February for the most part was actually pleasant. I spent some hardly-found time to carefully review my options in reengineering my portfolio, and speaking of investment performance, everything in my portfolio had been enjoying a good ride. Of course that is unti February 27th, where the global sell-off conveniently set me back by $24,000.
I was hit particularly hard in my employee stock option exposure. Kicked off by a Barron's article doubting Windows Vista sales, and helped by a not-so-glamorous analyst meeting, MSFT's honeymoon with Wall Street finally ended. The stock declined 9.1% in the 19 trading days in February. As a result, despite a new batch of options vested in early February (valued at over $6,000 when vested), the value of my employee stock option account still dropped by 25%.
On the other end, I should feel glad for the rest of my portfolio. Although S&P 500 lost 2.2% in the month, my half-a-million-dollar mutual fund and stock positions held up pretty well, only lost $2,400 or a tiny 0.4% along the way.
Below is the breakdown of my portfolio at the end of February:
1) I sold my Altria Group, Inc (MO, previously Philip Morris) positions at $87.72 shortly after it reported quarterly results and finally announced the Kraft Foods spin-off. I'm glad for the first double-bagger I achieved, although in hindsight, I should have purchased more than 50 shared two years ago.
2) I bought Marsh & McLennan Co. (MMC), the insurance broker, at $29.28. The business at MMC is apparently turning the corner, and if it can return to its usual profitability and multiples, the stock should appreciate handsomely from my entry point.
3) I started my position in two excellent international funds: Harbor International (HIINX) and Janus Overseas (JAOSX) after careful review of potential mutual fund options to supplement the foreign stock market exposure in my portfolio. While my timing could certainly be better -- both funds lost 5% shortly after my purchase -- having more exposure in international equity should benefit the return of my portfolio in the long run.
4) In the same vein, I exchanged my entire fixed-income exposure (PIMCO Total Return, PTTRX) to ING International Value (NIIVX) in my 401(k) account.
5) I also liquidated all my remaining positions in China stock funds in the midst of the frenzy in late February. At the current valuation level, there is no other reason than speculation to stay in the market one minute more.
1) The recent sell-off, if continued, should create a lot of opportunities to buy stocks at low. I'm really glad I still have over a fifth of my portfolio value in cash, and will pull the trigger without hesitation when the price is right.
2) Speaking of my current stock positions, KO, APOL and PPD are approaching my target price for sale.
3) Unfortunately, our Benefits Department confirmed that since I'm still an employee with the big company, I couldn't roll over my 401(k) to Traditional IRA. Still, I intend to roll over my wife's 401(k) account in March.
4) I will finish off my "Reengineering My Portfolio Management" series.