TMFHelical (99.03)

Helical Portfolio - The Discomfort of Success

February 02, 2012 – Comments (5) | RELATED TICKERS: JNJ , ROCM , WLP

One item I like to consider and note when doing an annual portfolio review is my mindset and outlook for the coming year.  Here is what I said just last month on that subject.

"I enter 2012 much like 2011, with low expectations.  There could be the opportunity for double digit returns if Europe doesn't blow up, but I think it will -- or at least it will continue to look that way.  I plan to be aggressively defensive in 2012 i.e. still own higher risk securities, but with a quick trigger and a focus on money management. "

So here I sit in January, with the Helical Porfolio up to $61,484.69.  That is:

+9.2% year to date

+20.6% CAGR from 1/1/2011

I have not added money yet so no IRR (not that I know how to do that yet in excel anyway).  No hurry either, other than the 4/15 contribution deadline for 2011, as I would leave the money in cash.  There have been no changes to the portfolio this month, and just a single dividend payout form Cardinal Health.

If you had asked me at the start of the year whether I would be content with 9.2% for 2012, I would probably say yes.  So ... when should I raise cash?  Reported earnings to date have been  lackluster.  Rochester Medical had its oft recurring 'timing issues with revenue' in the quarterly numbers.  I was on the fence about selling this ahead of earnings, but did not do so.  I've held this too long in the past, but am inclined to give this another quarter.  Wellpoint was a tad disapointing, particularly in light of a few bellweathers in this space reporting well (UNH, Aetna). I expect that customer erosions should end with the launch of exchanges for health care, but this remains to be seen and is still a ways off.  Finally, JNJ annoyed me with its earnings chalk full of some very large 'one time charges'(non-GAAP here seems to mean earnings before the failures of management). What tweeked me though was to tought in the call and annual presentation "28 consecutive years of adjusted earnings increases" Really?!?

Additionally, I am a bit at odds with what I might let go to raise cash. In my big round of selling last year, I tended to keep the more speculative plays, and reduce the stalwarts / ballast of the porfolio.  I'm not sure I feel that way now (undecided), and would likely be more balanced.

Enough musings for this month.  Looks like 2012 will be as mentally taxing as 2011 was, though that is part of the pleasure of investing (for me anyway, otherwise I'd be a buy and hold asset allocator).

TMFHelical

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