All Year LongThe concept behind the holiday portfolio is simple: At the beginning of each year, 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 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.
Tough Tape, Tough LoveOne thing that a difficult tape tends to do to investors is restore discipline and eliminate complacency. It should remind each of us that investing is serious, that bad decisions have consequences and that laziness begets losses. While very few investors have enjoyed the last three weeks, those who have done their homework, stuck to their disciplines and remained nimble probably are feeling less pain than others. Remember that each year I attempt to create a basket of five stocks from diverse walks of life that will weather the storm better than the market. To do so, I stick to what I know best: core stocks with solid, relatively stable growth potential, that fit my view of the macro-environment. Most of them will also pay dividends. That doesn't mean I'm always right, but it does mean that I will always try to stick to my knitting. What you aren't going to see in this group of stocks are "highflying, speculative" names that have very little but hope on which to peg their future. Now let's quickly look at the five stocks and the diverse elements they bring to this portfolio. Altria ( MO) needs very little explanation. Here is a diversified consumer staples company that has great product-line and geographic diversity, is only minimally affected by economic fluctuations and continues its tradition of ever-increasing free cash flow and dividends. While there is some regulatory risk, this is a company that has proved to be an all-weather stock. It gives us exposure to consumers in good times and bad with an incredible ability to regularly increase its payout. I want to be here in a difficult tape. Advanced Micro Devices ( AMD) is our cheap way to play the technology game. While not very likely to claim the dominance of its bigger brother Intel ( INTC), the stock was incredibly beaten down at the end of 2007 and should be a better relative performer than its brethren in 2008. While down so far this year, it has held up better than most tech names.
|Holiday 2008: OUCH! |
Hard to Find Places to Hide; Dividends At Least Help!
|Advanced Micro Devices (AMD:NYSE)||7.03||$7.35||-4.35%||--||--|
|Bank of America (BAC:NYSE)||36||$41.42||-13.09%||$2.56||7.11%|
|Cheniere Energy Partners (CQP:AMEX)||16.7||$15.80||5.70%||$1.70||10.18%|
|Equity Residential Properties (EQR:NYSE)||32.7||$37.04||-11.72%||$1.93||5.90%|
|Source: Company Reports, Bloomberg, TSC Research|