Since I wasn’t able to do a portfolio summary for October and November, I will first discuss the results of Q4 ’07 before giving a full year summary. November was an awful month that saw the retest of August lows in the general market. I added three names: BHP (under water now), SLB (showing a profit) and MOS (Yipee!), consistent with the resource/commodity theme I have been focusing on. All three were intended to be long term holds. Overall, I’m quite pleased with the +1.91% performance turned in by my actively managed accounts. The asset allocation accounts benefited from both the hedged mutual funds and the resource stocks. Although showing a decline of 1.08%, it gave up less than the benchmarks.
For the year, the AM accounts gained 16.35% and the AA accounts 4.90%, combining for a 10.67% gain overall. This was nearly double the 5+% dividend adjusted gains made by VTI and SPY, for which I’m quite pleased. The poorer performance of the AA accounts was primarily due to ill considered timing moves in the first half of this year. The current allocation plann was finalized in June, and since that time has outperformed SPY by about 3.5%. The weakest sectors in the allocation plan were real estate (implemented with RWX) and alternative investments (implemented with PSP). To some extent, their weaknesses was foreseen; however, the principles of asset allocation did not allow one the leeway to time the entry points. I'll stick with the allocation plan and rebalance some time before this June.
Current allocation and comments
PM and non-PM commodities and related companies each take up around 40% of my actively managed accounts (I haven’t incorporated my trading account at Zecco into this spreadsheet yet. It holds some PM positions as well.). Overall, around 25-30% of our entire net worth is in PM bullions and mining shares. When I say I’m a foaming-at-the-mouth bull, I have the numbers to back me up.
You may have noticed a heavy concentration of cash and no municipal bonds in the AA accounts. That was because I sold them to take the capital loss. Remember that I keep the majority of bond allocation in the form of closed-end muni funds in taxable accounts rather than taxable bond funds in retirement accounts because I want more tax-sheltered equity growth. I plan to re-purchase some closed-end muni funds shortly, but not exactly the same ones which would be a wash-sale. The muni funds have been beaten down this year in the wake of the subprime scandal but given their yields and discounts to NAV, represent a good value.