My Personal Finance Journey

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Portfolio Update - March 2008 (Down 1.37%)

Contributed by mm | April 6, 2008 10:49 PM PST

I'm back to PFBlog! I know it has been a long hiatus since the last time I posted, but the last couple of months hasn't been easy. I was asked to take over a billion dollar P&L that had been poorly run and turn it around. While PFBlog is always an important source I find the meaning of life from, in this circumstance, I have to answer to the call to devote 100% of my bandwidth on this important career-lifting opportunity.

Anyway, after 6 weeks on the road traveling around the world in the last three months and countless hours of overtime poured into the work, I'm finally getting some work/life balance. This doesn't mean the hard work has been completed in my day job, but I'm satisfied that solid foundation has been built to put the business back to the right track.

So, I'm back to the blogging, and I'm starting by putting together some long-overdue monthly updates:

SUMMARY

Though the daily price change still suggested a lot of volatility in the market, the market almost ended the month where it started. My portfolio hasn't been that lucky: the heavy exposure on financial stocks still dragged the overall performance of my portfolio. It ended the month with a 1.37% haircut, versus the benchmark performance of minus 0.24%.

It is worth noting that March marks the fifth back-to-back month of portfolio decline, not something easy to swallow. During the five months' timeframe, my portfolio lost 8.36% while my benchmark index retreated 10.46%.

On a year-to-date basis, my portfolio bested benchmark by 1.70%. Still, not exactly something to brag about since I still lost dearly in the market.

TRANSACTIONS

I sold my last batch of Citigroup (C) shares in a bid to fly to safety. While Citigroup is "too big to fall," with the collapse of Bear Stearns as a reminder, it is probably prudent to avoid the bank with the most SIV assets and obscure P&L.

NEXT STEPS

Starting from April, our 401(k) plan will allow participants to freely pick stocks and mutual fund investments via Fidelity's BrokerageLink program. I'll seize the opportunity to review my asset allocation and shuffle some funds.

Of course, 28.8% cash position is not sustainable for long-term portfolio management. But while the market recovered a lot in the first week of April, my bet will still be that we haven't seen the worst yet. I'm more than happy to hold onto the cash (and park them in money market funds in China that is essentially earning 10%+ in dollar terms risk-free) and wait for the best time to come.

portfolio-08-03.jpg

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This Post Has Received 13 Comments. Share Your Opinions Too.


Jim Commented on April 6, 2008

10%+ risk free? Try again. Doesn't exist. You should spend 15 minutes thinking of the risks associated with that investment. 10% doesn't come cheap. No doubt there are LOTS of risks.


SingleGuyMoney Commented on April 7, 2008

Welcome Back!


pj Commented on April 7, 2008

With that +10% China MM fund, you are essentially going short on the US Dollar. I would reconsider that position given the historic lows of the USD recently. (Yes, the FED does this and that, but the market knows that too. It's priced in already.)


york Commented on April 7, 2008

welcome back MM...we all love the blog, but realize work comes first


Deborah Commented on April 7, 2008

Check your money market funds carefully.

Here's your scary read of the day, from $400,000 to $5,000...

http://globaleconomicanalysis.blogspot.com/2008/04/opes-prime-collapse-down-under.html


Jack Commented on April 7, 2008

Welcome back!! Good to hear from you. We should be in for a good ride this summer. Until later, all the best.


stevieweevie Commented on April 7, 2008

I think a significant amount of your advantage over the benchmark comes from the fact that you have almost two as much money in your money market (15% vs 29%).

FWIW - Staying out of the market has been shown to be a money loser over the long haul since you miss the large swing days that account for a large portion of the overall market gains.


John Galt Commented on April 7, 2008

I see you deleted my post after it was showing for more than a week on your January portfolio update, so I'll ask it again: What exactly is the point of your "target price" column? Specifically, BRK.B passed your target of $4500, you raised to $4700, which it passed again on it's way to $4985 on Dec 10th. Still no sell. But now, after I asked the question, I see the target is revised again, now to $4900. Wasn't the point to "establish discipline in selling" or something like that? I understand revising if your analysis suggests a higher value, but it doesn't seem likely given your frequent, arbitrary revisions. So, what's the point?


MM Commented on April 7, 2008

John, it is pretty easy. There is a time value associated: companies keep getting cash will see their value increase over time.


John Galt Commented on April 7, 2008

MM, nice try, but that explantion doesn't add up with your actions in changing the target because your price target changes don't coincide with Berkshire's filings. Also, you didn't answer my question of what the point of your target price is. Is it a "sell above" point? If not, what do you use it for?


MM Commented on April 8, 2008

it is a "full valued" and "considering selling" target. if you don't like it, just ignore that. I don't feel by publishing it i'm obliged to selling it when the price crosses the target.


Jason Commented on April 8, 2008

I don't buy the absence....you had time to buy and sell your positions while you were "traveling" for this screwed up billion dollar P&L. What are you hiding Daniel-son?


CPA1298 Commented on May 1, 2008

MM - I can't believe you said that shorting the dollar is a 'risk free' proposition. You are turning around a $1bil P&L, and you consider shorting currencies to be risk-free?

What would your benchmark return be if it was invested as conservatively as your actual portfolio?



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