Automatic Investment Plan Results, Sector Risks and Cash Reserves

This is an update of the Automatic Investment Plan I executed last week.

 

My $434 bought 14.4152 MDLZ shares @ $30.11/share.

 

We now own 26.2504 MDLZ shares.   I expect to be paid $3.412552 in dividends (@$0.13/share).

 

With our new MDLZ total, our top five holdings are as follows:

 

1. AAPL  17.91%

2. GLD    14.26%

3. MDLZ 14.05%

4. LULU  13.92%

5. MO      11.48%

 

With this update, our portfolio's sector exposure has changed.  Before, the Computer and Technology sector was the bulk of our sector exposure due to Apple's meteoric rise in value which concerned me especially during the months when Tech was hated in Wall Street.  It took some time (and Apple's decline) but we were able to balance out our sector risks.  So now, the Consumer Staples Sector (29.28%) took the lead from the Computer and Tech Sector (24.10%).  I am still not satisfied and I think I need to bump up the rest of my sector exposures (Business Services 8.36%, Oil & Energy 10.17% and Retail Stores 13.82%).  My goal is to put each sector at 20% value of our portfolio which would make our portfolio's exposure risk as divers as possible. 

 

Why am I so focused with sectors?  Because Sector performance/sentiment pretty much affects about 50% of each stock's performance.  Going back to my original concern,  the Tech sector was pretty much hated by Wall Street in the summer months of 2012.  My XLNX position pretty much suffered while Apple held on to it's values for as long as it could.  It can get frustrating seeing XLNX pretty lose value or at best, stay the same while my Consumer Staple stocks (MO, KRFT & MDLZ) have carried our portfolio during those tough months.  Knowing how this affects stock prices, I am convinced that diversifying our Sector risk would be good for our portfolio.

 

In other news, I need to rebuild our cash position.  I should see opportunities to do so in my next few paychecks.  Now the question would be whether or not to buy more XLNX with an upcoming Ex-Dividend Date of 05/13/2013 or get some more WM to bump up our Business Sector position. 

 

We'll see.  We have until May 9, 2013 to decide.

New Stock Purchases... And It's NOT Groupon (GRPN)

I got some spare change around $300.  So I decided to put it in our Investment fund.  I'm almost done with my ROTH $5,000 limit so now, it's time to double down on our stocks.

Here are my picks for next Tuesday's trading day (via Automatic Investment Plan - lower fees): prices as of 11/042011 at 9:48 am

GLD = $200 - $4 (fee) = $196.00/$170.53 = 1.1494 shares
WM = $100 - $4 (fee) = $96.00/$31.31     = 3.0661 shares.

The Market in general has been a roller coaster these past few weeks.  Europe still has the Greek debt issues while the US Unemployment rate went down a bit. So you can imagine how some days the market is down and some day it's up.  Here's my view, whatever short term news/events that affect the markets in the near future should not affect how I view my investments (unless, these events are specifically about my portfolio positions).  In fact, the more the Markets put fear into the masses, the more I should invest (after due diligence of course).

So why GLD and WM?  Well GLD is easy.  It is a Gold ETF that would serve as my hedge against inflation and government catastrophes that can weaken the dollar or the US's credit rating.  I want more share of GLD to help shore up my portfolio.  WM on the other hand is a waste disposal play that I believe would be busy in the upcoming holiday season.  It would haul millions of pounds of trash and perhaps even clean up after snow storms and other weather-related events.  Plus, they just paid their dividend in Sept 2011 so I expect the next dividend date to be in December.  So I'm putting in more shares to get that juicy dividend.

All in all, I'm just balancing my portfolio and building up my positions so that I can eventually sell shares to recoup my initial investment and play with the house's money (pure profit play).

Automatic Investment Plan Confirmed

Today, my new Automatic Investment Plan kicked in.

I got 2.1473 shares of Apple (AAPL) at $347.42 per share.

Analyst predict AAPL will go up to at least $400 in the next 18 months.  Watching the charts, this statement is not too far fetched.  Plus, with WWDC 2011 just around the corner, AAPL is poised to release their new Mac OSX version (Lion) and people still hope for a new iPhone 5.  Even if the iPhone 5 does come out in the fall (per rumor mills), AAPL is all but guaranteed to have record sales for 2011 because of the iPad 2, new iMacs, Mac OSX Lion and the iPhone 5 (with some push for the iPods in September).  Also, this weekend marked the first time AAPL beat Google (GOOG) as the world's most valuable brand.  AAPL is kinda down today... most likely from profit takers or mutual funds re-balancing their positions (Like the NASDAQ index).

I got 1.3806 shares of Lululemon (LULU) at $98.51 per share.

Currently, LULU is a bit higher than when I placed my order.Roughly 2-3 points down from the Day's high.  I still believe LULU has some room to run leading to the impending 2-1 stock split in June.  It is also not too far fetched that LULU will be the next Chipotle or Netflix.  High quality brands and room to grow in the US, Europe and Asia.

I got 2.9717 share of Xilinx Inc (XLNX) at $35.67 per share.

I bought some more XLNX ahead of it's X-Dividend date of May 16.  If I had more cash, I'll buy some more.. I'm practically getting paid to buy the stock.  I'll probably lock in some earning or re balance after I get the dividend reinvestment.

With this action, I'm a bit overweight in the Tech Sector.  This is a no no.. but in this case, I think I can ride out the imbalance because of two impending events with my 2 Tech positions.  Apple's WWDC and iPhone 5 and XLNX's X-dividend date.

I'll reconsider my positions as soon as these events pass.

Getting In on APPLE (AAPL)

The market has been down lately... especially on Tech Stocks.

Today, AAPL closed 15.33 down off it's 52-week high. Over 4% drop from the high and from today's range, almost broke the 5% pullback.

I think it's time to get in on AAPL.

Here's why:
1. Close to 5% pullback.
2. WWDC 2011 is coming up in June where Apple is expected to release it's new OS (Mac OSX Lion).  Also, the iPhone 5 might make an appearance (although highly doubtful per analysts and sources close to the matter).
3. A version of the iMac just came out with 2 Thunderbolt ports.
4. The white iPhone 4 finally came out and on WWDC, Apple would probably announce how much white iPhone 4's they sold.
5. RIMM is bringing Black Berry Messenger (BBM) to Android and iOS. This might convince BB users to finally switch to iOS or Android.  Either way, AAPL will have a greater profit margin since they control hardware and software distribution of the iOS devices.
6. Analysts and project AAPL to reach $400 in the next few months.

Therefore, I took $1000.00 from my reserves (which I will not do often) and put in my new Automatic Investment  Plan (to be executed on Tuesday, May 10).  I put in $750 for AAPL which would buy me 2.13 shares (@$350/share + $4 fee).  The $140 will be used to buy LULU that would fetch me 1.44 shares (@$94/share + $4 fee).  LULU is down 9.33% off it's 52-week high of $102.83.  A great way to buy some more LULU ahead of it's expected 2 for 1 stock split and Annual Stockholder's Meeting.  Finally, I allocated $110 to buy 2.94 shares of XLNX (@$36/share + $4 fee).  XLNX has bee rebounding lately and the X-Dividend date is coming up (May 16).  Might as well get those juicy dividends.

I know with my AAPL purchase, I may have 2 tech stocks and would unbalance my diversification.  However, with XLNX rebounding and the dividend distribution coming up, it makes good sense to keep XLNX and AAPL is also a great long term investment.

I will review my opinion of XLNX after the dividend distribution and earnings call.

Week Lessons

I just did a rear view mirror look of my investment moves last week.

Even though the market value of my investments are up, I'm still behind due to the fees that was charged to me to execute my trades.

Recap:
Total Money Put in fund: $200 + $50 bonus = $250.00.
Market Value of investments: $221.55 (as of 9:58 am PST)
Loss: $28.45
Fees paid $29.85.

Lessons learned:
Purchase positions that would bring more bang for my buck after fees.
ex: Buy 5 LULU at $90 each ($450) at one time with only $9.95 paid in fees instead of 5 different trades of LULU at $90 each ($450) and pay $49.75 ($9.95x5) in fees.  Whatever dollar cost averaging discount I get from buying in different times would have been eaten by the fees.

Plan of action: Perhaps do a monthly trade of blocks of stocks instead of buying one-by-one.  Also, do the automatic investment plan where the fees would be $4 instead of $9.95.

First Funding

I just transferred $200.00 to our Investing Fund.

Unfortunately, I have to wait 1 business day for the funds to be available for Stock purchases.

Initial Investment: $200.00 on March 23, 2011