We got back from the Grand Canyon a couple of hours ago. Getting this close to an elk (we zoomed a bit to get the shot and are not as close as we appear) was pretty nutty. I've never been this close to one despite having been to the canyon quite a few times.This post will be the big picture post and Sunday morning coffee rolled into one. I don't have access to the computer with the camera for a video as Joellyn has to put the wheels back on the bus for whatever it is her stand-in has done with the spay/neuter program she runs.
I had 47 emails in one email account, another 14 in another and it took about two hours to work through them.
I was away from the market yesterday and just now checked how the portfolio did. I see that it was a good day for both the market and the portfolio.
A few names in the portfolio had a really good day, I'll look for news later. The point is not about good stock picks because in any diversified portfolio there should some stocks that had a great day yesterday it is about portfolio construction and the understanding that a well planned portfolio will work for you more often than not without you getting in the way of it.
While I prefer individual stocks in most instances this same effect of a well designed portfolio working for you is more about sectors, countries, cap size, volatility and themes than the exact stock picks. When the China theme is working everything goes up by some amount. The thing up the most today may not be up the most tomorrow but it will be up.
If you have a knack for picking the best performer within a theme all the better but if you get the theme right, and some of the other things mentioned in the previous paragraph, which is much easier than stock picking IMO, you will have success with your portfolio...if you just let it do it's thing.
12 comments:
Picture at upper right... Neil Cavuto... in a kitchen... eating an ice cream cone.
What's this all about, Roger??
where in the Grand Canyon did you go?
Pretty mellow elk; getting that close in the wild isn't usual, at least if there is a hunting season (I'm assuming you were on the Rim2rim trek and that was North Rim).
Certainly agree WRT portfolio construction and sector picking although it certainly is fun when one of the individual names really takes off (although it still burns me that I sold half my long-term AAPL position to generate a capital loss a few months before the iPod came out -- D@MNIT!)
OT: Assuming you're serious 6:13, that's our host with the cone in the upper right pic.
the elk was at the south rim. at the north rim see four wild turkeys and a lot of deer.
RW you make a good point with your AAPL example.
If you own a diversified portfolio of stocks (as opposed to funds) you probably have a couple of monster winners. It seems that predicting which ones will be the monsters can be tough which is all the more reason to diversify.
Example; have you ever an article about gold/mining stocks where the expert picked Newmont (NEM)? The logic is sound it seems like it should be a good pick yet in the last 12 months it has had a much more volatile ride on the way to the same return as the S&P 500.
Anyone thinking it would have been the winner wouldn't have seemed crazy but it just did not work out.
South rim? That would help explain the mellowness then, no hunting there. Never saw a wild turkey on the Kaibab plateau (NR) but I sure have heard them a time or two.
But, yes, NEM is another case in point. Should have reflected the sector but it just didn't. ISTR it started having problems with its trading desk rather than production problems: Gold majors are really two operations, mining and futures. I've also seen some stats suggesting that rising fixed production costs including energy expense have really hit the bottom line of all miners including gold; e.g., IIRC in 2000 the cost of production was something like $275-325 per oz on average for most producers and now (assuming my figures are semi-correct) it's closer to $475-550.
I own a gold index equity fund and GLD but all my individual names in the PM sector have been juniors or mid-caps the past few years; volatile true but the risk/reward ratio was usually better (sometimes much better) than the majors I investigated.
Models this week:
Timing Model = 3.0
100% long
Global Allocation of long positions
MSCI EAFE Index 30%
MCCI Emerging Markets Index 30%
Russell 3000 Index - U.S. 40%
Top U.S. Sectors
Composite Internet 4.5
U.S. Oil & Gas 4.5
U.S. Oil Equipment, Services & Distribution 4.0
Precious Metals 3.5
U.S. Basic Materials 3.5
U.S. Biotechnology 3.5
U.S. Technology 3.5
Top Intl ETFs
FTSE/Xinhua China 25 Index Fund 3
MSCI Brazil Index Fund 3
MSCI Emerging Markets Index Fund 3
MSCI Hong Kong Index Fund 3
MSCI Pacific ex-Japan Index Fund 3
S&P Latin America 40 Index Fund 3
MSCI Australia Index Fund 3
MSCI Singapore Index Fund 3
MSCI Canada Index Fund 3
Strategy 3
EAFE 11.1%
Emerging Markets 11.1%
Money Market 11.1%
Industrial Materials 11.1%
Agriculture 11.1%
Precious Metals 11.1%
U.S. Large Cap 11.1%
U.S. Small Cap 11.1%
U.S. Long Bonds 11.1%
U.S. REITs 0.0%
TomK,
The broad etfs are not everyone's favorites and to my constant surprise every year there are a few that have amazing and superior performance. This year: epp40%, ilf52, eem39,...and a little further down the etf for efa/growth 19%. I suspect you had a great past week.
RW,
I've been getting acquainted with the miners sinceSpring; the big money is made there. XAU overshoots bullion going up or down. Agree totally about the issue of production cost as a damper. GDX is not a bad way to capture returns but investing in individual miners takes a lot of knowledge mostly in the human network and not on the web. I decided to realize gains late last week but still have some exposure. Do you know of a CEF that you like for the miners? Gabelli...maybe GNN...has a nice dividend but seems to track the more liquid GDX./jasper
Jasper, don't really follow gold cef's, sorry. I've used BGEIX for more than two decades to move in and out of gold equities (mainly because Harry Browne liked it in combination with the old Capital Preservation Fund, they were both part of Benham Funds back then) and it's become a habit; GDX pretty much displays the same performance. The old International Bond Fund (BEGBX) at the same firm is still one of the few to maintain a policy of no currency hedging so I find it convenient to stay there as part of my inflation/dollar decline strategy. Of course it could also be that it's because I've become a stick-in-the-mud too as my wife might say (LOL) but there it is.
RW,
When you trade mutual funds do you not have trading restrictions? (Sorry, i had to google harry browne, though his name did ring a bell.)
Roger: I caught the Red Sox debacle via Yahoo sports yesterday at my sister-in-law's house. I don't think we'll ever see Eric "Donnie Moore" Gagne pitch again. Be back Friday.
Larry
dude, the Donnie Moore joke is a little rough.
i missed the 11th inning, we had a little fire that i responded to with one other guy, back by 1130pm but the game was over and not even in the TIVO anymore.
Anon 6:54, I do not adhere to Browne's model but my strategic portfolio does resemble it in some respects; e.g., some asset classes are designed around macro-economic scenario w/ upper and lower limits (bands) to class size; I adjust those using relative strength techniques primarily.
Post a Comment