Category: Finance

Performance-wise, at present my portfolio is sitting in a position where I’d be happy to book this percentage return in a year. Part of me wants to just sell the whole thing and wait again, but a lot of what I have purchased is still well below my fair value range.

So I continue to wait. I have been nibbling on one low-liquidity position but other than that, it has been just a matter of waiting and hoping the party isn’t finished yet.

The S&P 500 is up about 5% year-to-date, even including Apple’s fall from the stratosphere (which was its largest weighted component).

Although I don’t see signs presently of a speculative euphoria on equities quite yet, the moment that I start seeing publications like the Drudge Report or equivalent reporting on the rise of the stock markets will probably be the best signal to start scaling exit positions and building cash reserves.

I’ve been relatively happy with my portfolio, although the market performance has been less than thrilling. About two-thirds of the portfolio is trading well less than tangible book value, while the speculative components are fairly well positioned and I am just patiently waiting for the market to come to the conclusion that there is some serious undervaluation. Just eyeballing it, these companies are roughly at 55-70% of book value with strongly positive earnings.

Such suppression of market value can continue for some time but inevitably I will get paid – either through a dividend payment or a boost of market value. Buying back shares under tangible book value is also one of the rare times that I like to see share buybacks.

As prices have gone down, I have nibbled more of a position. This is probably the deepest value position that I have taken for my portfolio in quite some time.

Throughout the year it is always good to keep in the back of the mind if unrealized losses in the portfolio should be taken, and over the past couple months I have liquidated the losers and what is remaining in the portfolio is a substantial sum of deferred capital gains for 2013 and beyond.

I expect to see these unrealized capital gains get larger with the current portfolio. It is just a matter of being patient and hence, the general lack of observations here lately.

While one should always be vigilant at looking for opportunities, sometimes there are none and that sticking to your existing portfolio is the best thing you can do.

In order for any investment to be successful, you need to make two critical decisions. The decision to buy, and the decision to sell. If you get the buy correct, but ruin it by an incorrect sell decision, the results are quite depressing. Just look at those people that bought Apple at $50/share and thought it topped out at $100. Sometimes those decisions are good – if you dumped RIMM at $60 a couple years ago, you’d be laughing.

Traditionally in my own investment history, my entries have been quite good, but most of my sell decisions have been early to the game. I have been trying to improve this.