Tuesday, May 02, 2006

Portfolio April 2006

Once a month we face the music, where the beliefs, conjectures and theories don’t matter, only the numbers in front of the percentage sign reign supreme. For one more month at least, the music was upbeat. My portfolio put in another solid month. These actively managed accounts managed to gain 7.54%, the asset allocated accounts 1.39% and the total portfolio 4.64%. Since January 11, which is the inception date for this blog, the cumulative returns are 20.28%, 5.54% and 13.32%, respectively. The returns are calculated net of contributions, using the midpoint Dietz method as described here. The table below summarizes the returns as well as those from certain index ETFs for comparison.

Click to see a larger version in a new window.

Major changes in positions
NTO (Northern Orion Resources, 1000 sh @$4.95) and TRE (Tanzanian Royalty Exploration, 800 sh @$6.86) were purchased as the HUI index broke above the 350 resistance level convincingly. I had been eyeing NXG, but decided against it after it went straight up due to an article by Jason Hommel. I settled on NTO which is another profitable junior mining company with both gold and copper deposits. TRE, on the other hand, has been a high flier during this segment of the bull market. I intended it to be a short term play. SSRI (Silver Standard, 300 sh @$20.89) was purchased on the day silver experienced a $2+ drop that I thought was in part precipitated by the change in margin requirements on the Comex.

TREMX (T. Rowe Price emerging Europe and Mediterranean fund, ~$4000) was purchased as part of the asset allocation account to augment my emerging market exposure.

I sold approximately 20% of the company stock to raise some cash. I also exited the URPIX position after it was revealed that the Fed was likely to pause after one more raise.

Future portfolio actions
As the actively managed portion of my portfolio continues to sail on the wind of strong commodity prices, it has outdistanced itself from the (still respectable) asset allocation accounts. It’s not a simple matter to rebalance the two, which I want to be approximately equal, as some accounts are jointly owned between my wife and I, and some are separate accounts. For now, we’ll continue to be vigilant and contribute to the asset allocation portion as much as we can. Since the bond component is running approximately 1.5% below target, I’m planning to add a short term municipal bond fund for safety and diversification.

If I sounded a little alarmed at the beginning of this post despite some great April numbers, I was, especially after Bernanke came out to dispel some misconceptions about his latest remarks. I don’t think the exercise on hedging bets was in vain. The latest rally in commodity prices and trashing of the USD could experience a sharp snap back after Bernanke’s flip-flop. In addition, I continue to expect a correction in the general stock market due to: a slow down in housing, high energy costs, and potential protectionist posturing in the upcoming election season. For now I’ll maintain my positions in BEARX and BZH (short) and I’m ready to sell some PM stocks (I’m currently above the target allocation of 35%.) at the appropriate time.

None of the above is intended as investment advice.I have disclosed buy and sell decisions in the past, but there is no guarantee I will continue to do so in the future. While the above information is believed to be accurate, mistakes can and do occur. The responsibility for any investment decisions you make are yours and yours alone.