Mark Welch Goes to the Market (October 15, 2001) Nearly two years ago, I wrote a brief article describing my investment of the proceeds from the sale of a web site.
In December 1999, I wrote:
Anyone who looks at my investment portfolio will quickly reach a very clear conclusion: I am a "value" investor. In general, a "value" investor focuses on fundamental market attributes:
- the company's stock trades at a lower multiple of earnings than other companies in the industry (the so-called "Price/Earnings" or "P/E" ratio), and/or compared to the average ratio within a broader "sector" or index;
- the company's stock trade's at a lower multiple of its "book value" (tangible or intangible) than other companies in the industry ("Price/Book");
- the company's stock price, compared to its competitors' stock prices, appears low based on the company's financial condition and performance (for example, I look at a company's level of debt and revenue and earnings growth, compared to other companies in the same industry).
Most "value" investors abhor stock in companies that don't earn any profits at all, or which trade at extremely high multiples of earnings. In general, this means that "value" investors rarely invest in "internet" or "e-commerce" stocks (which usually have large losses), nor in companies trading at multiples of 50 ot 80 times earnings.
Since December 1999, I have made a number of changes to my portfolio. Perhaps most significant, I shifted about 15% of my portfolio from individual stocks to mutual funds and "exchange-traded index funds." I liquidated 23 of my "old" individual stock holdings and I now hold 32 "new" individual stock holdings (compared to December 1999). In the interim, I also bought and sold about 2 dozen other stocks that aren't listed since they weren't held on either date shown. I also sold out some holdings (when prices spiked up), and then re-purchased shares (when the price dipped again). (Examples include GM, JP Morgan, and Sears.) I shifted the funds from the Schwab International Index Fund to the Scudder Japan Fund (suffering substantial losses in both). I also bought more shares of several companies (Hubbell and Louisiana-Pacific are the largest examples).
|
Percentage of Total Portfolio on: | ||
| Individual Stocks | 10/12/2001 | 12/21/1999 |
| Hubbell | 4.0% | 1.0% |
| AmSouth Bancorp | 2.4% | |
| Louisiana-Pacific ... | 2.1% | 0.9% |
| Wachovia (First Union) Bank | 1.6% | |
| Royal Dutch Petroleum (Shell Oil) | 1.5% | |
| Edison International (Electric Utility) | 1.1% | |
| PG&E Corp. (Electric Utility) | 1.1% | |
| National Service Industries | 1.1% | |
| Intel Corp | 1.1% | |
| Center Trust (REIT) | 1.0% | |
| Abigail Adams Natl Bank | 1.0% | |
| Daimler Chrysler | 1.0% | |
| Greater Bay Bankcorp | 0.9% | 1.5% |
| Eagle Bankshares | 0.9% | |
| First Fed (Bank) | 0.9% | |
| Bank of Hawaii | 0.9% | |
| Bank of America | 0.8% | 2.3% |
| P H Glatfelter (Wood/Paper) | 0.8% | |
| Merck & Co. (Pharm.) | 0.8% | |
| Verizon (formerly Bell Atlantic) | 0.7% | 1.2% |
| J C Penney | 0.7% | |
| General Motors | 0.6% | 2.6% |
| Sears | 0.6% | 2.0% |
| Ford Motor | 0.6% | 0.9% |
| SBC Communications | 0.6% | 0.9% |
| E.I. DuPont | 0.6% | |
| Del Monte Foods | 0.6% | |
| JP Morgan | 0.5% | 1.9% |
| Intl Paper | 0.5% | |
| Schering-Plough (Pharm.) | 0.5% | |
| Cypress Semiconductor | 0.5% | |
| Enron Corp. (Energy/Util) | 0.5% | |
| Lucent Technologies | 0.5% | |
| UPM-Kymmene (wood/paper) | 0.5% | |
| Goodyear | 0.3% | 2.4% |
| Aurora Foods | 0.3% | |
| Unisys Corp. | 0.3% | |
| Hewlett-Packard | 0.3% | |
| Genuity Inc. | 0.2% | |
| Xerox | 0.1% | 1.0% |
| Nortel Networks | 0.1% | |
| U S G Corp. | 0.1% | |
| Johnson and Johnson | 0 | 3.2% |
| Delphi Automotive ... | 0 | 2.4% |
| Allstate | 0 | 2.3% |
| Wal-Mart | 0 | 2.0% |
| Toys R Us | 0 | 2.0% |
| Exxon-Mobil | 0 | 1.5% |
| Hanneford Brothers | 0 | 1.2% |
| Texas Utilities | 0 | 1.2% |
| Florida Power and Light | 0 | 1.2% |
| Fannie Mae | 0 | 1.2% |
| VF Corp. | 0 | 1.1% |
| Fidelity Natl Fin | 0 | 1.0% |
| Honeywell (Allied ... | 0 | 1.0% |
| US Food Service | 0 | 1.0% |
| Tribune Co | 0 | 1.0% |
| Baldor Electric | 0 | 1.0% |
| Aetna | 0 | 0.9% |
| Holinger Int'l (Ne... | 0 | 0.9% |
| Wisconsin Energy C... | 0 | 0.9% |
| Getty Petroleum | 0 | 0.9% |
| Burlington Norther... | 0 | 0.9% |
| Pharmacia & Upjohn | 0 | 0.8% |
| Monsanto | 0 | 0.7% |
| TOTAL Individual Stocks: | 35.3% | 48.7% |
|
Percentage of Total Portfolio on: | ||
| Mutual Funds & Exchange Traded Index Funds | 10/12/2001 | 12/21/1999 |
| Schwab Total Stock Mkt Index Fund | 14.2% | 3.7% |
| Am.Cent. Small Cap Quant | 9.0% | 4.6% |
| Eclipse Small Cap Value | 5.5% | 5.5% |
| Wilshire Target Small Cap | 5.3% | |
| Shadow Stock | 4.6% | 4.6% |
| Quaker Small Cap Value | 4.3% | 4.6% |
| Scudder Japan Fund | 3.6% | |
| SPDR - Basic Industries | 3.5% | |
| NB Soc. Resp. | 3.3% | 4.5% |
| SPDR - Technology | 3.1% | |
| P&R Growth & Income | 3.0% | 4.6% |
| NASDAQ 100 Trust | 3.0% | |
| NB Guardian | 2.7% | 4.6% |
| Schwab 1000 Fund | 0 | 1.9% |
| Schwab International Index Fund | 0 | 1.8% |
| Schwab S&P 500 Index Fund | 0 | 1.8% |
| SSgA Yield Plus (UltraShort Bond Fund) | 0 | 9.2% |
| Total Fund Investments: | 65.1% | 51.4% |
I do not plan to disclose my future investment decisions, or changes to my investment portfolio.
I am not an expert in investments or financial
matters.
Last Updated on 10/15/2001
By Mark Welch
Email: MarkWelch@MarkWelch.com
Mark Welch's Perspective . . . Read my ideas, then think for yourself!