Friday, August 04, 2006

Portfolio July 2006

In July my portfolio continued to recover from the beating it took in May. The actively managed (AM) accounts gained 1.17%, bringing the cumulative return from Jan 11 to 20.12%. It is a hair away from the highest end-of-month cumulative gain which was 20.28% at the end of April. The dollar value in the account has exceeded that of the May peak due to ongoing contributions which of course are not counted as gains (formula for calculationg gains here). The asset allocated (AA) accounts fared less well. In July, it gained 0.31%, bringing the total from Jan 11 to 2.05%. At the end of April, cumulative gains in the asset allocation accounts were 5.54%. This relative performance gap is an indication that my timing and security selection in the AM accounts have been making a positive impact. The combined accounts gained 0.78% in July and 11.52% since inception. The performance compares favorably with those of VTI and SPY, which clocked in at -0.12% and 0.49% for July, respectively. The portfolio benefited the most from the recovery in the PM and energy space, especially in gold and silver bullion. During this period, the general stock market can be aptly described as directionless although my expectation, as stated many times, is for further downside. Currently, the AM accounts are partially hedged through bear funds and shorts. I’m again heavily weighted in the precious metals in accordance with my bullish projections. I aim to outperform the general market; however, the kind of gains made earlier this year is unlikely unless strong trends re-emerge.

Click to enlarge in a new window.

All net additions this month were to our 401(k) accounts including both our contributions and employer matching. Other transactions include:

  • 7/5 Sold half of AUY (500 sh @ $9.95, +5.7% net) and NXG (1000 sh @ $3.6608, +5.4% net) to lower their effective cost basis.
  • 7/20 Bought MZZ (100 sh @ $74.40) and QID (100 sh @ $75.23), the double short Mid cap and NDX ETFs to replenish my short exposure.
  • 7/24 Bought GRS (400 sh @ $12.70) as the HUI made another short term bottom.

I have been considering changing my asset weighting in the AA accounts to reduce my exposure to general equities. My current allocation is domestic stocks 30/ foreign stocks 30/ bonds 30/commodities 10. I’ve been considering increasing the bond component as well as adding some energy income trusts to make the allocation closer to 25/25/35/15. Any up-tick in the stock market would be an opportune time to effect this transition. It's something that I'll have to discuss with my wife. I'll write about our decisions here later this month.

The usual account details follow. One thing I have not been doing right is the treatment of short positions. I have been using the net gain to calculate portfolio weighting when the total position size should have been used. I don't know when I'll get arount to fix it, so I'll just make a note here.

As usual, the above is not investment advice, so please do your own due dilligence. Good luck and be safe!