Personal Portfolio Update Archives

Been some movement in my account, I bought in after the dip and was lucky enough to pick up a quick 2.5% on Monday.

Moving into a fresh 2013 is exciting for me. My goals remain the same, 25% a year (9.31x for 10 years).

I’ve decided to no longer post exact dollar amounts of my portfolio balance for privacy, but I finished up 61% after commission for the year. This is well in excess of my 25% a year goal, and I would love to have a repeat.

I’m Long (64% invested)

Powershare QQQ Trust Series 1 (Symbol: QQQ)(25%)
That’s right. I’m 25% invested in Apple..errm…  I mean QQQ. QQQ is an ETF that holds major tech companies, and since it 16.31% Apple and Apple tends to be an industry leader, it’s kind of like investing Apple.  I think tech is oversold (for the most part), and I’m looking for a major bounce. [ Composition of QQQ found to the right ]

Silver (Symbol: SLV) (12%)
It’s always good to have some commodities in your portfolio, especially with inflation and instability. I have about 12% of my account in Silver. I’ve been in and out of Silver with some major success.

MET (Symbol: MET)(10%)
The option chains were just too cheap and I think this stock has some room to easily pop up $1.50 – $2.00. Hoping to grab a quick (within 3 months hopefully) 20% gain.

AMD (Symbol: AMD)  (6%) and Sprint (Symbol: S) (6%)
These are my hail marys. I have them both on Jan 2015 calls. I simply could not avoid such a good upside potential. I actually like AMD more than Sprint, and I’ve considered selling out of Sprint altogether (might on a small bounce).



GE (Symbol: GE) (5%)

Hoping GE crawls back up to $22+ range so I can get a few % return on my portfolio. Relevantly low downside, but also very limited upside. Hoping this stock was oversold a bit going into the end of the year.

 

 

For those who following my blog, you know that I roughly have $13,000 in my brokerage account (minus taxes I’ll have to pay at year’s end). An amount that I hope is quick to growth.

What’s my plan for growth over the next 4 years to break $100,000?

Save, Sell, and Invest.

Save

I would like to save $7,500 to $10,000 a year. This is a very obtainable goal. $21 a day automatically deducted from my bank account would be $7,665 in a year. This is to start in 2013.

Sell

I’m not talking about eBaying my misc possessions (although I will do this), I’m talking about selling my house. I hope to sell my home in 2013 (depending on how personal things and how the market treats me). I’m hoping to get $155,000 to $160,000 for my home. I owe $117,000 and after the dreaded 6% selling fee, I should net roughly $30,000.

This is going to be one of the largest actions in the short-term. Combine my existing $13k (minus taxes) + $30k for home + $7k saved = $50,000 by end of 2013 (hopefully).

Invest

Hoping for a 25% Yearly ROI which nets 18.75% after taxes (ignoring that later could be slightly higher taxes). Currently my performance is in excess of 50% (double my goal).

(Below the average balances assume I save $7,500 and that the balance is received half at year’s start and half at the year’s end (to reconcile the yearly ROI), this table is also assuming 25% growth rate that is taxed at 25% for effective 18.75% net growth)

**Sale of home, mentioned above +$30000.

There you have it, my master plan to get $100,000+ by age 30.

Some people who read this might think that I’m insanely greedy, but you have to understand that I view it very important to get this foundation for future growth. A 25% growth for 10 years results in 9.31x your money. Starting with $20k or $100k results in $186k vs $931k (pre-tax). Both amounts large, but one much more life changing.

As I previously said, I’m in excess of 50% this year ROI. So I decided to plug 50% return into the equation as well to see what I got, and just for the record, don’t plan on getting 50% return for the next 4 years.

 

Time to Bite into Apple (Symbol AAPL)

I use Google Finance (along with my broker) to screen stocks daily, and it’s just impossible not to talk about Apple (Symbol: AAPL).

With growing revenues and net incomes, an insanely attractive P/E (around 12), a healthy dividend, and rumors of more products yet to come, Apple is most likely underpriced.

Microsoft is arguably the best comparison to Apple, but virtually on every fundamental it is inferior (be sure to note the scale (y-axis) on the income statements).

The only note-able quality that Microsoft even has over Apple is its investments. But when it comes down to strictly an operation comparison, it’s kind of a joke.

Hence I believe Apple (Symbol: AAPL) is almost for certainly undervalued.

How to play this information (four options):

Go Long on Apple Stock (Symbol AAPL) and pray for a rally to the 700+ point range (About a 33% return + dividends)

Pros: Less volatility, collection of dividend, downward resistance.
Cons: Limited profitability due to lack of leverage. Large capital requirements for size-able return.

Buy a LEAP Option on Apple (Option Chains shown below). For example, $10,145 to control all of the upward swing from now till Jan 2015 on 100 shares (1 contract).

Pros: Less volatility than a short-term option or a butterfly option. Very large potential net gain due to leverage (If stock went to $700 by Jan 2015, 67.5% return). Less capital requirements.
Cons: Leveraged bet that this stock will at least go to $631.45 (Breakeven) by Jan 2015. $664.92 would give approximately the same return (33%) as the first option, ignoring dividends. Don’t forget Option Expiration.


Call Spread, You buy a call and sell a call above it. Example: Buy $530 call ($101.45) and sell $540 call ($96.00).

Pros: Low capital requirements. If stock finishes anywhere above $540 you would have gotten $10 for your $5.45 which is an 83.4% return.
Cons: Limited Profitability, Potential for someone to early exercise to capture dividend, slightly complex liquidity due to holding a call spread, margin requirements, and of course option expiration. All very important to understand before buying a call spread.


Buy Tech ETFs (Option or Stocks) that have APPL and a mix of other tech companies

Pros: Diversity and if Apple tanks and the rest of the market avoids the crash, you mitigate your losses (unlikely in my opinion)
Cons:
Fees, May contain stocks in the holding you don’t believe will perform well, and your avoiding selective targeting for maximum profit.
As for me personally? As I mentioned yesterday I sold out of a large portion of my portfolio, but I kept two ETFs that have a large AAPL component. As much as I hate call spreads because of the dividend capture and margin requirements, I can see call spreads being a solid play (and maybe not just for LEAPS).

 

Pulling Back on Stocks Before Christmas

Just an update:

Time to take the money and run, well not run, but wait for a correction. At least that is what I hope is coming.

Today I sold a lot (now 62.1% cash) in hopes that the market will shave off a couple hundred points before having it’s late “Santa Rally.”

Thinking that dividend tax rates will inspire a sell off then an immediate repurchase the last few days of 2012.

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