A little late for this month’s portfolio review but there has been a lot going on  lately on the personal front.  My apologies. This month there was a lot of changes to the portfolio. I’m mostly in cash now and starting to make a new shopping list. Lets get to the review.

I’ll start with the retirement accounts. Most of the retirement accounts are in the IVY portfolio so the changes reflect the same ones I discussed in the IVY update this month. Otherwise, I still hold my disaster hedge FRFHF in these accounts. Fairfax will probably have some short term impact from Sandy but long term its still a good hold.

In my main investment accounts I had a large move to cash this month. In these accounts I am now about 12% equities, 13% muni bonds, and 75% cash. I sold KMI, KMR, WPZ, WMB, and AFL this month. These moves do not reflect on the underlying fundamentals of these companies. I had lines in the sand drawn, stops,  to protect profits and all the prices dropped to my exit levels. If its one thing I’ve learned in investing is to follow your rules and my number one rule is capital preservation, or don’t lose money. And just as important as learning when to buy stocks is learning when to sell them, a much overlooked topic. All of these companies are on my potential future buy list due to their good fundamentals. The recent weakness is more macro driven and I’m looking forward to getting back into some of these names. But for now, with the overall market weakening, capital preservation is the most prudent strategy.

My one sell that deserves further discussion is EPD. This has been my longest term holding, going back to 2005 for my initial position, and mainly since early 2009 when I backed up the truck and loaded up on EPD at about 10% yield. Oh, to have that chance again. This has been my best investment ever and due to that it had become a huge part of my portfolio. I have no problem holding large positions but at about 26% of my portfolio it had become too large even for me. So, a few months ago, I drew a line in the sand at a price where I would reduce my position in EPD. That line was hit this pas week and I thus reduced my EPD position to about 11% of my portfolio, still a large enough position to make most people choke. At this point I’ve taken all my original investment out, plus, all dividends, and am letting all the capital gains (the house’s money so to speak) ride. EPD continues to be the MLP with the probably the best operating performance and management and I would love to add more on further price drops.

Lastly, the muni part of the portfolio is doing great, beating stock market returns again this year, and looks to do well for the rest of the year. The only thing I could hope for here is another Meredith Whitney call….just kidding. Until next month. If you have any questions about the recent changes let me know.




7 thoughts on “ November 2012 portfolio review

  1. KMI/KMR – another MLP doing quite well. KMR has recently broken out quite strongly and still has room to go higher. I added to my KMR position on the breakout. Looking for at least $80 to $81 in KMR.

    AFL – still trading quite a bit on European news no matter how silly it is. The stock has been pulling back from its test of $50 and has started to climb back higher in the last few days. AFL is a great long term hold but subject to a lot of European volatility. A break and follow through down from $47 would be quite bearish. I’m looking for a test of $50 again. If it breaks $50 I can see $54 in the stock in the short run. Long term the company is still very cheap and doing quite well.

    The above comments were taken from your October portfolio review. Not sure how your readers would have made the similar decision to sell KMR and AFL given you outlook just a couple of short weeks ago.

    1. Chris,

      All investors have different time frames, risk tolerances, etc. I’m just documenting changes to my personal portfolio once a month with the purpose of just describing my thought process in the hope that it helps some investors with their personal investments.

      As I said in the post, these are all great long term investments. I just have personal risk management rules which made me exit these positions for now.

      I think having investors focus more on risk management is a valuable lesson to try and get across.


    1. Hi Cynthia,

      I never, ever, ever, ever, ever enter my stops as orders. All my stops are mental. What I do is to set an alert in my trading platform so I don’t have to sit there all day watching it. When the alert triggers then I go in and enter the order (the alert is emailed to me as well). Programs and floor traders are very good at moving prices enough to trigger stops if they are entered as orders. Hope that helps.


  2. Just started to follow your blog. In reading your posts, it sounds like you made a big move to cash in Nov. You mentioned that some holdings were hitting your own mental stops as well as macro influences on the market. Do you see the overall weakening in the market as something protracted or just jitters from the fiscal cliff uncertainty? I can see some market downside on either way the fiscal cliff stuff goes, then add the Sandy effect and a Euro recession. Curious on your thoughts. Thanks.

    1. Hi Jim, thanks for following. Yes, I made a big move to cash last month in my trading accounts. I’m 75% cash, 13% munis, 12% stocks right now. I don’t try and let what I think is going to happen influence my investing/trading. I try and take what the market and prices are telling me. Right now they are saying indecision. This up and down on every headline is silly. For me there needs to be a clear move higher, to about 1430 on the SP500, for me to get more bullish, or a clear move down below 1390 or so for me to get more opportunistic on the downside. Here in the middle its best to sit out.

      As for what I think is going to happen. There will be a deal and the deal will be negative for the economy. Whether its enough to overcome the bullish things (housing, energy) that are taking place in the economy who knows. Even low growth in the US is better than what’s taking place overseas so that may be enough to keep the market aloft. Lots of uncertainty. A good trading environment but a tough investing environment. My 2 cents.


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