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Portfolio Update - December 2007 (Down 0.52%)

Contributed by mm | January 1, 2008 12:36 PM PST


After another choppy ride in December, the domestic market retreated 0.7% and the foreign market MSCI EAFE index lost almost 3%. My benchmark index, which is composed of 50% domestic equity, 35% foreign equity and 15% cash, suffered 1.34%.

Speaking of my portfolio, although I took some (more) beatings in my large bank and credit card company holdings, my other financial stocks and energy holding came to the rescue. Also, my hand-picked foreign equity funds are performing extremely well compared to the index. All together, my portfolio only took a small haircut of 0.52% in December, which is much better than the 1.34% loss of the index.

Although extremely volatile in the latter half, 2007 is still a good year for investors committed to the market. For the year of 2007, my portfolio recorded a gain of 8.77%, besting my benchmark's 6.98% gain by a good margin.


The year-end distribution of all mutual funds make bookkeeping a nasty job in December. Other than that, I made a few adjustments to the portfolio:

1) To book some tax loss before the end of the year, I swapped some losing Citigroup (C) shares to JP Morgan (JPM).

2) Believing the market is still undervalued in the ongoing bearish mood, I continued to add some more exposure to the market, including more to FSTMX (domestic equity), JAOSX (foreign equity) and KBE (financial stock sector ETF).

Other than that, I'm gradually moving some cash balance to China to play the Dollar/Yuan carry trade, and hence you can see a higher-than-normal return on my cash account -- that includes some currency gains.


1) I intend to complete a more thorough analysis of my 2007 performance by asset class (domestic equity vs foreign equity) and by vehicle (mutual fund vs individual stocks).

2) I will then take the learning and start thinking about my 2008 asset allocation and investment strategy.


This Post Has Received 44 Comments. Share Your Opinions Too.

Millionaire Money Habits Commented on January 1, 2008

That's a pretty healthy portfolio!

deborah Commented on January 1, 2008

This coward is routing for you, but I am in nothing but government guaranteed deposits for now.

I will make about a risk-free 4% return on investments over the next year.

Creative Investor Commented on January 8, 2008

deborah: Would that 4% risk-free return include inflation as well? With inflation running at 2-4% a year (depending on the source), it's nothing to sneeze at, so you should consider that as well.

Deborah Commented on January 9, 2008

I will be losing to inflation, however, I just don't trust the market. I suppose losing about 1/3rd in the tech bubble has left me very cautious and the market is simply a highly risky place to have your money right now.

I think we are heading into a bear market and I would rather preserve capital and lose to inflation rather than risk having a negative return. I think negative returns are a very strong possibility for 2008.

Ro Commented on January 16, 2008

Hi! Great work on this, but one question, I don't quite follow how your Actively Managed Portfolio holdings go from 857K to 863K yet you register a loss? I understand the purchases/sales factor in to the gain/loss calc, but intuitively it doesn't jive with me. Any thoughts?

MM Commented on January 16, 2008

Ro, there is a cash infusion of $10,175 that makes the difference.

Ro Commented on January 17, 2008

MM, sure, but where does that come from? Is it supposed to just account for salary income that isn't accrued into the net worth calc (i.e. it gets accounted for when cash comes in)? Otherwise i would assume any other cash should already be accounted for in the net worth.

MM Commented on January 17, 2008

Ro, technically I do this by calculating any cashflow in or out of my investment accounts ... yes it won't tie to my cash position in my balance sheet.

Ro Commented on January 17, 2008

MM, mechanically i see how that works out in the ssheet, and the gain/loss makes sense. But i still don't see how you reconcile the difference in Actively Managed Portfolio value from Month-to-Month. I would think that the difference between months should be: End of This Month = End of Last Month + Gain(Loss) + Unaccrued Assets (Salary, Gifts, Inheritance, etc).

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