising values, they will now be putting money to work on new stocks with high valuations.  This cannot be avoided.  We will do our best to consider valuation with our new investments, and put in “stop loss” orders on stocks that are getting either too frothy or when we don’t necessarily want to ride all the way down if we’ve had big gains.  With this model, however, we do eventually put all the money back to work on new stocks, so overall valuation is always an issue.  This is a real-life investing lesson for all.

Timing of the List and Selections.

I will get these items selected in the next couple of weeks and start working with everyone on investing.  The kids need to get me a check and the money gets deposited and then they need to make the selection.  Everyone comes to the selection in different ways and it can be tough for them to make a decision about real money with real consequences.  But this is real life and decisions need to be made, which is a lesson in and of itself.  I want to get this done before they start going back to school by the middle or end of August.

The other thing that I have to do before then is update all the portfolios with the latest prices and valuations and dividends, as well as buys’ and sells’.  This also takes me a while because I comb through the statements and do it by hand as well as in excel.  Maybe someday I will farm out this process or create a system but for now I am doing it manually.  Maybe this is a 2015 project.  At least with google finance I can see the portfolios daily without doing much work and this is a big help for monitoring moves.


New Stop Loss Orders Entered

Back in October we set up some stop-loss orders.  None of these orders were executed because the market has been up since then (for my stocks, at least).  Since the orders didn’t occur they were free to set up and it is free when they expire (or I cancel them).  We did “pull the trigger” on some stocks that have been on watch (Riverbed, Bancolumbia).

Stop loss trades are good for 60 days, and then they expire.  Given that the market has been on a tear, it makes sense to set up some more stop loss trades in case we move into an extended downward phase – I don’t want to watch the run-up and then watch them go back down.

While there isn’t a “rule” on stop losses, I am going to make some now.  In general:

– I don’t want more than 1/3 of a particular portfolio in “stop loss” mode (this may not apply if you have only a few stocks, like 4 or 6).  These are long term investment vehicles, and I don’t want to deal with re-buying an entire portfolio after a 10% small market correction

– If a stock needs to be sold, then sell it, don’t use stop losses as a wimpy sales mechanism.  We did clean up a couple of stocks that were on watch recently

– Remember that while stop loss orders can prevent you from taking a big loss, they also take you “out of the market” if it goes right back up

– Sales near year end will generate gains that may generate additional taxes for the government.  In general these portfolios are not as tax sensitive because they are owned by individuals who don’t pay much in taxes but if we had a big selloff it could cause them to pay some additional amounts to Uncle Sam

– Finally, remember that money sold off needs to be re-invested.  Back in 2007 I sold off some stocks that made big runs, and we did well and many of the stocks haven’t reached their pre-crash peaks.  However, that money has to be re-invested, and often the stock you pick is as over-valued as the one that you are selling.  This isn’t a free lunch…

Portfolio 1 – 20 stocks

  • Urban Outfitters – URBN – at $35 (don’t want to ride this back down)
  • PM – recently dropped from $92 to $85… Stop loss at $80
  • SNP – went from 70 in July to 90 then down to $84.  Stop loss at $78
  • TSM – was down to $12 then up to $20 now at $17.  Stop loss at $15
  • CMCSA – from $37 to $50… a big run… At $44
  • EBAY – big rise and then recently from $58 to $52…  at $47

Portfolio 2 – 18 stocks

  • Urban Outfitters – URBN – at $35 (don’t want to ride this back down)
  • SI – from $82 to $131…  At $123
  • SNP – went from 70 in July to 90 then down to $84.  Stop loss at $78
  • WYNN – from $94 to $164… at $150
  • FB – $20 to $51, now $47… at 43
  • SPLK – $26 to $75, now $72… at $65

Portfolio 3 – 10 stocks

  • Urban Outfitters – URBN – at $35 (don’t want to ride this back down)
  • SI – from $82 to $131…  At $123
  • WYNN – from 94 to 164… at $150
  • SPLK – $26 to $75, now $72… at $65

Portfolio 4 – 10 stocks

  • NUE – from $41 to $55, now $51.  At $46
  • SSW – from $15 to $25, now $21… At $18

Portfolio 5 – 9 stocks

  • SI – from $82 to $131…  At $123
  • SNP – went from 70 in July to 90 then down to $84.  Stop loss at $78
  • SSW – from $15 to $25, now $21… At $18

Portfolio 6 – 4 stocks

  • SSW – from $15 to $25, now $21… At $18


Portfolio Five Updated November 2013

Portfolios Four and Five were both set up four years ago. The beneficiary contributed $2500, the trustee contributed $5000 for a total of $7500. The current value is $9,116 for a gain of $1616, which is 21%, or 6.6% / year over the life of the portfolio. Check results here or in the links on the right side of the page.

Recently two outstanding items in the portfolio were cleared up when we gave up on the metals company Alcoa, which is well run but faces ferocious state-supported Chinese firms willing to work at a loss.  We also sold Riverbed when it bounced up a bit as a raider considered a stake in the company.

The remaining stocks are either brand new (too soon to judge) or doing well.  We will watch Siemens which is near a 5 year high and not ride it all the way back down.  The current portfolio has 9 stocks, with 7 of the 9 being foreign ADR’s (the two recent sales were US companies).

Portfolio Two Updated July 2013

Portfolio Two is our second longest lived portfolio. We started this portfolio almost ten years ago. The beneficiary contributed $5000 and the trustee contributed $10,000 for a total of $15,000. The portfolio is worth $18,991 for a gain of $3991 which is 26%, or about 4% over the life of the fund (adjusted for the timing of cash flows). You can see the detail here or on the links on the right side of this page.

Currently the portfolio is doing well. We have only one stock underwater in terms of “total return” (price appreciation plus dividends) and that is WYNN, and it has come up substantially from earlier lows. Two technology stocks, SPLUNK and FACEBOOK, also have performed well recently (we bought FB near the nadir post IPO and it is getting near its IPO price of $38).

Siemens (SI) is a German engineering company that has missed earnings many times recently and they are looking to replace the CEO. That effort usually provides a good short-term catalyst for the stock and we will watch to see how it performs going forward. NIDEC (NJ) is a Japanese manufacturer that has gone down over recent years and cut its dividend; Japan has tried to rejuvenate their economy by reducing the value of their currency; in our US dollar terms gains in the stock price are often wiped out by depreciation after it is translated back into US dollars (done automatically by the ADR). Both of these stocks are now on watch.

While looking at stocks we’ve sold over the years, two have come back from substantial lows. Home Depot (HD) was sold back during the dark days falling out of 2009-10 but the stock has roughly doubled since then. USANA (the sales company) has also doubled since we sold them. A typical investment advisor wouldn’t bring up past sales that have gone against us but this is a portfolio not for profit just for our benefits and learning so we need to watch what happened. However, we have net done pretty well from the stocks we’ve sold, all things considered.

Stock Portfolio Review

In any portfolio it is good to keep and eye out for stocks that have had a big run up and might be at a point to sell as well as stocks that have dropped and don’t seem to have a chance to come back in the near term. We also watch for stocks that are just stagnant.

While we don’t rapid-trade in these funds we do rebalance occasionally. I am looking to re-balance before we buy stocks again as part of the annual purchase process (I contribute $500, they contribute $500, and then I “match” $500 for a total of $1500 every year) which happens at the end of the summer. Since many stocks are held in more than 1 portfolio I only describe them one time.

Portfolio One

– Urban Outfitters – low debt, seemingly well run, has recently had departure of top executives. Holding on a bit to see if they can turn things around since drop already priced in. if they don’t turn around by end of summer will drop

– Procter and Gamble – has been a core of the portfolio for a long time with a strong dividend. The CEO recently had a bad conference call and the company hasn’t been growing much when compared to rivals

– Canon – has been a good long term performer but Japan still refuses to have a stock market rally. Need to look at this more but want to have some Japan exposure

– Comcast – held on for a long time when the stock did nothing or tanked because believed in broadband growth and they also added and boosted their dividend over the years. Will watch to see if now it is over valued after the run up

– Ebay – another stock that did nothing for years and went down but finally came back. No dividend but basically a bet on pay pal since they sold Skype. Will look into this some more may want to take profits

– Exelon – the nations’ biggest nuclear utility. Now getting beat because of the low price of natural gas. This hurts coal much more than nuclear because nuclear always runs but it limits its profits, as well. They just took over a big Eastern utility. Will keep holding but watch

– Wal-Mart – recently ensnared in a bribery case. Given their massive size it didn’t move their stock price that much. They have been buying back shares aggressively and boosting the dividend which increases profits per share. On watch

– Philip Morris – had an immediate, great run up. Also a good dividend. May want to see for gains

Portfolio Two

– Also Urban outfitters, Wal-Mart

– Wynn – took almost a 20% hit out of the gate with the share holder dispute issue. Has regained half that loss. Still a great play on China gambling. Will watch

– Siemens – had a big run up but now back to break even. OK run but subject to Euro issues and overseas expropriation and potential corruption issues. Will watch

– Diageo – had big run up and fall, much of which was caused by gyration of UK currency vs. US dollar. Up now at some point may take profits

Portfolio Three

– Also Urban Outfitters, Siemens, Wal-Mart, Wynn

Portfolio Four

– Also Wal-Mart, Exelon

– Nucor – a well run metals company in the US that is subject to vagaries of US economy as well as foreign price competition. Will watch but hate to part with it because it is well run but may not be able to sustain high valuation (see Southwest Airlines)

Portfolio Five

– Also Seimens

– Alcoa is a company like Nucor, well run but hit hard by foreign competition and international prices and demand. Like Nucor would benefit from US rally post “great recession” but that never really materialized. Will continue to watch

– Riverbed – a company with high growth prospects that lost 30% of its value in a single day when they slightly missed their earnings. Held on and since they have hung on at about the same price. Will hold through an earnings release or two seems transient not permanent

Portfolio Five Updated December 2010

Portfolio Five also just started its second year of investing, with $3000 under investment. Portfolio Five has done reasonably well on a percentage basis, being up over 10%, to $3350.

Siemens is up substantially, even with the gyrations in the Euro, and it pays a decent dividend. The other stocks in the portfolio are up, and 3 of the 4 are foreign ADR’s. We are doing well early with this fund but performance gains on a small base are just a start, and we will continue to monitor stock performance closely.

Portfolio Three Update December 2010

Portfolio Three is on its 4th round of annual investing, meaning that it is a bit older than 3 years. This portfolio started during one of the most tumultuous times in the stock market, at least during my investing lifetime.

Total investment in this portfolio is $6000, with $2000 from the beneficiary and $4000 from me. In 2007 we sold China Mobile during what looked like a peak (still is far below that price, so it was a peak to date) but then got clobbered in 2008. With only a few stocks in the portfolio, it is at risk of total performance if even one stock does badly, and Nokia (NOK) just plummeted and frankly, like with portfolio two, we didn’t pull the plug on that stock soon enough. NOK just let its lead in mobile technology slip away when it missed the iPhone and next generation of smart phones and owning a large share of commodity phones with low margins won’t cut it. Also for those that view dividends (high dividends) as a path to wealth of course as the stock plummeted the dividend went down with it; you need earnings to support that dividend in the first place.

Recently with all that we are finally about back to break even; the portfolio is worth about $5900 (out of an investment of $6000).

Recent investments in overseas companies with ADR’s like Siemens (SI) and more recently a Canadian Bank (CM) and a Chinese oil company (CEO) have done well in the stock market run-up. Since most every issue has gone up (but the Chinese oil stocks in particular) it doesn’t take a genius to do well with the rising tides but it does feel good to get within a hair’s breadth of break even in this portfolio (as in “mattress status”, comparing against what would happen if you put the money under your mattress, a sad benchmark but relevant in these times).

With 5 stocks, the portfolio is still subject to large swings due to performance of a single stock, and we will watch them and not let them fall like we did with NOKIA, lesson learned there.

Another good thing about this portfolio is that we are able to do no-commission stock buys and sells, and there is not an annual fee for having the portfolio. Not having these charges adds up over time (they are essentially subsidized by my other accounts at the provider, which is fine with me).

Update on Portfolio Two Performance

Portfolio Two is my second longest portfolio and has been running for 6 years.

Portfolio Two started when the stock market was in rocky times and has finally climbed above break even, with a total investment of $10,500 and a value of $11,403. The portfolio has 11 stocks and thus is reasonably well diversified. Big winners (that we kept) include Exxon Mobil, Siemens and China Petroleum (SNP). In the past we had some major gains on sales for BHP and China Mobile, and some major losses on Nokia (just recent), Cemex and ICICI Bank. I should have sold Nokia sooner I won’t wait for that big of a loss when I see future declines before selling.

This portfolio benefits from the fact that now commissions are effectively zero on buys and sells since I am using my “free trade” allotment on this portfolio; this probably saves $60-$80 / year which adds up over time. Fees are also effectively zero.

This portfolio seems to be in a good place with regards to a balance between US and foreign companies (since the swing in the dollar significantly impacts values, and most economic growth is overseas) and we will watch the stocks here and look for potential sales of losers or opportunities to sell high for winners.

2009 Stock Picks

Every year I provide six stocks for selection for each trust fund. Generally each trust fund selects 2 stocks, in amounts of $700 – $1000 depending on available cash (some cash accumulates from dividends and prior sales).

1) WMT – Wal-Mart. Retailer from US.
Wal-Mart benefited from the recession which drives a focus on price and value. WMT is tweaking their international strategy to produce better results and is a well run company. WMT also provides a dividend of 2.2% and is trading not too far off its 52 week low

2) TEVA – Teva Pharmaceutical Industries (ADR). Generic drug manufacturer from Israel (and ADR traded on US exchanges).
Teva is another well run company that could do well in most scenarios involving potential health care reform, as well. This stock also provides some international exposure. They have a 1.1% dividend yield.

3) SI – Siemens (ADR). A German industrial conglomerate, Siemens seems to have put much of the scandals behind them and is poised to grow as Europe comes out of a recession. Siemens is also very active in the green energy business. SI is often thought of as a European GE, for better or worse.

4) NUE – Nucor. A US steel manufacturer. Nucor is an extremely well run company that has thrived amongst a difficult environment for US steel manufacturers (pretty much everyone else state side went bankrupt over the years, killed by unions and a lack of investment). There is competition at home and abroad (Ross bought up most of the bankrupt company’s capacities and fashioned them into a new company). Nucor also has a 2.8% dividend yield.

5) SNP – China Petroleum and Chemical Corp (ADR) (also known as SINOPEC) – A massive Chinese oil and chemical company. China requires significant resource growth to power their growing economy. Chinese companies are also better able to work in some developing nations that have dodgy human rights records, where US and European countries would face legal difficulties. This stock is an ADR and has a 1.5% dividend yield

6) ADBE – Adobe Software – US software company. Adobe has a franchise with the PDF technology and graphical tools. Adobe has a strong software business with low debt and cash on hand. Adobe does not pay a dividend.

For the stock selections wanted to attempt to balance:

US vs. non-US stocks – much of the future growth will take place outside of the USA, so limiting the portfolio to US stocks seems foolish. In order to ease difficulties on investing, only foreign ADR’s (which is when the stock trades on US markets like NASDAQ and the NYSE, mimicking the home market) are put on the list
Limited / manageable debt load – many companies were burned when the thought that they could easily use the debt markets to refinance debt at reasonable rates, which turned out not to be the case in the latest recession. For the purposes of this trust fund I would like to stay away from companies with significant risk on debt; at various times I have sold stock because of looming debt maturities (CX)
Small and large company sizes – while none of these are “small” or even “mid-sized” companies, I wanted to give some selections that weren’t absolute giants. Different sectors of the market behave differently in times of crisis and during a market advance