Portfolio Breakdown, Again

Ok, a short note on the portfolio, and thoughts about the market.  I'll be brief. If you had acted on everything suggested in the blog, then your portfolio would look something like 55% stocks, 45% bonds.  The "small trades" or "little positions" I called $5,000 in size, and the full positions I called $10,000 in size to make up numbers.  All names I priced as of the date of the blog, and on average that seems to be about year end 2010, so a good comparison to the market's returns year to date.  (these are closing prices last night).

					Current
Name	Price	Position	Shares	Purchase Pr	Value	Gain (Loss)
Bond Book
PLBDX	10.47	Long	933	$      10.50	9,772	(32)	-0.3%
PUBDX	11.17	Long	933	$      11.05	10,425	110	1.1%
FXA	101.62	Long	50	$      99.19	5,081	122	2.4%
Short Treasury TBF	46.5	Short	250	$      42.22	11,625	1,070	10.1%
CSJ	104.2	Long	100	$    103.84	10,420	36	0.4%
						1,306	0.0%
Equity Book
WGRNX	14.16	Long	733	$      13.80	10,384	264	2.6%
UTF	17.33	Long	600	$      16.21	10,398	672	6.9%
NFLX	217.63	Short Sell	(30)	$    178.50	(6,529)	(1,174)	21.9%
CSCO	21.99	Long	483	$      20.21	10,629	858	8.8%
NEM	58.27	Long	175	$      60.59	10,197	(406)	-3.8%
TD AMERITRADE	20.69	Long	533	$      18.40	11,035	1,221	12.4%
AAPL	355.2	Long	30	$    341.00	10,656	426	4.2%
TEVA	52.02	Long	100	$      53.75	5,202	(173)	-3.2%
HPQ	48.14	Long	223	$      43.90	10,751	947	9.7%
SPY	132.57	Short Sell	(78)	$    125.50	(10,385)	(554)	-5.6%
					109,661	2,082	0.0%
						3,388
		Bonds			47,323	43.2%
		Stocks			62,338	56.8%
		Portfolio Size			109,661
		Return			3.1%
		S&P Return YTD			5.4%
		Bond Index YTD (AGG)			-1.4%
		Portfolio Index			2.5%

Looks like the S&P is up 5.4%.  This portfolio's equity book is up only 3.3%, with Netflix detracting 100 bps from performance.  The Bond book is up 2.76% including interest, vs the Lehman Government/Corp bond index down 1.4% (ticker AGG).  That is good, TBF is helping a lot.  The 10 year has moved from 2.5% to 3.7% in a very short time.  Muni's also continue to lose money in 2011, hopefully you have been out of them as I have.  (too bad you cant short them).

Equity-wise gold also was a drag with Newmont Mining weakening with gold prices in Janaury.  I think its highly likely that NEM will kill numbers when they report this month though.  Q4 estimates are $1.10 a share, unchanged essentially from the $1.09 they did in Q3 last year.  However, gold prices jumped in Q4.  It looks like gold rallied 10% from Q3 to Q4, and yet no analysts changed their estimates.  They also produce copper, which was $3.67 in Q3 vs $4.50 today.

Net net the total portfolio is up 3.1% vs the index weighted basket up 2.5%.  That is ok, and given the conservative blue chip nature of the portfolio, not bad actually.  The average hedge fund was up 0.8% in January.

While I suspected the market would be up 10% this year, we have already seen up 5.4% in less than 6 weeks.  We have had 56 straight trading days above the 30 day moving average, a record.  I am paring back a couple names that have been winners for me, perhaps not here, but generally I am selling 30% of 2 stocks that are up 30%+ for me today: CI and AMTD.  Both I have owned since last summer and have done well.  I think adding some PLBDX makes sense given the dollars strength lately, and the fact that foreign goverment balance sheets are still solid.

As far as Netflix, I am taking it off.  Pretty much everything went wrong with the trade:  management is continuing to depreciate all their Epix costs on a heavily back end loaded basis.  That is, while real cash EPS was $2.42 last year, they reported $2.96 in GAAP EPS.  Also, there was a huge short squeeze in the stock as 30% of the float is short as of month end.  Revenue was up more than expected, and the market generally has been on a tear.  While a stock trading at 91x earnings is insane, I am stop-lossing this one.  I will revisit this after the Starz deal is renegotiated this August.

With so much inflation creep happening worldwide, I think it looks like many central banks are combating this by raising rates.  China just raised rates yesterday for the second time in month. Inflation is running 5% there.  UK inflation is at 5.7%.  Commodity prices do impact prices, albeit indirectly.  With our deficit problem continuing, the Fed really has no choice but to create another asset bubble here.  Other countries are tightening monetary policy, but the US is remaining loose and keeping rates low mostly because it has too.

Why does this matter?  Generally the stock market is most correlated to monetary policy.  GDP is influenced mostly by debt increases of households and businesses and our government.  So, I think US stocks are the place to hunker down.  Its no coincidence that Chinese rates are going up, and its market is down 1.25% this year to date.  (I used the FXI as a proxy).  I am a little surprised that the US dollar has been rallying, but I think the credit problems we pose are ultimately our death knell relative to other currencies.  Best place to hide in an inflationary world are commodities and equities and foreign currencies.  My exposure to these has worked well mostly over the past year, but not so much in January.

Speaking of commodities, I haven't been able to get comfortable buying oil yet.  With so much unrest in Egypt, the risk premium seems too high.  I will probably wait until things die down, then revisit.  Good luck.

PS I tried to expand the width of the blogs, and somehow got some goofy airplanes as a background.  Anyone know how to get some cool stock charts back there???