Sell Central European Distribution (CEDC) in my long-term Jubak Picks 50 portfolio

I dropped Central European Distribution (CEDC) from my Jubak Picks 50 long-term portfolio http://jubakpicks.com/jubak-picks-50/ on Friday, January 13 (See my post http://jubakpicks.com/2012/01/13/10-stocks-for-10-years-2012-edition-my-annual-update-of-my-long-term-jubak-picks-50-portfolio/ on January 13 for all the changes to the portfolio.)

Why sell now? The stock lost 80.9% in 2011 so why not hold on for a turnaround? Read more

I added Weyerhaeuser (WY) to my Jubak Picks 50 long-term portfolio http://jubakpicks.com/jubak-picks-50/ on Friday, January 13 (See my post http://jubakpicks.com/2012/01/13/10-stocks-for-10-years-2012-edition-my-annual-update-of-my-long-term-jubak-picks-50-portfolio/ on January 13 for all the changes to the portfolio.)

Why? Because as much as I’d hate to pick a precise month for the bottom in the real estate market, I think that we’re close enough to a bottom so I’m willing to put some money to work in the sector—if I get paid to wait for the precise turn. Weyerhaeuser converted to a real estate investment trust in 2010 (2.97% current dividend) so I’m getting paid a better than 10-year-Treasury-bond yield while I wait for a bottom in the second half of 2012 or sometime in 2013. And when the bottom comes Weyerhaeuser’s real estate sales on its 6.15 million acres of timberland and its concentration on products for the construction market give me plenty of leverage to the upside. About 40% of sales come from its wood products business, with about 70% of the products of that unit used in new residential construction. Weyerhaeuser Real Estate Company, 15% of sales, develops master communities, single-family houses, and residential lots.

With that business mix, as you’d expect, 2011 wasn’t the greatest year for Weyerhaeuser. Read more

Sell Encana (ECA) out of my long-term Jubak Picks 50 portfolio

The December 2009 split into two companies was supposed to highlight the value of the U.S. and Canadian natural gas assets that EnCana (ECA) kept. (The new company Cenovus (CVE) got the Canadian oil sands and refining assets.) Instead it has wound up emphasizing EnCana’s exposure to a glut in North American natural gas that could keep prices depressed for years.

Now EnCana looks like it has decided to invest in reversing that 2009 split by putting about 20% of its capital budget into developing reserves that are rich in natural gas liquids and oil. Read more

I added Pioneer Natural Resources to my long-term Jubak Picks 50 portfolio http://jubakpicks.com/jubak-picks-50/ on Friday, January 13 (http://jubakpicks.com/2012/01/13/10-stocks-for-10-years-2012-edition-my-annual-update-of-my-long-term-jubak-picks-50-portfolio/ )

To understand why I’m picking this oil and gas company from a long list of alternatives you have to get deep inside the U.S. oil boom going on now.

That boom is a result of oil companies bringing new technologies to bear on fields that were thought to be near the end of their lives or on fields that were thought to be impossible to drill.

Pioneer’s Spraberry field fits that first category. The field is one of the oldest—and largest—in the Permian Basin and despite having drilled in the area since the late 1980s, Pioneer continues to expand production by using technology to drill into deeper formations that has almost doubled estimated ultimate reserves. Pioneer has 900,000 Spraberry acres under lease.

Those estimated reserves don’t include what looks like it will turn out to be a major new Permian play from the deep Wolfcamp Shale formation. Read more

I’ve often said that you can’t judge a portfolio until you see how it does in both a roaring bull and a raging bear.

Did the market gods have to give me my wish?

My long-term portfolio, the Jubak Picks 50, has done just fine in bull markets. Based on my book The Jubak Picks and started on December 30, 2008, the portfolio http://jubakpicks.com/jubak-picks-50/ gained 57.8% in the bull year of 2009. (You’ll remember that the stock market bottomed in March 2009.) And it did okay in 2010, too, gaining 20.1% that year. In those each of those two years the portfolio beat the Standard & Poor’s 500 Stock Index hands down: The S&P 500 gained 26.5% in 2009 and 15.01% in 2010.

Then came the bear market test of 2011. The portfolio lost 18.59% last year. That’s against a 2.11% gain for the S&P 500.

For the three years, the Jubak Picks 50 was up 54.3%. That’s against a gain of 48.5% for the S&P 500.

That’s an extra 5.8% for the Jubak Picks 50 over the S&P 500. (Yes, the actual advantage would be lower since the Jubak Picks 50 incurs trading costs that an S&P 500 index wouldn’t. But I’m only doing 10 trades a year so, in these days of $10 trades (or less), we’re not talking about a lot of commissions costs.)

Is this a good or a bad result? Read more