My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.

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Portfolio Update - January 2007

Contributed by mm | February 5, 2007 3:21 AM PST

Compared to my portfolio at the end of 2006, I made very limited changes -- I was too busy in work and hadn't started working on my new year resolution to set up a clearer strategy for my portfolio. I did completed three transactions:

- I sold my newly acquired MSFT shares from the Q4 ESPP program involvement. This has been my regular practice since 2002 -- I always sell them soon after they are purchased since I already have enough exposure from my employee stock option holdings.

- I converted all my 401(k) balance in money market funds to Vanguard Value Index Institution (for whatever reasons I exchanged some of my international equity funds for 5% guaranteed return on money market funds in October 2006).

- I downsized my holdings on China stock funds from about $6,000 at December end to about $2,500, and added some exposure to local fixed income funds.




- The size of my portfolio is growing rapidly every month, and I have to find some time to thoroughly review my options and clean up the portfolio.

- Apparently because of my lack of attention to regular portfolio review, I have excessive amount of cash. I probably will consider to take more exposure in international stocks. (Although the $190,000 cash balance is yielding over $800 in interest risk free every month when I park them in high yield money market funds, so it is not too bad.)

- Will I act on the high MSFT stock price and sell (some of) my vested stock options?

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This Post Has Received 8 Comments. Share Your Opinions Too.

Jim Commented on February 5, 2007

Thanks for the information about your portfolio. It would be nice if you would provide some information regarding your monthly performance in terms of $ gain and/or % gain.

What is your rationale for owning both Citigroup and Bank of America while also owning stock in two insurance companies - AIG and WTM?

I think you may want to consider adding a MidCap fund (such as Vanguard's Midcap Index Fund) and increasing your allocation to SmallCap Value funds.

Bob Commented on February 6, 2007

Just a thought but your portfolio seems to lack a few precious metals. Have you thought about the uranium market at all?

b2a Commented on February 6, 2007

Can you post your reasoning behind some of your mutual funds selection? Why have you gone with some higher expense ratio funds when nearly identical ones are available through Vanguard? Thanks!

DrChunger Commented on February 6, 2007

Starting to feel i'm a regular here...

been reading a bunch of stuff recently about funds, etfs and tax managed funds. to the post about higher expense ratio funds, i think at the end of the day, performance is the bottom line that people should be looking at. if those other funds have been beating vanguard, it is POTENTIALLY worth it but there are a number of factors and just looking at expense ratio is a bit misleading.

having said that, i would consider looking at some of the tax managed funds - in particular, some of the vanguard ones. in looking over my 1099's, i found that i've been especially hit against dividends and capital gains. the tax managed funds have historically done fantastic at minimizing this and i believe it is worth the look.

as for precious metals, my take is that it is interesting but there has been a "hyper inflation" effect of the price. unless you're in the market already, you probably would lose some money over the next year or so (personal belief, so take it for what it's worth).

C, BofA, JPMC, and AIG are all huge companies that will likely do a major aquisition in the next couple of quarters or pay out a "large" cash dividend. There is much consolidation going on right now in both the insurance and banking markets. Despite C talking about breaking up pieces of its business, the general trend is bigger rather than smaller. That makes companies like Wells Fargo, WB, and some of the medium sized banks of particular focus. Regardless, financial services are ripe for some bull run so, I would support the overweighting mm has in FS.

Dan Commented on February 6, 2007

What SW are you using to generate your spreadsheet above? Is it a Quicken/Money product or do you dump evertyhing into a spread sheet?

b2a Commented on February 8, 2007

If possible, could you create a post on what DrChunger is talking about regarding tax managed funds and your methodology on your fund selection? Thanks!

makingourway Commented on February 13, 2007

Thanks for the portfolio review.
I'm sure you're busy with work (as am I for Big Company), however, if you have time, why not create a pie chart showing your asset allocation. It will help envision your overall portfolio and provide comparitive insights on where you need to go.

I think it's a great idea to keep the value index in a retirement account - they get very expensive.


PS Interesting that the individual stocks underperformed the mutual funds - what's the overall trend?

MM Commented on February 13, 2007

For all fairness, I'll not consider my individual stock picks as mad money. With the exception of APOL and PPD, all stock holdings are bluest chips.

Yes, a portfolio asset allocation is good. I should leverage my Premier subscription to Morningstar to create one each month. Good idea!

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