The 12 stock for 10 years portfolio consists of stocks I would be comfortable putting into an IRA for 10 years. The main criteria is for companies with a history of large positive cash flow, that seemed likely to continue that trend. I continue to be very satisfied with the portfolio and don’t see any reason for changes.
The current Marketocracy* calculated annualized rate or return (which excludes Tesco) is 7.2% (the S&P 500 annualized return for the period is 4.7%). 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 4.5% annually (it would be a bit less with Tesco, but still close to 4%, I would think).
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||410%||11%||7%|
|Google – GOOG||184%||16%||14%|
|PetroChina – PTR||125%||8%||6%|
|Templeton Dragon Fund – TDF||100%||9%||9%|
|Templeton Emerging Market Fund – EMF||74%||6%||6%|
|Danaher – DHR||47%||9%||10%|
|Apple – AAPL||40%||6%||7%|
|Toyota – TM||14%||10%||11%|
|Intel – INTC||6%||5%||6%|
|Tesco – TSCDY||-3%**||0%*||10%|
|Cisco – CSCO||-15%||4%||5%|
|Pfizer – PFE||-17%||5%||7%|
The current marketocracy results can be seen on the Sleep Well marketocracy portfolio page.
Related: 12 Stocks for 10 Years: Feb 2011 Update – 11 Stocks for 10 Years, July 2010 Update – 12 Stocks for 10 Years, July 2009 Update – hand picked articles on investing
I would still 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).
Apple’s performance as a company continues to be fantastic. And Google is close behind. Both do have the problem that if they slip up much the stocks could drop (Apple is a bit more at risk I believe). Amazon is also doing very well. More than Apple or Google, Amazon’s price seems to reflect positive hopes about the future rather than just what has already been achieved. Emerging markets are volatile (and showing it recently) but from a long term perspective I think the returns will be rewarding and am not concerned about the Templeton emerging market funds held in the portfolio. They will likely suffer large declines at various periods, but I expect large gains to more than make up for the declines.
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), ATP Oil and Gas (ATPG) and USG.
* 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 $19.49. The -3% return is just an estimate.