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TMFHelical (98.70)

Portfolio Review II



January 02, 2011 – Comments (1)

In my prior post, I mentioned an exercise where I tried to see if the moves I made during 2010 benefiter my portfolio or not.  But moving forward, how am I currently shaped.  I again don't have high expectations for 2011 in terms of the market going up substantially (> 10%), but perhaps better than I felt about 2010.  I think another correction is in the cards, but perhaps pushed off further into the future.

Allocation strategy is the same as detailed last year.

Allocation    Target  Actual(09end)    Actual(10end)   

Alt. Yield       10%            9.1%                 13.9%

Fixed Inc.      10%            9.8%                     0%

Cash               0%             7.4%                 14.4%

REIT             10%             9.9%                  11.6%

Inc. Secur.     20%          20.6%                  22.5%            

Small Cap      20%         17.4%                  16.7%

Foreign          25%          19.3%                  18.1%            

Sect. & spec.  5%            6.3%                    5.3%

I find myself entering  2011 with an emphasis on income generating securities, but not fixed income i.e. equities with the ability to raise payout over time.  Also some cash on hand.  The alternate yield allocation still has mainstay EPD, which has had a nice run and may be overvalued, but is worth keeping in the port.  IRAs aren't the best place for MLPs, so I may shift this out.  I replaced NLY with more risky sub-companies Chimera and Crexus.  Their even lower leverage than NLY should make them less susceptible to interest rate rises, but they hold riskier assets.  I got a nice return on a fixed income CEF in 2010, but that was partly due to spread compression vs. treasuries, and potentially won't last.  Income securities are mostly US Income Investor recommendations of dividend paying equities.  Never too highly allocated here in my opinion.  The REIT segment is anchored by HCN, but I've added some smaller allocations to compaies like ROIC as well.  Small cap is an area of high turnover for me.  Even here I tend toward companies that pay dividends but will harvest profits and cut losses here fairly regularly.  Foreign allocation has seen the largest changeover for me.  I was even further underweighted here during the year, and expect to continue so for a time longer.  I've also again embraced owning funds here rather than struggle with individual companies.  I have some mainstays like DEO, and a couple of pharmas, but also MINDX, CHN, and PID.  I can only focus effort in so many places.  Sector and Specialty holds Apple and Bank of America Warrants.  It is a catch all allocation space for me.  I want Apple through the holidays, but perhaps not much longer (we'll see).


End of year always for me includes a subjective risk assessment.  This is an entirely subjective effort based solely on my 'impression' of the riskiness of the holding to me and my port.  A company like EPD for example, even when fairly to over valued, isn't ever high risk in my opinion.  Small caps, especially technology based ones, almost always are risky.  The subjectivity is manifest in for example my considering NVS to be low risk, and GSK moderate.

                            2009 end     2010 end

Low Risk               50.8%           52.1%

Moderate Risk       34.6%           26.4%

High Risk              14.6%           21.6%

So, I've reduced (in my impression) some of the mid-level risk.  This is still pyramid shaped, which is intentional, and I note my 'base' widened.  I think a number of energy picks in the small cap space drove up the risk, but I'm comfortable with this and perhaps more high risk speculative (Rule Breakerish) investments.  Should I employ cash, mid level risk may be a focus / consideration.

As always, this commentary is largely for my own record keeping and is part method to gather my thoughts on my port.  Happy to share though.


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1 Comments – Post Your Own

#1) On January 02, 2011 at 12:43 PM, Option1307 (29.90) wrote:

Great series, +1!

it's always a good diea to review your holdings at the end of the year and see how things are going etc.

I don't like to put too much weight into my yr./yr. return because I don't want to fall into the trap of typical mutual funds etc. that try and juice quarterly profits simply for the sake of "having a good quarter" on paper. However, year end reviews are a great idea!

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