Stretch of Underperformance

My portfolio has been underperforming for the past few weeks and I am now about 50 basis points behind the Russell 3000 for the year.  Guess what?  It does not bother me.  My struggles have really been driven by my commodity buys: FCX, NSU, NEM, NUGT and recently CDE.  I think it is important to have some exposure to basic materials/commodities in any portfolio. And I think I can safely say I have heard this verse of the song before.

CSCO is being pressured a little bit this morning as FFIV pre-announced a poor 2nd quarter last night (F5 Drops 17%: Cuts FYQ2 View on North American Slowing).  It would be naïve to think this does not impact CSCO.  So there may be some short term pain (perhaps a 5 to 10% drop over next month). But CSCO is a core holding for me.  They are not going anywhere.  Things will pick back up.  They will continue to make money and pay dividends.

I did make a couple material buys to my dividend portfolio yesterday.

 I increased my position in RIG by 50%. They were down 5% since I first bought them.  They are starting a dividend policy this summer.  They provide a highly needed service and sell at under 9x next year earnings.  I think there is some fear/uncertainty over the Deepwater trial.  My experience has been that stocks way over sell on fears of trials (cigarette companies, Merck and even MTXX recently), so I view it as an opportunity. Also Carl Icahn and Leon Cooperman have taken sizeable stakes. I do not mind riding their coattails

Then I bought TC-PT.  These are bonds that pay 10% dividend.  It is convertible into TC common stock at 5.4 x through May 2015.  So I get upside potential of the way oversold TC, plus a 10% dividend for next 2 years.  I will publish entire portfolio over the weekend.