12 Stocks for 10 Years: January 2012 Update
The 12 stock for 10 years portfolio consists of stocks I would be comfortable putting into an IRA for 10 years. The main criteria is for companies with a history of large positive cash flow, that seemed likely to continue that trend. I am considering adding Abbot to the portfolio, and maybe dropping Cisco.
Since April of 2005 the portfolio Marketocracy* calculated annualized rate or return (which excludes Tesco) is 5.7% (the S&P 500 annualized return for the period is 3.9%). Marketocracy subtracts the equivalent of 2% of assets annually to simulate management fees – as though the portfolio were a mutual fund – so without that (it is not like this portfolio takes much management), the return beats the S&P 500 annual return by about 380 basis points annually (it would be a bit less with Tesco, but still close above 3%, I would think – calculating rates of return with purchases and sales and dividends is a complete pain, which is one reason Marketocracy is so nice).
The current stocks, in order of return:
% of sleep well portfolio now
% of the portfolio if I were buying today
Amazon – AMZN
Google – GOOG
PetroChina – PTR
Templeton Dragon Fund – TDF
Templeton Emerging Market Fund – EMF
Danaher – DHR
Apple – AAPL
Intel – INTC
Cash (likely to be ABT soon)
Cisco – CSCO
Toyota – TM
Pfizer – PFE
Tesco – TSCDY
The current marketocracy results can be seen on the Sleep Well marketocracy portfolio page.
Related: 12 Stocks for 10 Years: Feb 2011 Update – 12 Stocks for 10 Years, July 2011 Update – 12 Stocks for 10 Years, July 2009 Update – hand picked articles on investing
I decided to lighten up on Tesco and will likely buy Abbot (ABT). I am considering selling Cisco (largely to reduce the overload on technology and to keep the number of stocks down – I still think it is a perfectly good stock). I would still consider replacing PetroChina and Pfizer: I like both sectors more than I like the companies themselves. Still as part of the portfolio I think they are valuable. I would like a bit more exposure to commodities and health care but I haven’t found the right companies to add to this portfolio (I tend to like smaller, companies and haven’t found ones I am happy to lock away for a 5-10 year holding period).
In order to comply with the marketocracy diversification rules and deal with not being able to buy Tesco (in marketocracy) I own fairly small amounts of several other stocks in the portfolio (that are included in the marketocracy return). I only have: ATP Oil & Gas (ATPG) and USG left (and may sell them soon – especially if I keep Cisco).
* In order to track performance created a marketocracy portfolio but had to make some minor adjustments (and marketocracy doesn’t allow Tesco to be purchased, though it is easily available as an ADR to anyone in the USA to buy in real life – it is based in England).
** Tesco had a purchase price of $22.55 on Dec 11th 2006 and has paid approximately 40 cents a year in dividends. The current price is $17.89. The -13% return is just an estimate.