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Labor Day is a celebration of the traditional end of summer for most folks, but, for investors, it's simply a short reprieve from the daily labor of watching a churning market and trying to determine which way it will move on any given day.

To say that this has been a difficult market is an understatement. Concerns over the direction of the economy, the price of energy and the future of finance have dominated the investment landscape, causing individual company fundamentals to take a back seat to much larger concerns over liquidity and, in some cases, solvency of entire sectors.

Moreover, with fall approaching, another exogenous variable creeps into the mix -- namely, the 2008 Presidential election. Talk of tax hikes, especially adjustments to the capital gains rate, is likely to impact market psychology with each new poll and pontification regarding the next resident at 1600 Pennsylvania Avenue.

One constant in this market, however, is that, for every long weekend, you can count on a revisit of the Holiday Portfolio. Like the broader market, the holiday portfolio has hit its share of bumps in recent weeks.

Good, Bad or Ugly

The concept behind the holiday portfolio is simple: I select a group of five stocks that I believe bear 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


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 discussions on investment decisions and company strategies, and for reinforcing 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.

Got Gas?

We start this holiday analysis with a stock that deserves some special attention,

Cheniere Energy Partners

(CQP) - Get Free Report

. Cheniere owns the Sabine Pass liquefied natural gas (LNG) re-gasification facility, a new development capable of receiving cargoes of LNG brought to the Gulf Coast from distant parts of the world.

Nearly five years ago, there was a nearly universal believe that LNG would become a key component of U.S. natural gas supply by the end of this decade. Domestic gas production was declining, Canadian exports to the U.S. were waning, and Mexico became a net importer of U.S. natural gas.

The solution was to liquefy natural gas, put it in a massive oceanliner (nothing more than a mega-thermos that floats) and bring it to the U.S -- at least, that's what I and others believed was the solution. To do so, however, the U.S. would need a new generation of terminals to accept and store the LNG and the infrastructure to warm it back into gas for use at home.

Cheniere, which is a master limited partnership along with its parent,

Cheniere Energy

(LNG) - Get Free Report

), was not only a major proponent of the plan but an emerging leader in LNG terminal development. Even today, the plan continues to make sense.

Competing demand from around the globe for LNG supplies (coming primarily from the Middle East and West Africa), however, was an unexpected development. As a result, LNG prices in places as diverse as Japan, China, the United Kingdom and Europe rose well above U.S. natural gas prices.

So LNG suppliers have chosen (so far) to take gas to markets other than the U.S., creating a concern that the original belief -- namely, build a gas terminal, and the imports will come -- was wrong.

Combined with financial stumbles at Cheniere's parent company, the lack of supply has caused investors to abandon Cheniere's LNG vision and punish the stock price. At today's price, while the units provide an enticing yield, many feel that the risk of a dividend cut is too high to hang around.

On paper, the dividend is escrowed through this year and then should be met by long-term contracts for terminal capacity with


(CVX) - Get Free Report



(TOT) - Get Free Report


Some argue, however, that the parent's liquidity challenge, combined with a lack of gas flowing into the Sabine Pass facility, may provide an opportunity for Chevron and Total to rework the terms of the contract, putting pressure on the Cheniere organization. While possible, the option to have the capacity to bring gas to the U.S. likely remains of value to the two majors.

This is not a play for the faint of heart, and there is liquidity risk. Over time, however, the domestic natural gas supply picture will remain challenged, and there is little doubt that LNG will continue to play an increasingly important role in meeting domestic demand.

In addition, while some would argue that the enterprise value of the Cheniere entities is still above the asset value, near current levels, there is an increasing likelihood that a major energy player with a long-term view on value creation could decide that the Sabine Pass facility and Cheniere's other assets have meaningful value.

The Morris Twins

Even after the spinoff, the holiday portfolio has continued to check in on


(MO) - Get Free Report


Philip Morris International

(PM) - Get Free Report

. While the corporate shuffling has created a bit more complexity in the enterprise, it should also continue to add value for shareholders.

Altria is, very simply, an all-weather stock. The consistent nature of growth in its consumer products provides an opportunity for investors to own a core "growth and income" equity that provides relatively consistent returns. While the economy will influence any consumer staples entity, the impact on Altria has been relatively modest.

While some have concerns over the new entities' dividend policies, the same type of income growth is likely. Long-term investors should like what they continue to see from this core workhorse for an all-weather portfolio.

The All-American Bank

Say what you will, but through the recent financial crisis,

Bank of America's

(BAC) - Get Free Report

operations have continued to move forward. While not completely unscathed from the housing debacle and certainly painted with the same brush as many larger banks, it is somewhat surprising that Bank of America has had relatively little internal strife when compared to many of its peers.

That being said, volatility will continue to impact all banks. Patient investors can point to the nationwide footprint, the likely opportunities that will come in consolidation as the cycle improves and solid management talent, but, until the housing crisis cools, the economy shows signs of improvement and government policy becomes clearer, the stock is likely to remain as volatile as its peers.

The pattern of buying the big dips and selling the big rallies has worked very well in recent weeks, however, and is likely to continue, at least until the November election. Long-term investors that can stomach the volatility are likely adding to positions on those dips, which is a good strategy as long as patience is defined in quarters, not weeks or months.

Advanced Micro Devices

Sometimes second-tier flyers work and sometimes they don't.

Advanced Micro Devices

(AMD) - Get Free Report

is simply one that hasn't.

Second-tier technology plays work when demand is accelerating, leaders become complacent and innovation provides a competitive advantage for the smaller player. When all three are present, investors can hit a home run. When none are present, investments rarely work, which is what has happened with AMD.

While there was optimism for acceleration in tech demand early in the year, the economic malaise pulled the rug out from under the rally.

Moreover, while


(INTC) - Get Free Report

isn't lighting the world on fire, AMD has done little to differentiate itself. In fact, the products of the two competitors may be more similar than ever before in the minds of consumers.

If you don't believe that, go walk through a retail computer seller and see if there is any promotional differentiation between Intel and AMD machines. AMD's success will again emerge when it's able to gain a perceptual quality advantage over Intel's products.

That isn't to suggest that a value case can't be made for AMD, however, it's unclear as to just when that value will be unlocked.

Building Blocks

One somewhat bright spot in the portfolio is

Equity Residential

(EQR) - Get Free Report

, an apartment REIT controlled by Sam Zell's Chicago empire. Ironically, one beneficiary of a tighter housing credit market and a weaker economy is the rental market. As it becomes more difficult for potential homeowners to buy, there is increased demand for multifamily rentals.

Equity Residential owns a national footprint of quality apartment properties that appeal to a wide range of prospective homeowners. The ability to attract the potential homeowner that is just short of the needed down payment creates a good tenant base with a relatively low rate of rent defaults.

This REIT has an acceptable balance sheet, good dividend history and solid management. While the apartment business can be capital-intensive, its scale and relationships with a plethora of capital sources reduces the risk.

The bottom-line: Equity Residential is an all-weather REIT with a solid payout that, while it won't provide world-class growth, you'll get low volatility and reliable returns in difficult markets.

Autumn Awaits

For now, that is the holiday portfolio. While still lagging portfolios from previous years, it has been an interesting and, in many ways, very informative group of companies to watch. We'll check in on the portfolio once again on Thanksgiving Day.

Until then, Happy Labor Day.

At time of publication, Edmonds had no positions in the stocks mentioned, although holdings can change at any time.

Christopher Edmonds is managing principal at Energy Research & Capital Partners, an energy investment firm and an affiliate of FIG Partners. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he appreciates your feedback;

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