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"What a long strange trip it's been."
-- The Grateful Dead
- No new trades.
Six months isn't really that long, especially when the median hold in your model portfolio is about five and a half years. It is a bit strange to apply a long-term strategy to a short-term time frame, however. All things considered, we can live with the results.
If you had asked me back in January which stock would be the best performer in the portfolio, I would have said one of the banks, which I subsequently sold. In hindsight that appears to have been a good decision. Like most of the crowd, which I try not to run with, I thought interest rates would be declining by May. I have some thoughts about the bonds and rates, but I'll leave that to my first journal of the next round of Strategy Lab.
The pharmaceutical and health-care portion of the portfolio had mixed results. Merck (MRK, news, msgs) did well; Johnson & Johnson (JNJ, news, msgs) is about even; Pfizer (PFE, news, msgs) and Cardinal Health (CAH, news, msgs) were disappointing. I still like Johnson & Johnson, Pfizer and Cardinal Health as all three are trading at historically repetitive levels of undervalue. Over time all three will deliver.
Coca-Cola (KO, news, msgs) and General Electric (GE, news, msgs) were midround replacements for our financials. While they didn't blow the doors off, the returns were acceptable for the time frame. Mercury General (MCY, news, msgs) gave us a bit of a tease and then backed off. I still believe this stock will reward investors over the long run.
Considering the bloodbath in housing, Home Depot (HD, news, msgs) held up fairly well. In retrospect I should have cut loose with the position for the purposes of the game. We are long Home Depot in our model portfolio and believe that there is a lot of upside in this stock.
McDonald's (MCD, news, msgs) did what McDonald's does: steadily execute and produce. Our average price in our model portfolio is just under $20 per share, and our average yield on purchase is right at 6%. This is not uncommon with Select Blue Chips that have consistently rising dividend trends. Automatic Data Processing (ADP, news, msgs) also had a respectable showing with close to a 10% gain for the round.
Our three top performers were Eaton Vance (EV, news, msgs), Polaris Industries (PII, news, msgs) and Teleflex (TFX, news, msgs). While not as well known as some of the big blues in the portfolio, it underscores the importance of diversification.
So that's it for this round. If you have any comments or questions, please feel free to e-mail me at Kelley@iqtrends.com.
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