My single largest stock holding is Apple, Inc. (AAPL). In fact, AAPL has become such a large part of my portfolio that I had to stop buying in, despite loving the stock and the company, because I was concerned it would become larger than 5% of my portfolio. I was actually thinking about selling some but decided that just not buying any more would likely work over the course of a year.
And now, AAPL has hit another all time high on the news that its iPad tablet, long awaited and recently announced, will be shipping–late.
Sometimes I’m just amazed by what causes a stock to soar.
February, of course, is the shortest month of the year, but it seems it was long on gains for our model portfolio. Let’s look at how our funds did last month:
The Vanguard Total Stock Market Index (VTSMX) was up 1.86% in February, while still paying that 1.94% yield. In our international segment, the Vanguard Total International Stock Index (VGTSX) was down 1.44% and paying a 2.51% yield, meaning that while not having a spectacular month, the stock portion of our portfolio had a positive gain.
In the fixed income section of our portfolio, the Vanguard Total Bond Market Index (VBMFX) was essentially flat, up a penny, but a statistical 0.00% increase, with a yield of 3.96%. Our other fixed income fund, the Vanguard GNMA Fund (VFIIX) was up a little more, 0.12% and yielding 3.71%.
So, while it wasn’t a great month, it was a positive one for three of our four funds and the majority of our portfolio. Let’s hope March keeps building on these gains!
When I reviewed my model portfolio in January–which, as stated, was not a great investing month, even though it wasn’t awful either–one thought went through my mind: “Correction”.
A stock market correction is a short term drop in prices of about 5 to 20 percent. It’s not really clear why this happens, and it’s not really clear when it’s a “correction” and when it’s the start of a much longer, more destructive bear market.
With this week’s rally in the market and my portfolio right around an all time high–again–I’m hopeful that we’ll see the market continue to move higher for awhile, rather than fall into the doldrums we did in 2008.
As those of you who have followed this blog for awhile know, I have a model portfolio made up of four funds, two stock and two bond, that I track regularly. This is actually essentialy the portfolio I have in my 403(b) as well.
Any portfolio where asset allocation is a consideration–that would be every investment portfolio–needs periodic adjustment. For me, that adjustment happens yearly. Quite frankly, if the adjustments are very minor I often leave the portfolio alone, just because it’s often more trouble than it’s worth. That’s not the case this year.
If making adjustments to your portfolio, please consider fees (commissions from sales, for instance) and taxes (which is not an issue here since these funds are all contained within a 403(b)).
Also, consider what your overall asset mixes are. For instance, last year I decided on a more aggressive than usual 75% stock/25% bond allocation; this year I’m going back to my usual 70% stock/30% bond mix. Of the stock allocation, 47.5% is a domestic stock index and 22.5% is an international stock index; with bonds, 15% will be a total bond index and the other 15% will be a GNMA fund.
To match those up with the funds I discuss in the model portfolio posts, the domestic stock fund is the Vanguard Total Stock Market Index (VTSMX), the international stock fund is the Vanguard Total International Stock Index (VGTSMX), the domestic bond index fund is the Vanguard Total Bond Market Index (VBMFX), and the GNMA fund is the Vanguard GNMA Fund (VFIIX).
Turns out that I will need to take a bit off both my domestic and international stock funds and put them mostly into VFIIX but a little into VBMFX. I will work on that today!
Let’s be honest: 2009 was a banner year for investing. How will 2010 fare? Early in the month it was looking like 2010 would be picking up right where 2009 left off, but the end of the month showed pretty mediocre results:
The Vanguard Total Stock Market Index (VTSMX) ended the month down 5.09%, despite starting the month quite well–remember, this is the largest single component in our portfolio and pays a 1.94% dividend yield. The Vanguard Total International Stock Index (VGTSX) did worse, down 7.44% while paying a 2.51% dividend yield.
In the fixed income portion of our portfolio, the Vanguard Total Bond Market Index (VBMFX) finished January up 1.16% while paying a healthy 3.96% dividend yield and the Vanguard GNMA Fund (VFIIX) up a tiny 0.94% but paying a 3.71% yield.
It wasn’t the best month, but let’s see how the rest of the year goes. Investing year 2010 has just begun!
The 401(k) match, where an employer matched up to a certain contribution by an employer into their retirement account, largely disappeared last year in the midst of the economic crisis.
Now, according to CNNMoney.com, the 401(k) match is back.
While a whole bunch of companies discontinued or at least cut back on their 401(k) matches last year, 80% of the ones who eliminated their matches are saying they’re going to restore them this year.
That’s a huge help for folks saving for retirement and a positive sign that an economic recovery is underway.
Fortune.com recently posted a piece entitled “Meet the Market’s Biggest Losers”, profiling the ten companies that have lost the most in market value over the last decade.
Seven of the ten companies–Cisco, Intel, Microsoft, Nortel, Lucent, AOL, and WorldCom–were in the tech industry. The others were General Electric, AIG, and Exxon Mobil.
Yes, many of those seven are still huge players (particularly Intel, Microsoft, and Cisco), but it apparently shows that some tech companies–and the sector as a whole–really never recovered from the tech bubble.
The stock market had been cruising upwards at a nice clip in January month until the latter part of two weeks ago, where it gave up just about all of its gains for the month (and therefore the year). This is the kind of time when Chicken Littles start running around declaring how the stock market is about to self destruct.
Yes, it’s true, just about all of the gains in my portfolio for 2010 went poof just now. But at the same time, we’re less than four weeks into the new year and it’s not like I’m investing for four weeks–this is a many year long process. What’s interesting is despite all of the changes that have occurred over the years, the market is still the market, and doing the smart, time tested things works out: invest in quality products, keep expenses down, use whatever tax advantages you can, and hold on for years if not decades.
Three days this past week doesn’t change decades upon decades of reinforcement.
Bank of America (BAC) is not a stock I bought because I thought the company was great. Rather, it was a calculated risk based on its stock price, its dividend, and the fact that the government was not about to let the banking system of the United States fail.
Since I purchased it last year, the stock price has more than doubled.
I certainly don’t expect that growth to continue, and I’m not really even sold on it as a bank (when they had operations here in Hawai’i they did not have the best reputation). Unlike Amazon, I don’t feel like I need to justify to myself why I’m selling it, because I really don’t believe in the company; I just bought it because I thought the stock price was low, the dividend (at the time) was relatively high, and that they wouldn’t be allowed to collapse.
So I’ll take my profit on this one and run. Simple as that.
DuPont (DD) is a stock I have mixed feelings about. I’ve held it in my portfolio before and it’s always bought with the intention to re-evaluate year to year if it has more upside potential. I’m not sure if it does or not right now. Year over year it’s doing a hair better than the S&P 500, but I’m not sure it can go much further.
It’s one of those companies that I believe cycles in stock price; it gets beaten down more than the index, and when it rebounds, it either matches or does better.
That is at least what I believe. Whether history will support me is unclear, and it’s totally unclear whether the future will. To some extent, investing in individual stocks–particularly the ones I don’t believe in long term–is a gamble, so this one is a gamble that I believe has paid off, at least enough for me to ditch it, take my profits, and find another (small) gamble.
