The 12 stock for 10 years portfolio consists of stocks I would be comfortable putting into an IRA for 10 years. My main criteria was companies with a history of large positive cash flow, that seemed likely to continue that trend.
In the original portfolio I created in April of 2005, I included Dell. Apple was one of the stocks I was considering but I chose not to include it. That has turned out to be a very bad mistake (though even with that the annualized return for the portfolio is beating the S&P 6%). As I have said the last few updates, I was considering dropping Dell. Since the last update, Dell has been dropped and replaced with Apple. This is the first decision to drop an original selection (First Data restructured and so it was removed).
The current marketocracy* calculated annualized rate or return (which excludes Tesco) is 6.8% (the S&P 500 annualized return for the period is 2.6%) – marketocracy subtracts the equivalent of 2% of assets annually to simulate management fees – as though the portfolio were a mutual fund – so without that (it is not like this portfolio takes much management), the return beats the S&P 500 annual return by about 6.2% (it would be a bit less with Tesco, but still close to 6%).
The current stocks, in order of return:
|Stock||Current Return||% of sleep well portfolio now||% of the portfolio if I were buying today|
|Amazon – AMZN||330%||11%||7%|
|Google – GOOG||184%||17%||15%|
|PetroChina – PTR||102%||7%||6%|
|Templeton Dragon Fund – TDF||100%||11%||10%|
|Templeton Emerging Market Fund – EMF||76%||6%||6%|
|Danaher – DHR||22%||9%||10%|
|Cisco – CSCO||18%||6%||7%|
|Apple – AAPL||12%||5%||6%|
|Tesco – TSCDY||-2%**||0%*||10%|
|Toyota – TM||-5%||7%||10%|
|Intel – INTC||-8%||5%||8%|
|Pfizer – PFE||-27%||5%||7%|
The current marketocracy results can be seen on the Sleep Well marketocracy portfolio page.
Related: 11 Stocks for 10 Years, July 2010 Update – 12 Stocks for 10 Years, July 2009 Update – Retirement Savings Allocation for 2010 – posts on stocks – investing books
Amazon’s price has increased very well, so much in fact that I think the price has become far too high. I am still very positive on the long term outlook for Amazon, but have sold some (and have order to sell more) to bring down the percentage of the portfolio invested in Amazon. At this point I am very positive on nearly all the stock in the portfolio.
I would consider replacing PetroChina and Pfizer: I like both sectors more than I like the companies themselves. Still as part of the portfolio I think they are valuable. I would like a bit more exposure to commodities and health care but I haven’t found the right companies to add to this portfolio (I tend to like smaller, companies and haven’t found ones I am happy to lock away for 5-10 years).
I am a bit worried about buying Apple at too high a price. But the future prospects really seems to justify this price to me. It is easy to pay too high a price for a company that is doing very well however, so we will see how this works out.
In order to comply with the marketocracy diversification rules and deal with not being able to buy Tesco (in marketocracy) I own fairly small amounts of several other stocks in the portfolio (that are included in the marketocracy return) – as well as some cash (about 5%): Target (TGT), Costco (COST), Car Max (KMX), Euronet Services (EEFT), ATP Oil and Gas (ATPG) and USG.
The loss on Dell was about 50%.
* In order to track performance created a marketocracy portfolio but had to make some minor adjustments (and marketocracy doesn’t allow Tesco to be purchased, though it is easily available as an ADR to anyone in the USA to buy in real life – it is based in England).
** Tesco had a purchase price of $22.55 on Dec 11th 2006 and has paid approximately 40 cents a year in dividends. The current price is $20.54. The -2% return is just an estimate.