2007 Year End Review
Well, it was a long and eventful year in the markets. Let’s take a look back at how The Curious Investor did. I’ve posted an Excel Spreadsheet with a review of my 2007-2008 trades as well as some calculations on the performance of the respective strategies which I run. You can get the whole file in the My Stock Holdings section of the page. Here, I’ll break out some of the highlights and, in following days, I’ll do a detailed breakdown of the successes and failures over the past year.
As you can see from the above chart, 2007 was a bit of a mixed bag. Strategies for Portfolio A and Portfolio B got off to a inauspicious start particularly between February and May where I deviated from my investment disciplines and began over trading. Why? I panicked over the February 28th sell off. Looking back on it, it would seem that the February 28th sell off and its aftermath were gentle compare to what we’ve seen here at the end of the year. Surprisingly enough, 40+% return from July to the end of the year in Portfolio A was not enough to offset losses from the beginning of the year. In fact, had you followed my trades in an equally weighted strategy from January to December, the strategy would only have gained .33%. Even in a year when the S&P 500 only gained 3.5%, this is poor return. I, however, was a little lucky in that the bulk of my performance took place after making additions to my portfolio account.
If you had followed every one of my moves including the addition of capital, return looks a bit better. The total money invested at the beginning of the year was $2442.19 and an additional $2800 was added in August and September allowing me to capitalize on the bulk of my good stock ideas and equating to a total of $5242.19 committed over the year. Nominal gain on invested capital was $684.12 which equates to a 13% return on monies invested this year with the bulk not committed until the last four months.
Portfolio B continued its impressive performance with a 22.32% gain simply based on the performance of each stock pick in a equally weighted portfolio. $2000 was added to the portfolio in October and similar calculations to those done for Portfolio A yield 19.4% return on monies invested over the entire year.
Finally, the Curious Investments Equity Income Strategy, a hypothetical strategy proposed earlier in the year based on high-dividend stocks, has not performed quite as well as expected. The value of its holdings has decreased in all four full months that it has been invested with a slight gain in August made only in the last few days of the month’s trading. Up until December, however, the portfolio stayed impressively stable and protected initially invested capital quite well. Then, December came and, as economic worries continued to rain down, the portfolio suffered. Good news, however, is that in just four months, the portfolio has already collected 1.85% in actual dividends. It seems that despite poor stock performance, most of the companies have maintained their dividends and the portfolio is projecting to yield 4.26% over the course of the year. One change will be made to the portfolio here at the beginning of the year, Vector Group’s stock has taken considerable technical damage and it seems that my initial hunch that the stock was merely in an intermediate term base seems to be incorrect. As a result, I will be replacing VGR in the portfolio with BlackRock Kelso Capital (BKCC), an investment company which makes capital investments in middle income companies and who’s stock is yielding a projected 11.47%. While a company like this does not offer as great a potential for capital appreciation as it typically will trade around net-asset value, the dividend and stability seem particularly beneficial given the current market environment.
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