Holiday Portfolio: Patience of Presidents

After only six weeks of market action in the new year, it's nice to have a breather. For many, it seems like we have been at 2008 for months, not just weeks, as the volatility can wear you down.

That certainly has been the case for the five stocks in the 2008 edition of the holiday portfolio. While diversity and dividends have provided some support for the portfolio, it doesn't make the daily swings and volatility any easier to stomach.

Now, with the promise of a day's rest, let's take a look at the five stocks in the portfolio. However, before we do so, let's review the reasons and the rationale behind the Holiday Portfolio.

The concept behind the portfolio is simple: I select a group of five stocks that I believe deserve watching over the next 12 months, and I follow them -- regardless of their performance -- throughout the year. I'll revisit the portfolio on each market holiday and, at times, make comments about the stocks in RealMoney's Columnist Conversation. The only way a stock is removed from the portfolio is if it merges with another company or ceases to trade on a major exchange.

The portfolio serves two purposes. First, it follows the fundamental progress of a group of stocks over a lengthy period of time. My hope is that the portfolio will serve as a forum for in-depth discussion of investment decisions and company strategy, and reinforce the importance of ongoing portfolio analysis.

Second, it provides an opportunity to look at both short-term trading strategies and longer-term investment strategies with the same stocks.

Patience and Perspective

In difficult markets, it's often easy to lose perspective, change behaviors and make poor decisions based on short-term data points. In times of real market challenges, it is important to stick to your discipline, do your homework and remain focused on your long-term objectives.

Diversity is one of the hallmarks of each holiday portfolio as we try to create a basket of equities that can work together to create opportunity in any market. I also stick to my core competence: stocks with solid, relatively stable growth potential, most of which pay dividends and fit my overall view of the macro environment.

While nobody is always right, the holiday portfolio will always be consistent. You won't see speculative, aggressive plays without a track record. Now let's see where we are thus far in 2008.

AltriaMO epitomizes that model as a diversified consumer staples company with vast product and geographic reach producing ever-increasing free cash flow and dividends. Recent volatility as a result of the Dow reshuffling should create opportunities for this all-weather stock.

Advanced Micro DevicesAMD is our cheap way to play the technology game, and it's getting cheaper every day. The second half of the year should provide a solid opportunity for patient investors.

Cheniere Energy PartnersCQP is the master limited patnership that will own the physical assets built by its corporate parent, Cheniere EnergyLNG. Cheniere's first LNG terminal -- the Sabine Pass LNG Terminal -- is scheduled to open in April and will be utilized by ChevronCVX and TotalTOT under 20-year contracts. The current 10%-plus dividend is prefunded for this year and then secured by the Chevron and Total contracts in the future. The yield was the attraction here, and to date, that strategy has worked nicely.

Equity Residential PropertiesEQR is an apartment real estate investment trust with "middle class" apartment assets from coast to coast. While some would argue a slowdown in the economy could affect performance, I will argue that I want to own rental real estate when ownership becomes more difficult.

In addition, if I am going to play the real estate game in a difficult market, I'll take Sam Zell on my team. The dividend should be safe, and even with the recent swoon in ERP shares, I can sleep at night.

Bank of AmericaBAC has recovered a bit since our last review but still faces the challenges of the financial markets. Patience here will also pay off, although ups and downs are likely to continue in the coming weeks and months. Use dips as opportunities and rallies the same way, if you are inclined to trade. However, we will likely look back 12 months from now and be happy with the dividend and growth of this national financial franchise.

Remember, volatile markets provide both challenges and opportunities. While the challenges seem overwhelming at times, the resulting opportunities are nearly always profitable. The challenges will pass and, as I said in January, your job as an investor is to make sure you remain in the game when it does.

Enjoy the holiday.

Holiday 2008: Barely Presidential Dividends Help Dampen the Volatility
	Recent Price	12/31/2007 Price	Change	Current Dividend	Current Yield
Advanced Micro Devices (AMD:NYSE)	6.53	$7.35	-11.16%	--	--
Altria (MO:NYSE)	72.69	$76.00	-4.36%	$3.00	4.13%
Bank of America (BAC:NYSE)	42.24	$41.42	1.98%	$2.56	6.06%
Cheniere Energy Partners (CQP:AMEX)	16.51	$15.80	4.49%	$1.70	10.30%
Equity Residential Properties (EQR:NYSE)	38.14	$37.04	2.97%	$1.93	5.06%
Unweighted Average			-1.21%		5.11%
Source: Company Reports, Bloomberg, TSC Research

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting