THIS IS NOT INVESTMENT ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN
As the third quarter ends, I take stock of my performance. I appreciate your indulgence in advance.
Early subscribers recognize that the initial purpose of this adventure was a re"solution" to achieve a reasonably safe return of 6 or 7% on principal. The guiding tenets were: 1) invest in only dividend or interest bearing securities paying no less than 6% per annum: 2) invest in good companies if not investment grade securities; 3) invest in nothing that was not liquid: that is, from which I could not extricate in an instant; 4) sell anything if it fell 8% below the entry point. From May 10, 2010 (first investment) through July 31, 2010 I followed these tenets assiduously. Investments during this period have now been placed into a basket that I call Baskerville Fund I. The two month period is abritrary, but in service of the adage "Nothing measured, nothing gained". I had to pick some time period. The name is a play on Sherlock Holmes' addiction to a 7 percent "solution" of cocaine. When I started Baskerville I, the Dow was at 10,785. It now rests at 10,830, a meager 0.4% gain. The S&P was at 1159. It now sits at 1146, a 1% loss. On average the securities in Baskerville I exceed 7% in interest or dividend payments and the principal on them has appreciated 8.1%. This equates to a 15% annualized return if none of them go up in value--and they will. I do not see them losing value in this yield hungry environment. If they do, I will sell.
I have placed the income securites purchased between August 1 and yesterday into a basket called Baskerville II Despite its recency and the fact that the amounts of the purchases have steadily increased, Baskerville II is already up 2.7% in principal. It, too, is comprised of securities that pay more than 7% per annum on average, all of which equates to an annualized return of no less than 9.7% (assuming of course that the creek don't rise!).
Starting in mid August, I began purchasing non dividend/interest paying securities such as GLD and AAPL. The goals of these acquisitions include hedging, exposure to non dividend paying sectors (e.g. tech) and of course, ultimately "principal appreciation". It is for this latter reason that I named the basket the Cloncs Fund, after the "principal" that I "appreciated" the most---Eugene Cloncs, NCHS. This recently initiated fund is up 5.4%.
Attached are three XL spread sheets of Baskervilles I and II and Cloncs displayed in acquisition order and showing current prices and entry points. I have also purchased and sold ANH, GRU, AINV, INTC, MCHP, PHK, WCRX, RBS-I and 1/2 of my SCCO. I achieved a modest gain in these transactions. I also purchased and still hold some AIG bonds that have appreciated 15% in principal and pay over 7%. Of the more than 130 positions displayed on the three sheets, only 18 are currently below water with the maximum loss sitting at 3.1%. Most are at less than a 1% loss which makes sense since they are primarily purchased for yield..
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