Jubak Picks Portfolio Performance 1997-2014
Buy and hold? Not really.
Not by a long shot.
So what is the stock-picking style of The Jubak Picks portfolio?
Click to expand...
I try to go with the market’s momentum when the trend is strong and the risk isn’t too high, and I go against the herd when the bulls have turned piggy and the bears have lost all perspective. What are the results of this moderately active—the holding period is 12 to 18 months—all-stock portfolio since inception in May 1997? A total return of 334% as of December 31, 2012. That compares to a total return on the S&P 500 stock index of 125% during the same period.
Jubak Top 50 Portfolio Performance for 2016
This long-term, buy-and-holdish portfolio was originally based on my 2008 book The Jubak Picks.
Trends that are strong enough, global enough, and long-lasting enough to surpass stock market averages.
Click to expand...
In The Jubak Picks I identified ten trends that were strong enough, global enough, and long-lasting enough to give anyone who invested in them a good chance of beating the stock market averages.
To mark the publication of my new book on volatility, Juggling with Knives, and to bring the existing long-term picks portfolio into line with what I learned in writing that book and my best new ideas on how to invest for the long-term in a period of high volatility, I’m completely overhauling the existing Top 50 Picks portfolio.
You can buy Juggling with Knives at bit.ly/jugglingwithknives
Dividend Income Portfolio Performance for 2016
Every income investor needs a healthy dose of dividend stocks.
Why not just concentrate on bonds or CDs?
Click to expand...
Because all the different income-producing assets available to income investors have characteristics that make them suited to one market and not another. You need all of these types of assets if you’re going to generate maximum income with minimum risk as the market twists and turns.
For example: bonds are great when interest rates are falling. Buy early in that kind of market and you can just sit back and collect that initial high yield as well as the capital gains that are generated as the bonds appreciate in price with each drop in interest rates.
CDs, on the other hand, are a great way to lock in a yield with almost absolute safety when you’d like to avoid the risk of having to reinvest in an uncertain market or when interest rates are crashing.
Dividend stocks have one very special characteristic that sets them apart from bonds and CDs: companies raise dividends over time. Some companies raise them significantly from one quarter or year to the next. That makes a dividend-paying stock one of the best sources of income when interest rates start to rise.
Bonds will get killed in that environment because bond prices will fall so that yields on existing bonds keep pace with rising interest rates.
But because interest rates usually go up during periods when the economy is cooking, there’s a very good chance that the company you own will be seeing rising profits. And that it will raise its dividend payout to share some of that with shareholders.
With a dividend stock you’ve got a chance that the yield you’re collecting will keep up with rising market interest rates.
But wouldn’t ya know it?
Just when dividend investing is getting to be more important—becoming in my opinion the key stock market strategy for the current market environment—it’s also getting to be more difficult to execute with shifting tax rates and special dividends distorting the reported yield on many stocks.
I think there’s really only one real choice—investors have to pull up their socks and work even harder at their dividend investing strategy. That’s why I revamped the format of the Dividend Income portfolio that I’ve been running since October 2009. The changes aren’t to the basic strategy. That’s worked well, I think, and I’ll give you some numbers later on so you can judge for yourself. No, the changes are designed to do two things: First, to let you and me track the performance of the portfolio more comprehensively and more easily compare it to the performance turned in by other strategies, and second, to generate a bigger and more frequent roster of dividend picks so that readers, especially readers who suddenly have a need to put more money to work in a dividend strategy, have more dividend choices to work with.
Why is dividend investing so important in this environment? I’ve laid out the reasons elsewhere but let me recapitulate here. Volatility will create repeated opportunities to capture yields of 5%–the “new normal” and “paranormal” target rate of return–or more as stock prices fall in the latest panic. By using that 5% dividend yield as a target for buys (and sells) dividend investors will avoid the worst of buying high (yields won’t justify the buy) and selling low (yields will argue that this is a time to buy.) And unlike bond payouts, which are fixed by coupon, stock dividends can rise with time, giving investors some protection against inflation.
The challenge in dividend investing during this period is using dividend yield as a guide to buying and selling without becoming totally and exclusively focused on yield. What continues to matter most is total return. A 5% yield can get wiped out very easily by a relatively small drop in share price.
Going forward, I will continue to report on the cash thrown off by the portfolio—since I recognize that many investors are looking for ways to increase their current cash incomes. But I’m also going to report the total return on the portfolio—so you can compare this performance to other alternatives—and I’m going to assume that an investor will reinvest the cash from these dividend stocks back into other dividend stocks. That will give the portfolio—and investors who follow it—the advantage of compounding over time, one of the biggest strengths in any dividend income strategy.
What are some of the numbers on this portfolio? $29,477 in dividends received from October 2009 through December 31, 2013. On the original $100,000 investment in October 2009 that comes to a 29.5% payout on that initial investment over a period of 39 months. That’s a compound annual growth rate of 8.27%.
And since we care about total return, how about capital gains or losses from the portfolio? The total equity price value of the portfolio came to $119,958 on December 31, 2012. That’s a gain of $19,958 over 39 months on that initial $100,000 investment or a compound annual growth rate of 5.76%.
The total return on the portfolio for that period comes to $49,435 or a compound annual growth rate of 13.2%.
How does that compare to the total return on the Standard & Poor’s 500 Stock Index for that 39-month period? In that period $100,000 invested in the S&P 500 would have grown to $141,468 with price appreciation and dividends included.) That’s a total compounded annual rate of return of 11.26%.
That’s an annual 2 percentage point advantage to my Dividend Income portfolio. That’s significant, I’d argue, in the context of a low risk strategy.
Portfolio Related Posts
ExxonMobil (XOM) is a hard company to characterize: it does some things so well that it has no peer and it does some things poorly enough to put the company in the middle of the oil company pack. On the very big plus side, nobody does the integration of refineries and chemical production facilities as well as ExxonMobil does
Deere (DE), the world’s biggest maker of farm machinery, is signaling that the worst is over in for its industry even as the U.S. Department of Agriculture is projecting another down year for farm incomes. In fiscal first quarter earnings reported today Deere said earnings climb to 61 cents a share. That was down from 80 cents a share a year ago but above Wall Street projections of 55 cents a share. Revenue fell 1.5% year over year to $4.7 billion, but that still beat the Wall Street consensus of $4.63 billion. Encouragingly, Deere raised its guidance for the second quarter
On Tuesday, since U.S. markets are closed on Monday, I’ll be adding shares of Albemarle (ALB) to my long-term 50 Stocks portfolio. The shares closed at $91.92 on Friday, February 17. After the 2015 acquisition of Rockwood Holdings, Albemarle is the world’s largest producer of lithium, a key ingredient in rechargeable batteries from smart phones to hybrid and electric cars.
I’ve got a number of open slots in my long-term 50 Stocks portfolio and I’m going to fill one of those with a buy of Tencent Holdings (TECHY). Tencent Holdings closed at $26.25 today, February 14. Tencent is the other big Chinese Internet stock. It’s less well known, to U.S. investors anyway, than Alibaba (BABA) but it may have a better business.
Today’s buy for Allergan (AGN) in my long-term 50 Stocks portfolio completes the transition I started when I sold the stock in my 12-18 month Jubak’s Picks portfolio. At the time of that sell, I felt that Allergan was chasing too many opportunities that took away from its dominance in the cosmetic pharmacology sector. Judging from a deal announced today, however, Allergan still knows where it’s strength lies.
What do you buy so that you’ve got a piece–and the best piece no less–of the Permian in your portfolio? You start, I think, with Pioneer Natural Resources. To me this producer is the standard for judging all other producers in the Permian. But I’ve found a second Permian picks that is, in some ways, better than Pioneer Natural Resources
Shares of Pioneer Natural Resources (PXD) closed up today, February 8, by 3.85% after this big player in the low-cost Permian Basin blew past earnings estimates and released aggressive guidance on future production growth. The company’s fourth quarter earnings of 49 cents a share was 15 cents a share above Wall Street estimates
Whew! And Yay! Whew, that it looks like someone else is going to win the bidding to acquire what’s left of airbag maker and Autoliv competitor Takata. Yay, that the likely acquirer is an airbag maker owned by China’s Ningbo Joyson Electronic. I’m...