Monday, February 5, 2007

The Value Plays Portfolio

I have talked about quite a few stocks here and have been asked by readers, "do you own all these stocks"? Well, no. I have put together an "Official Value Plays Portfolio" so you can track my suggestions and in turn, measure my results against others and the market as a whole. Just so everyone understands what the following chart means and how I am going to measure the results, here are the ground rules:

1- The "buy price" is the price the day my post hits that says "buy". Even though I write the blog the day before it is published in most cases, in order to make every recommendation verifiable, it will be tracked from the date on the blog. Even though I have owned several of these picks for years, I cannot prove this to you so the date of the blog will now be the "buy price". For stocks we advise you avoid, we will track those by the price per share the day I recommend you avoid them.

2- Dividends, splits or spin offs will be treated as a reduction in the purchase price to show the "true return" on the investment. For example, I buy a stock for $20 and it pays a 25 cent quarterly dividend. Each quarter I will reflect that payment (gain) buy reducing our purchase price by 25 cents. That reduction will be noted in the "actual cost" category. This will be the same for the upcoming Kraft spin off by Altria, I will reflect the investment gain of the Kraft shares we receive (since I will not keep them) by reducing my purchase price for the Altria shares by the value of the Kraft shares. Should I change my mind and keep the shares, this will be reflected by a decrease in the purchase price of the Altria shares to reflect the gain and then a purchase of the Kraft shares in the same amount.These situations will be footnoted for individual explanation.

3- Should I recommend the purchase of additional shares of a security, that will be reflected by another entry for that security and that price (to assure consistency with the new post).

4- I will update the results the first week of each month. Since I am "long term" oriented, I will not break out results quarterly or annually. If you have read my posts, the conditions that will trigger a security to be sold will not be a temporary drop in the stock price, so monthly and quarterly results are essentially irrelevant. I have found that the shorter I make the tracking time frame of an investment, the more likely people are to make decisions based on short term events and not long term fundamentals. This is counter to my philosophy, so to help prevent that, all results will be "from inception". By default since this is new, the initial results must be short term but as time goes on this will change. The benchmark I will use for comparison will be the S&P 500. It also will be tracked from the inception of my first post 1/18/2007.

5- I will rarely if ever "short" stocks (sell them first in the hopes of buying them back at a later date at a lower price). I will track the results of stocks I advise you avoid again in the interest of full disclosure and honesty.

6- I may engage in some options purchases or sales. If I do these will also be reflected on the tracking.

7- Portfolio assumes an equal weighting of shares for each security. By default this means I have more dollars invested in higher priced stocks like MO, and SHLD. I am very comfortable with this. Again, should we want to add additional shares of a security, we will note that by another entry.

8- Updates are current prices.

With that, here it is:


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