September 15, 2012 Comments

I am certainly feeling “pumped” about my investment returns and the performance of the stock picks on this site this year. My own portfolio is up 22.6%. Almost all of the stock picks have done well. A notable exception is Research in Motion. But we did include the word speculative in that rating and subscribers who follow this site were aware that I personally invested only a small amount in that one and that it was discussed as a speculative stock. Also it is far from a dead company yet. Our best gainer this year is Toll Brothers the U.S. land developer / home builder up 78%.

On Friday the market managed to continue going up due to the FED’s action. But the highs in the market occurred Friday morning and there was a moderate give-back by the end of the day. I felt it was prudent for me to take a little money off the table and so I trimmed back my Wells Fargo and Bank of America positions by a modest amount. With these two companies my history has been to buy on dips (although not every dip) and trim modestly when they rise. This has worked out well.

For example my first Bank of America buy was at $9.50 on August 2, 2011. That was very poor timing as the stock immediately fell a lot ultimately getting as low as$4.92. Also I compounded my timing error by, in a spasm of over-confidence, buying way too much all at once in that first buy. Having bought so much it was very hard for me to buy more at lower prices, but I did so, although slowly. The buys at lower prices have resulted in the fact that I now have a decent profit position in this stock despite the fact that the price today is almost exactly the same as it was on my first buy. With Wells Fargo I certainly did not trade it perfectly but I made no major mistakes and I quite stubbornly bought it on dips over the past couple of years (at one point it was over 20% of my portfolio) and I (reluctantly) trimmed some on gains and that has all worked out well.

One reason for trimming positions is I want to have some cash on hand just in case there is a general stock market decline or in case I find a company that I don’t already own (or own much of) and that looks very promising. The other reason is just risk management. I don’t expect a large decline in these stocks to happen but anything is possible in the markets.

I have updated my personal portfolio composition.