Kobalt (81.94)

As the market recovers, my portfolio fades

April 11, 2009 – Comments (3) | RELATED TICKERS: OMEX , PFE , MSFT

Kind of neat effect this fading as the market improves.  My "Crisis Portfolio" worked during a falling market (at least on a relative basis), but during a rising / recovering market, my picks lag, in many cases big time.

Large caps are defensive and so do relatively better during a falling market.  However, in a recovering market, often smaller caps, speculative plays and growth stocks often do well.  Thus, half of my picks, which are large caps, are suffering - Johnson and Johnson, 3M, Pfizer, and Microsoft.

I think J&J and 3M are going to be great as later recovery plays.  Spectacular management, product lines and diversity, and plenty of room for global expansion. More on PFE and MSFT in a moment.

Materials companies are funny. Depending on their primary materials, they may be defensive, they may rise with a growing global economy, they may be inflation plays. Hecla was a bad purchase; I was going to say "just" but there is no such thing.  If you made a bad purchase of a stock at its high, and/or with a bad chart, and/or with bad prospects, and/or one whose management made bad hedging or other decisions, well, then you pay the price. Depending on the rules of the game you are playing, you need to make the decision that nets you the best result FOR THAT GAME. Frankly, I would love to see a CAPS for Dummies guide, it would be amusing to see what the best decision would be to keep/maintain a great score and prevent score erosion and how they differ from the real world. Sell Hecla or hold it until it recovers?

Barrick Gold, too, rises and falls not just on the basis of the price of gold, but also to what extent it hedged gold and the other metals it mines. One question I hear often is "The metal or the miners?"  I don't know the answer to that one...any answers anyone in light of the movement of the metal versus the miners circa early 2009?

Pfizer, in hindsight, was/is a value trap.  But the sign to everyone, without a doubt, was to sell when they announced the deal to buy Wyeth, a business like the one they had gotten out of just a few years earlier instead of three or so smaller biotechs.

On MSFT, I think that if they don't get their act together, they are screwed.  What is their plan for the netbook threat? What is their cloud computing plan?  What is their plan in the face of more consumer computing appliances as opposed to desktops?

Of my eight picks, only two of them are ahead on an absolute basis; Walmart and Odyssey Marine. My thesis on WMT remains, minimal competition, global expansion, well run.

Odyssey is still my favorite and most interesting pick.  I have written a little about it some and while it was a great lottery ticket, I now see it as a decent long term play as well.