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Diversification

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August 10, 2011 – Comments (0) | RELATED TICKERS: KNM , CLCT

I've been holding onto some stocks that a lot of you would call real dogs.  KNM, which I've held on and off since 2005, is one of them; for the past 3 years it's been stuck in a very narrow trading channel at around 19-20.  I was overweight it, then sold some of it at 40 in 2006 or 2007 - don't recall - so with my cost basis in the remainder at about 30, I had more or less broken even and just caught the annual 2% dividend every year at the low price.

During the last month it's gone on a tear and it's now at 31, making most of those gains in the last week.  Would you believe a lot of the rest of my portfolio didn't do so well during that time?

Another standout in the last month has been CLCT.  Take a look at its 'vs S+P 500' chart; it looks like a mirror image.  I guess an 8% dividend and a long history of price stability looks different to a lot of people after the events of this week.

I don't really care, because I have a long time horizon on all these stocks, plus all the ones in my portfolio that got trashed in the last week.   I'm not selling - so I don't care what today's prices are.  They're not relevant to my shares because I'm not trying to sell my shares.

But it's nice to reap the psychological rewards of a diversified portfolio.  Makes me feel like I'm doing something right even when the market is going wrong.

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