2011 is off to a pretty good start. As mentioned earlier, this is the 5th straight month where I've improved on my previous year's results. And this month represented the 6th best month to date for realized gain. And even though I had a CD mature during the month, I managed to increase my percent invested. As a result of this aggressive push to invest, I'm in the red for my unrealized positions.
Sales this month:
- ConAgra Foods, Inc - 9% gain for 2 month holding
- EnCana Corporation (USA) - 12% for 4 month holding
- Lockheed Martin Corporation - 10% for 4 month holding
Current holdings and unrealized gains/losses are as follows. Note that I've made significant investments in new stocks this month with 6 new holdings. As noted above, most of these are temporary losers. However, five of six of the new holdings were bought at a premium and it's reasonable to expect that there might be follow-up opportunities to double down on these holdings and increase eventual gains.
- Exelon Corporation - Down 2.5% (-4.5% in Dec, -9.7% in Nov, -9.3% in Oct, -5.4% in Sept, -9.6% in Aug, -7.1 in July and -15.7 in June).
- FirstEnergy Corp. - Up 6.0% (+0.3% in Dec, -4.8% in Nov, -2.7% in Oct, +1.8% in Sept, -3.5% in Aug, -0.4 in July and -6.9 in June).
- TeleCommunications Systems, Inc. - Down 8.0% (+5.0% in Dec, +4.1% in Nov, +21.9% in Oct, -12.1% in Sept, -30.7% in Aug, -26.4 in July and -31.5 in June).
- National Grid plc (ADR) - Up 3.3% (-0.5% in Dec, -1.4% in Nov, +6.4% in Oct, -4.2% in Sept, -5.5% in Aug, -9.0 in July and -17.4 in June).
- Kellogg Company - Up 2.1% (+3.7% in Dec, Even in Nov, +2.0% in Oct).
- Universal Corporation - Down 2.3%
- Colgate Palmolive Company - Down 1.9%
- Life Partners Holding, Inc - Down 9.9% - Bought on bad news. Stock continued to drop.
- Lorillard, Inc - Up 2.3%
- General Mills, Inc - Down 2.6%
- Abbott Laboratories - Down 1.6%
The following dividends were collected:
- National Grid plc (ADR) - Annual dividend
I'm becoming more and more interested in exchange traded funds (ETFs) as a way to capture the movement of the market without having to actively manage my account. As mentioned in earlier posts, I'd hoped to dabble in Index mutual funds and/or ETFs as part of my evolving strategy.
While I continue to think these have a place in my strategy, I remain mystified about how I would actually do this. In fact, this morning, I got quite a shock to my assumption about the behavior of these funds.
As an experiment, I compared the yields of four ETFs which as based on the S&P 500. My first experiment supported this. When I compared the yields between SPY, IVV and the S&P Index itself, I found them almost indistinguishable.
Then I compared some other ETFs and found quite a surprise. When I compared, SPY, SSO and UPRO, I found that that there was some kind of multiplier effect at work where the yields of some ETFs are doubled and tripled. So clearly all S&P 500 ETFs are not the same and there are some very deliberate actions afoot to provoke this multiplier.
Next steps, I need to figure out why the yields are different and which (if any) of these funds will best complement my current strategy. It's easy to see that a very bullish or very bearish investor could benefit from one of the multiplied funds, but I'm not sure how this fits into my balancing act where I hope to be cope with market upturns or downturns.
hmmmmmm.
Last week I assessed the adjustments that I made at the start of the year and found myself lacking in some areas. This week had a couple of down days, so I was able to take advantage of these in light of my revised strategy.
Take profits sooner - I made another sale that put me ahead of January 2009 gains. I'm pleased to say that the last five months have represented higher realized gains than their previous year counterparts. Last March was a pretty impressive month (4th best ever), so it will be challenging to extend this streak for much longer.
Quit bottom feeding - I did much better on this jumping into two new holdings at a premium price. One of the two are down at the end of the week, but that doesn't trouble me because I have plenty of funds to double-down if necessary as my strategy dictates.
I also had buy orders on two other stocks that did not fire. I was especially disappointed with GIS (General Mills). I set my buy price at $35.70 and the price briefly bottomed out at $35.70. Unfortunately my order didn't fire (I guess there were many other buyers at that price). The stock then jumped up to $37.20 the next day. It wouldn't have been enough to trigger a sale, but a 3-1/2% one day gain always feels good.
Reduce or cap investment pool - No real change here as my sales and purchases from the last week cancelled out each other. But as long as I generate turnover, I generate realized gain. So I'm happy with maximum turnover and good liquidity.
Dabble in Index Funds - Not yet, but if we have a string of down days, I'm ready to jump in. I think I've also found a solution to my natural avoidance of mutual fund companies. They have played a role in my hesitancy to jump in to index funds. I've learned that there are ETFs that track indexes too. I haven't done a lot of research yet, but it appears that there are some out there. I would prefer to buy into these because you have better transparency. Also, you're not constrained by holding periods.
The adventure continues!
Well, I finally took the plunge into new technology for trading. I've been struggling with the decision to buy a smartphone that would allow for easy monitoring and trading without being tied to the computer.
The main question has been whether to go with iphone, Android or Blackberry.
Blackberry was immediately out of the running because it seems to be more email focused with other apps taking a backseat. Perhaps this is a false impression, but I didn't seriously consider this option.
iphone is clearly the leader and in fact, my broker (Firstrade) has a iphone specific app). So this would have been the easy choice.
However, I elected to go with an Android. I specifically selected the HTC G2 because I use Google Docs so prominently in my screening and tracking. Also, Firstrade has promised to follow-up with an Android app.
So far, I've made some changes to one of my spreadsheets to allow for easier viewing via the mobile platform. But I'm sure this will result in many other changes to my trading approach in the coming months.
Last April I contemplated three telecom plays. I eventually bought in to all three companies.
- Telecomunicacoes de Sao Paulo (TSP) - 6.5% realized gain
- Nokia (NOK) - 12% realized gain
- Telecommunications Systems (TSYS) - This continues to be a roller coaster ride, but I'm holding on because I believe there to be a large upside. I'm sitting with an 11% unrealized gain, but I've seen this rise to as much as 21% in October, and be as low as -30% in August. The good news is that I've been in the black since October on an overall basis. But I am in the red with my Roth holdings.
I sure hope to close the book on this soon as I've not collected dividends on any of these holdings. TSP and NOK paid annual dividends and I did not hold at time of payment. But TSYS pays no dividend.
At the end of 2010, I reviewed my performance and identified some areas for adjustments.
- Take profits sooner (B) - I've made two sales in January and gained 9% and 12%. Naturally, the stocks continued to rise after I sold, but not so much. So I have recognized gains that I would not have otherwise had.
- Reduce or cap investment pool (F) - This one is tough. I had another CD called, so I've actually went in the wrong direction and the investment pool is now larger than ever leaving me only 43% invested.
- Quit bottom feeding (D) - I haven't bought anything at a premium price, but prices have been rising. Nonetheless, I need to get more fully invested and overcome my cheapness. This will also help me convert some excess cash into dividend or interest income.
- Dabble in Index Funds (D) - I've identified a preferred fund (VFIAX - VANGUARD INDEX TRUST 500), but have not taken the plunge. Mainly because I want to bottom feed on funds too.
- Don't sweat employment (A) - My current project is NO FUN and has been dragging past the original launch date, so I'm looking forward to it wrapping up, even if it costs me a paycheck.
Overall Grade (D) - The rising market has made it difficult to execute on many of these adjustments. My overall strategy has assumed some volatility and there simply hasn't been any. I hopeful that there is a correction of some sort in the next 3-6 months. Otherwise, I will likely continue to get poor grades.
