November 2012 portfolio review

A little late for this month’s portfolio review but there has been a lot going on  lately on the personal front.  My apologies. This month there was a lot of changes to the portfolio. I’m mostly in cash now and starting to make a new shopping list. Lets get to the review.

I’ll start with the retirement accounts. Most of the retirement accounts are in the IVY portfolio so the changes reflect the same ones I discussed in the IVY update this month. Otherwise, I still hold my disaster hedge FRFHF in these accounts. Fairfax will probably have some short term impact from Sandy but long term its still a good hold.

In my main investment accounts I had a large move to cash this month. In these accounts I am now about 12% equities, 13% muni bonds, and 75% cash. I sold KMI, KMR, WPZ, WMB, and AFL this month. These moves do not reflect on the underlying fundamentals of these companies. I had lines in the sand drawn, stops,  to protect profits and all the prices dropped to my exit levels. If its one thing I’ve learned in investing is to follow your rules and my number one rule is capital preservation, or don’t lose money. And just as important as learning when to buy stocks is learning when to sell them, a much overlooked topic. All of these companies are on my potential future buy list due to their good fundamentals. The recent weakness is more macro driven and I’m looking forward to getting back into some of these names. But for now, with the overall market weakening, capital preservation is the most prudent strategy.

My one sell that deserves further discussion is EPD. This has been my longest term holding, going back to 2005 for my initial position, and mainly since early 2009 when I backed up the truck and loaded up on EPD at about 10% yield. Oh, to have that chance again. This has been my best investment ever and due to that it had become a huge part of my portfolio. I have no problem holding large positions but at about 26% of my portfolio it had become too large even for me. So, a few months ago, I drew a line in the sand at a price where I would reduce my position in EPD. That line was hit this pas week and I thus reduced my EPD position to about 11% of my portfolio, still a large enough position to make most people choke. At this point I’ve taken all my original investment out, plus, all dividends, and am letting all the capital gains (the house’s money so to speak) ride. EPD continues to be the MLP with the probably the best operating performance and management and I would love to add more on further price drops.

Lastly, the muni part of the portfolio is doing great, beating stock market returns again this year, and looks to do well for the rest of the year. The only thing I could hope for here is another Meredith Whitney call….just kidding. Until next month. If you have any questions about the recent changes let me know.