Happy New Year! Another year in the books. Though, as I wrap up last year, I’m shocked that 2011 opened with an atomic money explosion. My average annual return increased from 16.6% to 18.6% just today thanks to Bank Of America (BAC) rising 6.37% today. Though I wish I could put this on my 2010 score card, I’m happy that I’m not a hedge fund manager who started the year in 100% cash and missed such a huge move. Just another example of how it’s impossible to time the market.
This is my second year investing on record and I’m excited to have another year of S&P 500 (SPY) beating performance. Even by taking major risk and having my biggest loser, Blockbuster (BBI), which was at one point 10% of my Portfolio, drop 80%, I’m still ahead of the market. Through diversification it only took a few heavy lifters to raise my portfolio back from the dead. These 2010 Schwarzenegger stocks were:
1) CIT Group Inc. (CIT), (Jan-Dec, still holding), up 70.59%. Fresh out of bankruptcy. Lending money to small businesses will never be obsolete.
2) Apple (AAPL), (Jan-Dec, still holding), up 56.6%. My bet that the iPad would be a success was right.
3) Ford (F), (Jan-Nov, sold entire position), up 51.8%. Ford is one of the greatest turnaround stories in America’s history. “The best time to sell a turnaround is after it’s turned around” (Peter Lynch)
Thankfully, the winners made up for my losers, because I took some massive beatings. Here are my 2010 biggest losers:
1) Blockbuster (BBI), (Jan-September, sold entire position), -79.2%. I knew this was a long shot, and I missed. I’m a Netflix addict and shareholder so this was no surprise. My son was in NICU and I was selling my Blockbuster shares from the hospital via iPhone as they declared bankruptcy. My worst week to date.
2) Orthovita (VITA), (Jan-Dec, still holding), -47.1%. The product I was betting on, Cortoss, is currently a huge flop. It’s such a small position it’s not worth selling though. I would sell if I had more money invested.
3) National Bank Of Greece (NBG), (April-Dec, still holding), -34.4%. The PIIGS haven’t turned around yet. But, I wouldn’t be surprised if this is my biggest winner in 2011.
My latest buy update was five months ago because of my son being born. I completely underestimated how much my life would change and fell behind. Because of this, I launched a twitter feed and a Facebook page for GWF so I can quickly send out my buys/sells in between articles.
If you’re interested, please follow me here:
Greedy When Fearful On Twitter
Greedy When Fearful on Facebook
Here is how I’ve been putting new money to work since September. Since I’m so behind, I’m going to keep my reasons extremely short:
12/23/2010. Bank of America (BAC) @ $13.27. Tripled down to make it 10% of the Portfolio. It was the most beaten down bank in my bank basket so I made a big bet. I’m a huge believer in buying in “wide scales” or “pyramid investing.” “A stock get’s less risky the cheaper it gets.” (Jim Cramer) or “It’s better to fall through the basement than the ceiling.” (Motley Fool analyst). Eventually California will turn around and people will stop defaulting on their mortgages.
12/2/2010. Activision (ATVI) @ $11.97. What’s bigger than Michael Jackson’s Thriller and James Cameron’s Avatar? Call Of Duty: Black Ops. Activision had the biggest entertainment launch in history by bringing in 360 million in one day. Yet, the stock is priced where it was during the heart of the recession. Why? Because Wall Street thinks app store and social gaming (like Farmville) is going to kill the industry. They are wrong. Call me when You Tube viral videos kill Hollywood Blockbusters.
11/2/2010. Microsoft (MSFT) @ $27.03. Windows 7, Xbox Kinect, Bing, Windows Phone 7, Office 2010, etc. It took Microsoft 20 years but they are finally getting it right. The stock is exactly where it was a decade ago. It pays a 2.29% dividend. Is Wall Street crazy? Yes, this is a goldmine. Cloud computing is being built on the back of Microsoft (Server/SQL/Exchange), it’s not replacing Microsoft. Ask anyone who’s installed VMware (VMW) how many Microsoft products are running on their ESXi servers.
10/11/2010. Google (GOOG) @ $538.48. Android is the most popular smart phone platform. Google’s mobile searches have increased 500% from 2008-2010. You Tube has 50% more weekly views than last year. Google is the same price it was in 2006 yet revenue and earnings have doubled. Wall Street will eventually catch up, and so will the price.
09/10/2010. BYD Company (BYDDY.PK) @ $12.65. What’s the most challenging aspect of electric cars? The battery. Wang Chaun-Fu, a peasant farmer orphan (I’m not kidding) in China started making batteries when he was 29 (1995) and became the richest man in China in 2009. He did this by making batteries and electric vehicles which grew revenue at a compound annual rate of 48% over the past 5 years. If that’s not enough reason to like BYD, Warren Buffet also owns 10% of the company.
09/03/2010. BP (BP) @ $37.01. “Don’t catch a falling knife. Let it hit the ground and vibrate for a while” (Peter Lynch). After getting cut by buying in April, I let BP vibrate for a while and then doubled down. BP is America’s #1 producer of oil and brand image doesn’t matter here. Even if you are mad at BP you probably have bought their oil and just didn’t know it. Also, T Boone Pickens invested right along with me so I must be doing something right.
08/03/2010. Intuitive Surgical (ISRG) @ $271.25. Robotic Surgery is the future and it’s just getting started. Imagine a doctor with infinite arms, infinite tools, and eagle eye vision. This is a reality and thanks to da Vinci, can be used on hundreds of operations. At my son’s last hospital visit, the hospital was bragging about their da Vinci system. If you have never heard of da Vinci visit http://www.intuitivesurgical.com/products/ to see the present and the future.
Happy New Year!
Monty
Greedy When Fearful 
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