Six Months Out Of Every Year

Six Months Out Of Every Year

Not sure if my readers know the reference but that is the opening song in Damn Yankees, a fun musical. In the song, it is referring to wives losing their husbands to baseball six months every year. But here, on June 30th, it refers to us making it halfway through what has been a pretty uneventful 2014.

As of this writing, I am somehow up a very snappy 15% on the year (would be 18% without the LMNS fiasco). Obviously it does help to have largest holding, GTAT, up 113%. But other things are working as well, for example my MFI portfolio is up 13%.  The R3K is up almost 7%, so I am pretty happy with the performance as we turn the corner.

Index	Stock	Start of Year	Current	YTD Change	Share
1	GTAT	8.72	18.60	113.4%	9.8%
2	GNW	15.53	17.40	12.0%	7.2%
3	TZA	15.29	13.96	-8.7%	5.3%
4	KLIC	13.30	14.26	7.2%	4.8%
5	AOD	8.10	8.92	10.1%	4.8%
6	BBEP	19.45	22.12	13.7%	4.8%
7	RPXC	16.90	17.75	5.0%	3.8%
8	ATVI	17.83	22.30	25.1%	3.4%
9	NTC	11.76	12.64	7.5%	3.2%
10	TPVG	15.15	16.38	8.1%	3.2%
11	CSQ	10.41	12.01	15.4%	3.1%
12	GPS	40.55	41.57	2.5%	3.1%
13	FSC	9.24	9.83	6.4%	3.1%
14	RIOM	2.18	2.31	6.0%	3.0%
15	TGONF	9.66	10.05	4.1%	2.6%
16	AVG	17.21	20.13	17.0%	2.5%
17	TLM	10.66	10.60	-0.6%	2.4%
18	SNDK	69.32	104.43	50.6%	2.2%
19	SYNA	51.81	90.64	74.9%	2.1%
20	AGX	27.56	37.29	35.3%	2.1%
21	BAC-WTA	6.47	6.86	6.0%	2.1%
22	NADL	9.31	10.62	14.1%	2.0%
23	TSL	12.56	12.83	2.1%	1.9%
24	TIME	22.89	24.22	5.8%	1.8%
25	KLAC	60.57	72.64	19.9%	1.8%
26	HIG-WT	27.75	27.22	-1.9%	1.7%
27	GA	11.24	11.84	5.3%	1.6%
28	WNR	38.59	37.55	-2.7%	1.4%
29	CSCO	22.79	24.85	9.1%	1.2%
30	NSR	$25.82	26.02	0.8%	1.1%
31	RCII	28.78	28.68	-0.3%	1.1%
32	CA	29.29	28.74	-1.9%	1.1%
33	CF	233.04	240.53	3.2%	1.1%
34	O	36.25	44.42	22.5%	1.0%
35	FLR	80.29	76.90	-4.2%	1.0%
36	OIBAX	5.97	6.20	3.8%	1.0%
37	EDV	101.70	104.74	3.0%	0.5%
38				15.1%

At an anniversary date like June 30th, it is always a good idea to think a little bit. Take a pulse. Think strategically instead of just tactically. If I were to list my biggest surprise of 2014 thus far, it would have to be the treasury yields. The ten year started the year at 3% and today it is 2.53%. This is despite a steady tapering by the Fed during all of 2014. What does it mean? I am not a rocket scientist on this stuff. A lot of people point to it as proof the economy is weakening. Bonds are typically used in a flight to safety, so obviously rates dropping means a lot more demand which may mean flight to safety.  This is possible.

Another thought of mine is that we need to think more globally.  Canada is 2.24%, Germany 1.25%, Italy 2.74%, Spain 2.67%, Ireland 2.36% and UK is 2.67%.  If you think about that, you start to realize that US rates really cannot go up sharply. Almost everyone would take the US bond over Italy or Spain if we had the higher yield.  So instead of our lowering rates implying a recession here, it could be that we are more attractive than many other country's bonds.

S I guess I remain unconvinced that the US economy is about to crash and burn, though until we start getting some wage growth and job growth I do expect us to keep limping along at 2%.  So then the obvious next question is whether the stock market has gotten ahead of the economy. It certainly "feels" that way. The past three years have been terrific in the stock market and it is not unusual after three straight very good years to expect a settling.

I think that factor alone has me wary about the market, albeit it may be "different this time". Another point that makes me nervous is the tremendous amount of margin currently being used. When some parties have applied a lot of leverage, it will not be fun if they all try to unwind that at about the same time.

So, I guess at the 1/2 way point, I am happy with my performance and I am guardedly optimistic on the future.   Onwards fellow investors!

June 28th 2013 Monthly Tracking Portfolio

June 28th 2013 Monthly Tracking Portfolio

Another month has zipped by. As my faithful readers know, I have been tracking the Magic Formula Stocks as described by Joel Greenblatt in The Little Book That Beats the Stock Market since January 2006.  Every month I take the top 50 stocks over $100m market cap from his website and track how that portfolio of stocks fares versus the Russell 3000 for the next 12 months.  It has been an uphill struggle as the tracking portfolios have under-performed, driven in part by Chinese reverse merger fiascos, for-profit education stocks and home health care stocks all being proverbial albatrosses.

 Fearless readers will recall we had a 29 month "losing streak"..  This month-end extended the winning streak to 13 ! It went up an excellent 26.9 %,edging the R3K, which was up a less excellent 19.2%! Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
AGX	15.05	36.88	145.0%	14.94	218
QCOR	44.43	91.27	105.4%	45.39	2,706
PBI	14.20	27.97	97.0%	13.76	2,958
APOL	17.72	31.06	75.3%	17.45	1,998
DLX	33.89	57.82	70.6%	34.67	1,757
AAPL	55.31	91.98	66.3%	57.32	372,776
EBIX	9.17	14.24	55.3%	8.31	344
ATVI	14.12	21.92	55.2%	14.14	15,927
GTIV	9.96	15.23	52.9%	7.35	311
NOC	80.91	120.67	49.1%	81.74	19,467
LO	41.70	61.50	47.5%	41.56	16,511
RTN	64.32	94.40	46.8%	64.48	21,423
HLF	44.52	65.14	46.3%	44.85	4,649
SWHC	9.98	14.39	44.2%	9.89	664
CF	168.94	240.27	42.2%	169.33	10,389
VCI	24.11	34.00	41.0%	N/A	956
BAH	15.25	20.93	37.2%	16.61	2,411
UTHR	65.82	89.45	35.9%	66.01	3,307
CPLA	40.93	55.06	34.5%	41.55	516
PDLI	7.21	9.66	34.0%	7.38	1,079
VG	2.83	3.76	32.9%	2.73	604
CRUS	17.36	22.94	32.1%	16.81	1,099
FLR	58.72	76.88	30.9%	57.50	9,659
STX	43.64	56.92	30.4%	37.17	16,062
NSU	2.83	3.69	30.2%	2.80	587
CHE	71.70	93.03	29.7%	64.16	1,360
AUXL	16.63	21.26	27.8%	16.36	820
RGR	46.36	58.83	26.9%	46.69	928
MSFT	33.55	42.25	25.9%	30.84	288,416
MSB	16.58	19.69	18.8%	17.25	235
ABT	34.20	40.54	18.5%	32.70	54,373
NATR	14.58	16.97	16.4%	12.91	260
LPS	32.16	37.30	16.0%	N/A	2,747
SAI	13.81	15.91	15.2%	N/A	4,764
USMO	13.12	15.03	14.6%	12.58	295
UIS	22.07	24.71	12.0%	21.97	973
TNAV	5.23	5.76	10.1%	5.18	207
STRA	48.83	52.64	7.8%	33.51	528
USNA	72.38	77.76	7.4%	55.01	972
SPPI	7.46	8.01	7.4%	6.36	448
IDCC	44.13	47.31	7.2%	26.25	1,837
CSCO	23.61	24.70	4.6%	20.22	129,341
DELL	13.25	13.86	4.6%	N/A	23,385
RPXC	16.80	17.47	4.0%	14.55	899
ESI	24.40	16.62	-31.9%	16.20	570
DXM	17.57	11.35	-35.4%	4.30	179
LFVN	2.32	1.35	-41.8%	1.10	263
INTX	8.13	4.71	-42.1%	4.15	157
WTW	45.79	20.54	-55.1%	19.50	2,587
GNI	51.43	20.32	-60.5%	16.80	103

I did find another site that has been tracking since 2006 this week.  It uses a different approach, just 5 stocks picked randomly every quarter. They have had better results than me (TrackJGreenblatt's Stock Picks). I found it very interesting and would encourage people to take a looksee.

AGX was number one, I am glad to report I have gotten to ride that wave personally. QCOR was number two. One of my worst sales ever as I once bought them around $18 and sold at $22, happy with a quick 20% gain.  For profit Education Stocks were a minor drag.  The 4 of them were up on average by a sub-par 21.4%.  ESI, really took a nose dive recently.

Here is a listing of every portfolio I have tracked:

Average of Percent Change
Date	Total	IWV
1/6/2006	16.0%	10.9%
2/17/2006	21.2%	14.6%
3/29/2006	13.0%	9.6%
4/7/2006	10.3%	12.1%
5/12/2006	20.4%	18.6%
5/31/2006	29.2%	23.3%
6/30/2006	22.4%	20.0%
7/31/2006	19.7%	17.3%
8/31/2006	13.0%	13.3%
9/28/2006	12.7%	14.6%
10/27/2006	10.3%	12.0%
11/29/2006	-0.3%	4.8%
12/28/2006	-6.9%	3.4%
1/26/2007	-10.2%	-6.6%
2/27/2007	-3.7%	-1.0%
3/26/2007	-9.8%	-5.5%
4/27/2007	-10.9%	-5.0%
5/29/2007	-11.5%	-6.3%
7/3/2007	-30.0%	-15.6%
7/30/2007	-19.9%	-11.5%
8/30/2007	-12.5%	-8.7%
9/27/2007	-19.0%	-18.2%
11/2/2007	-40.4%	-34.3%
11/28/2007	-40.1%	-38.3%
12/28/2007	-36.3%	-40.0%
1/25/2008	-36.4%	-35.9%
2/26/2008	-51.7%	-41.5%
3/24/2008	-40.9%	-36.8%
4/25/2008	-25.6%	-31.0%
5/28/2008	-22.2%	-33.6%
7/2/2008	-11.7%	-25.3%
7/29/2008	-10.5%	-20.9%
8/29/2008	-13.8%	-17.9%
9/26/2008	-4.3%	-10.0%
10/31/2008	18.7%	13.9%
11/26/2008	50.9%	27.7%
12/26/2008	48.9%	32.3%
1/23/2009	59.3%	36.4%
2/27/2009	92.8%	55.6%
3/27/2009	85.8%	48.1%
4/24/2009	69.7%	45.8%
5/29/2009	31.8%	22.8%
6/29/2009	21.3%	24.0%
7/29/2009	19.5%	15.9%
8/28/2009	7.4%	8.8%
9/25/2009	12.6%	12.4%
10/30/2009	22.7%	18.3%
11/27/2009	24.3%	13.6%
12/31/2009	23.7%	18.1%
1/22/2010	19.0%	20.6%
2/26/2010	18.6%	23.6%
3/25/2010	10.0%	15.4%
4/23/2010	7.1%	11.4%
5/28/2010	19.3%	25.4%
6/29/2010	16.7%	25.7%
7/29/2010	5.4%	20.1%
9/2/2010	7.3%	10.1%
9/24/2010	-4.3%	0.3%
10/29/2010	-2.9%	10.4%
11/26/2010	-8.5%	1.4%
1/3/2011	-11.4%	0.1%
1/28/2011	-7.6%	4.9%
2/25/2011	-5.5%	5.0%
3/24/2011	-4.4%	7.4%
4/21/2011	-16.0%	3.2%
5/27/2011	-12.0%	-0.4%
6/24/2011	-9.5%	5.0%
7/29/2011	-4.3%	8.1%
8/26/2011	12.0%	21.6%
9/30/2011	23.5%	29.6%
10/28/2011	0.4%	11.5%
11/25/2011	13.9%	24.0%
12/29/2011	9.9%	15.9%
1/27/2012	7.4%	16.6%
2/24/2012	7.8%	13.3%
3/23/2012	9.1%	15.2%
4/27/2012	10.5%	15.3%
5/25/2012	26.5%	27.5%
6/22/2012	26.1%	24.6%
7/27/2012	30.4%	25.7%
8/24/2012	26.0%	19.8%
9/28/2012	39.3%	22.1%
10/26/2012	48.3%	28.9%
11/23/2012	45.7%	32.1%
12/31/2012	52.3%	33.0%
1/25/2013	39.5%	22.0%
2/22/2013	46.5%	26.4%
3/28/2013	40.1%	21.2%
4/26/2013	35.0%	20.5%
5/24/2013	20.4%	19.2%
6/28/2013	26.9%	24.1%
7/29/2013	18.0%	18.5%
8/30/2013	16.6%	21.8%
9/27/2013	14.1%	16.9%
10/25/2013	8.8%	12.2%
11/29/2013	5.5%	9.7%
12/31/2013	6.0%	6.7%
1/31/2014	10.4%	10.2%
2/28/2014	6.8%	5.3%
3/28/2014	2.9%	5.7%
4/25/2014	2.2%	5.6%
5/30/2014	2.2%	2.3%
Grand Total	10.0%

As noted, this is the thirteenth (unlucky?) straight portfolio to win after 29 straight losses! (that is hard to do... it ain't random).  It may be a bad omen that the 9 of the 11 newest portfolios are all trailing (including July 2013).  Still some time to go.

Subsets

I also keep 2 subsets of the larger portfolios:  (1) dividend stocks (those with a yield per Yahoo of at least 2.6%) and (2) new stocks (those new to the tracking portfolios in past 12 months.  The dividend portfolio was solid, up about 34%.  The new portfolio also was strong, up 34% as well - as UTHR and CRUS were both goodd.  Finally, I like to track cash as it is more "honest" than percentages as if you go up by 25% and then down by 25%, that is a different result than up by 5% then down by 5%.  So I track what you would have to day if you had spread $100,000 over the first twelve portfolios evenly.

Category	Value
Total	178,287
Total Russell 3K	182,653
New	186,483
Dividend	400,179

You can see that the dividend approach is doing well.  But overall, MFI is starting to lag just the R3K again.  I have written some blogs on what has caused that (Why Has MFI Performed Poorly?).  Onward! Time to create the new portfolio.