My Investing Notebook
:: Learning from the pros; making decisions on my own. ::
My Investing Notebook
:: Learning from the pros; making decisions on my own. ::
While at the Barnes & Noble today, I got drawned in by a title in US World & Reports: The 100 Best Mutual Funds for the Long Run. Sure enough, I found a few funds that I think are top quality.
The Yacktman Fund (YACKX)
Comparing it to Fidelity Contrafund, which is considered one the top funds, I can see why Yacktman is on top: 3 year return of 8.9% is much better than -0.2% for the Fidelity fund.
Sextant International (SSIFX)
Very good returns. Better than Marsico Global, also a top rated fund.
Fidelity Canada (FICDX)
Very good returns.
In my retirement accounts, I only hold Mutual Funds. Why? More security. More diversity. I’m also open to holding ETFs, which are almost like Mutual Funds, but I try to stay away from stocks.
It’s good to rebalance every year or so. It’s been a while since I’ve done it. But because we had a decent dip recently, I think it might be a good time for me to do so. Plus, I have come across some excellent Mutual Funds in the Kiplinger’s magazine — I always try to buy their yearly issue focused on Mutual Funds.
Here are some funds which I like and which I picked mostly from that issue. I’m entering trades as I’m writing this post.
Loomis Sayles Bond (LSBRX)
Pimco Total Return (PTTAX)
A pair of the best and most famous bond funds, as per Kiplinger’s.
Vanguard Total Bond Market Index (VBMFX) (also available as an ETF, (BND))
Another of our favorites, same source.
Harbor Fund (HABDX)
The portfolio of Harbor more or less reflects the distilled wisdom of Bill Gross and his colleagues at Pimco. Kiplinger’s top 25 pick.
Vanguard Infaltion-Protected Securities (VIPSX) (also available as an ETF, (TIP))
For added security, it’s always have to have some TIPS.
Fidelity Contrafund (FCNTX)
Recently reopened. Kiplinger’s Top 25.
Longleaf Partners (LLPFX)
Kiplinger’s Top 25. Impressive returns.
Marsico Global (MGLBX)
Very good returns. Kiplinger’s top 25 pick.
Vanguard Global Equity Fund (VHGEX)
Good returns as well. I like it.
There you have it!
There is a very good article on investing in the latest Kiplinger’s (Feb 2010) “Make A Buck Off A Sagging Dollar.” Their view is that the dollar is on the decline, and you better diversify. They have a few suggestions how you can do that.
I also think the long term the dollar does not look so good. Especially when comparing it to emerging markets.
Read on…
You can invest in emerging-markets bonds through Pimco Emerging Local Bond (PLBDX). “Pimco invests in 15 markets, including Poland, South Africa, Mexico, and Thailand.” It’s on the expensive side, though, with an annual cost of 1.35%. I try to stay under 1%, but this might be worth the price.
For a lower cost alternative, check Wisdom Dreyfus Emerging Fund (CEW). “This exchange-traded fund, launched last summer, uses futures contracts to provide exposure to money-market rates of 11 emerging markets currencies, including the Polish zloty, Chinese yuan and Chilean peso.” Annual fee is 0.55%.
Sell in May, buy in November?
It’s a technique that’s proven to yield good results. I wrote about it in 2007, see Sell in May, Buy Back in November.
Last year, the biggest losses were in that period. This year, I think it might be similar. Over the past couple of weeks, the stock market rebounded a great deal. I feel that stocks might be overvalued. Too fast too soon — that’s my general feeling.
I’ve sold several of my stocks recently. It’s not only because of this rule. I want to simplify my investing. I want to own companies that I know (TJX, PHG,NOK,F,CSCO,VZ are some that I’m sticking with). I want to own less stocks and more ETFs.
I’m going to test the impact of this rule, though. I have a larger share of my stocks in Consumer Staples (Kraft, General Mills, Procter&Gamble). Plus, I recently found a mutual fund that has a large short position, so in my retirement account, I investing a bit in it. It’ll benefit when the stocks go down.
I had a feeling that stocks were overvalued when the Dow reached 14K. But selling short is tough. I did several transactions, one of them was Wells Fargo. I did benefit, but with a wild stock market moves, I just bailed out. Investing in a Fund that has many short positions is better, I think. One that I found that is open and only requires $1K upfront is Comstock Capital Value R (CPCRX). It returned 57% in 2008! Had I known about these funds, I would have invested in them. Now I do, and this will help me in the long run. I learn something new every day. 
But this fund is expensive! 
It charges around 2% per year, I’ll have to find something else eventually. (Let me know if you know about something less expensive, that’s open and requires small position to invest.)
All in all, I think the stock market is due for a correction to the downside. The economy, though it seems it might be leveling off, is still in a bad position. Unemployment is high, foreclosures are mounting , house prices are sliding… Too much negative for the ecomomy to quickly rebound. I’m preparing for it a bit different this year, Sell in May, But in November.
Being well diversified is the key to long-term investing. If you were not, you probably learned from the recent correction. I began moving towards big, dividend paying, safe companies for some time. As a result, my portfolio is in good shape after the correction. The fact is, though, the economy is slowing and might even go through a recession. It doesn’t mean that there are no good picks. Actually, the best time to buy is during market downturns.
Here are some of the stocks and ETF that I’m currently looking at. I think technology is a good place to be in the near future. There is decent growth and the stocks do not look overpriced. I am going to have to pick on technology oriented ETF and invest in it.
Software and Technology ETFs
Software ETF ( (SWH))
iShares S&P GSTI Software Index Fund ( (IGV))
PowerShares Dynamic Software ETF ( (PSJ))
Technology Select ETF ( (XLK))
Town Sports Intl ( (CLUB))
Strong membership growth; profits should follow.
Here are the stocks that are “on my radar” now. I am doing a little re-shuffling in my portfolio. My objective is to have 10-15 quality stocks and invest in them regularly. (In addition to the ETFs I hold.)
Walgreens (WAG) » Pharmacy: ($44.1, S&P Rating: 4 stars, Great Value Line rating): Good company to own. Great appreciation potential. Recommended in Value Line as well as S&P Outlook.
WellPoint (WLP) » Health: ($127, S&P Rating: 5 stars): Recommended in Value Line as well as S&P Outlook.
Darden Restaurants (DRI) » Restaurant: ($31.4; S&P Rating: 4 stars): Owner of Red Lobster and Olive Garden is looking exceptionally well. Ready to deliver. Recommened by Value Line, S&P Outlook, and Barrons.
Amgen (AMGN) » Biotech: ($59.3; S&P Rating: 4 stars): I’ve always liked Amgen. I invested in it couple times before and always came ahead. The stock looks good, has good potential. It is recommened by Value Line and S&P.
Here are the stocks that are “on my radar” now. I haven’t been buying lately (only investing in stocks that I currently own — dollar costing, to be exact), but these look good…
Now, after February is gone — one of the worse months, historically — it might be a good time to load up on some stocks. This year, my strategy is to pick big, international companies as the dollar is weak and the economy might cool a little bit. I’m also investing in the following ETFs: SPY, VDE, VGT, VHT, VUG, EFA, EEM.
Citrix (CTXS) » Web Software: ($23.5, S&P Rating: 5 stars): Very good company to own for superior returns. I’m looking to get in. Recommended in Value Line as well as S&P Outlook.
Cisco (CSCO) » Network Gear: ($18, S&P Rating: 5 stars): Very good company beaten down. They will recover. One of the strongest players in the industry. Good long-term investment.
Coca Cola (KO): ($43.6; S&P Rating: 4 stars): International company with strong overseas growth. Beaten down.
General Electric (GE) » Electronics: ($36; S&P Rating: 4 stars): Strong inernational company. Good company to hold. Good price.
Hain (HAIN) » Foods: ($18.9; S&P Rating: 3 stars): This company looks interesting as we move more and more into organic, more healthy foods.
WebEX (WEBX) » Web Communications: ($23.4; S&P Rating: 5 stars): Leader in web communication. Looks cheap. Very good growth potential.
CheckPoint (CHKP) » Security Software: ($22; S&P Rating: 5 stars): Looks cheap. Very good growth potential.
Here are the stocks that are “on my radar” now. I haven’t been buying lately (only investing in stocks that I currently own — dollar costing, to be exact), but these look good and might be up for grabs soon.
Note, however, that September has been, historically, the worst month of all.
Advanced Data Processing (ADP) » Business Services: (S&P Rating: 5 stars): This is a good stock, good long-term play.
Applied Materials (AMAT) » Semiconductor: (S&P Rating: 4 stars): Chip stocks are down but because they’re cyclical they’ll bounce back. Applied Materials should do well. Good time to get in.
Cadence Design Systems (CDN) » Software: (S&P Rating: 4 stars): Good stock; cheap.
Car Max (KMX) » Car: Stock that was recommended in BusinessWeek (see article); I think it has a lot of potential. I like their business plan.
Sony (SNE) » Electronics: (S&P Rating: 5 stars): Recommended all over the place: good international player; safe bet; good long-term player. I’m looking to getting into it.
Phillips (PHG) » Electronics: (S&P Rating: 4 stars): Has always had good producs; seems cheap now.
Sybase (SY) » Database: (S&P Rating: 4 stars): Cheap; it will recover.
Sysco [Foods] (SYY) » Food: (S&P Rating: 5 stars): Just look at the stock chart for this market leader. Very cheap. Should do fine.
OK, you might have noticed that I stopped updating my stock lists. The main reason for that is that it was becoming painful to update the XML file with the picks (that’s how I stored them). I have not given up on stocks — I don’t think that will ever happen. I’m going to make my picks in this Stas on Investing blog, under the My Buy List category.
Investing in stocks is exciting. Although, I have to tell you that I bought some mutual funds and some ETFs, just to diversify a little more. OK, I’ll tell you which ETF I bought in the list below, as I think it is a good time to buy ETFs. What is an ETF? Exchange Traded Fund, that’s the name. It is basically a mutual fund traded like a stock. Get a little more info on ETFs here. I’ll explain how and where I’m putting my money in a seperate, later entry.
Nokia (NOK) » Communications Equipment: ($13, S&P Rating: 4 stars): I think that it might be a good time to get into buying this wireless equipment leader. This stock got hummered because they missed the analysts’ expectations. However, this is a very good long term play.
Standard & Poor’s Depositary Receipts (SPY) » S&P Index: ($110): I want to diversify my exposure to stocks a little bit. A good way, I think, is to buy an index fund. This ETF is basically the whole S&P index: it’s like owning every stock in the S&P Index. They have a 0.1% fee, which is low when compared to a reasonable 1% mutual fund fee. Index funds beat all of the mutual funds in the long run — that’s a fact.
Humana Inc (HUM) » Insurance: ($15.8; S&P Rating: 5 stars): Managed care company that’s oversold. S&P raised its rating on it from 3 to 5 stars (the highest) and they recommend buying it. It went down a lot.
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