Monday, May 6, 2013

Planned Portfolio Actions...None!

The Chump IRA has a had a nice run these past 4 or 5 months.  The portfolio is up over 14.5% since construction in the fall of 2012.  I've recently read a lot of articles about the coming market correction, or that it's time to lock in gains, or that we should re-size our holdings and take profits off the table.

Every time I read one of these articles, I get tempted to do....something.  Trim, or sell, or resize, or set a stop loss, or write some covered calls, something.

But then I think about Ben Graham (The Intelligent Investor), and his opinion that mastering our emotions is the most important aspect of investing.  I think this is right.

I'm not doing nothing, I'm holding and monitoring.  I continue to read about the Chump holdings in the portfolio;  I run a FAST Graph on all of the holdings each week looking for signs of "dangerous" levels of overvaluation, but so far, most of the holding haven't fallen into the danger zone.  Or if they have, there is more to the story (my REITs O and OHI come to mind).  Here is a summary of the holdings:


The holdings are sorted by EYE ratio, or estimated earnings yield.  As I state in my rules for the portfolio, I start thinking about trimming when the EYE ratio dips below 6:1.  The only holdings in this category are MO, CVX, WMT, MCD, JNJ, KO, and our two REITs OHI and O.  All still pay a nice yield above 3% except WMT.  And I consider all of these companies solid, core holdings for the portfolio.  I'm not adding to any of these at these prices, but I'm not trimming or selling either.  

The rest of the portfolio looks really healthy, fairly or undervalued, and poised for more growth!

Best,

Chump

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