Sunday, February 16, 2014

Some Changes...

Well folks, I hate to do this, but it's time for some changes...

As you know, one thing that makes this blog unique is that I post all of my transactions in real time and real dollars.  The great thing about this is that I have an audit trail and verifiable track record.  However, there's also a downside...

For one, the blog is now mostly focused on logging my trades, which isn't much fun for me and probably isn't that interesting to you.  I mean aren't you tired of all my posts on buying/selling Sears?!  I'm also worried about blogging induced style drift - am I more risk adverse, does "talking my book" create commitment bias, etc.?

Now, I might have been willing to live with this if it were just my own money, but recently I took on outside investors.  This means I need to be very careful about anything that can bias my decisions or impede my investing process.

So, where do we go from here?  For starters I will no longer log my trades.  And as for the rest of the blog, well I'm still trying to figure that out... stay tuned!

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Tuesday, February 4, 2014

Trading out Sears common...

Man, Sears is really struggling these days!  Frankly, with things as bleak as they are, it wouldn't surprise me to see some big changes in the near future - perhaps we'll see significant store closings, or maybe a large real estate transaction.  Your guess is as good as mine.

So, with their stock in the mid-30's, I figured it was time to swap out the common and add some options!  Specifically, I sold my 400 shares at $34.25 (for total proceeds of $13,698).  I then bought 15 SHLD Jan 2016 $60 contracts at $4.40 (for a total outlay of $6,607).  Wish me luck!

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Sunday, January 12, 2014

2013 Summary

Alright folks, 2013 is over and 2014 is underway.  Frankly, I'm not sure what to think about last year's performance.  On the one hand, my absolute returns were decent, and that's despite my very conservative cash position.  On the other hand, I under performed the S&P, which is never a good thing.

Speaking of the S&P, it was up an astounding 32.3% last year!  On a percentage basis, that's better than the bounce we saw in 2009 (which was only 30.4%).  In fact, this is the market's single best year since I began investing (which was 8 years ago).  And, on top of all that, this is the 5th straight year market's been up.

So where does this leave us?  Well frankly, as a value investor, this has all been a bit frustrating.  After all, the more "stretched" valuations become, the more difficult it is to find companies trading at a discount to their intrinsic value.  In fact, right now the most compelling opportunities are the ones that have something "wrong" with them (like Sears and Strayer).  If companies like these can be "fixed," the payoff can be huge, but there's execution risk...

Anyway, here's the summary:
  • I started the year with $213,090 and finished with $267,482.  Since I didn't deposit or withdraw any money, this increase is straight appreciation.
  • In percentage terms, my portfolio was up 25.5% in 2013, whereas the Hypothetical S&P appreciated 32.3%. 
And here are the exhibits (8 year performance summary, waterfall graphs, holdings summary, and quarter-to-quarter bridge, click to enlarge):

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