Back Shelf Portfolio Surpasses S&P 500 Performance

Yes, this portfolio of quality stocks which was (theoretically) purchased back in January 2012 and just left to sit there, is doing better than the S&P 500.

Our amateur stock guy portfolio is now up 40.35% compared to the S&P 500 index which is up 38.15%.

In money terms, our theorectical portfolio which was purchased for $11,665.31 back in January, 2012 is now worth $17,177.81 (up $4,706.59).

Here's what that portfolio would look like today.

So, all this daily stock news that you are listening to that is causing you to buy stocks too late and sell stocks too early is distracting you from what you should be doing - which is just buying good, quality stocks and holding them. (Sounds like Warren Buffet, right?)

Remember, this portfolio does not have fees like holding an index fund might have, and all taxes paid on a portfolio such as this would be considered long term gains - unlike holding an index fund, which does have fees and due to turnover, and may have some short term gains.

This January might be a good time to adjust this portfolio, which I will post when that happens.

How did we do in 2012?

Here we are in February, 2013 revisiting our portfolio.

Let's take a look and see how it did this year.

Up 10.93%. Looks good.

Compare that to the S&P 500 which is up 18.5% for the same time period.

Well, I can't complain about being 10.93% ahead, but for those of you that just held the S&P 500 index fund this year, you did quite well.

I plan on holding this portfolio until about April 20, which is about the time that most stocks peak.

You've heard the adage, "Sell in May, go away." Well, this is surely the year to pay attention to that, since stocks are really getting quite overvalued this year.

I will most likely plan to repurchase a new portfolio in the fall when stocks reach more normal valuations.

New Positions For 2012

Below find the new positions for this blog portfolio. The same rules apply.

The previous portfolio was sold in its entirety. Each stock was assigned a $10 commission for both the sale and the purchase of new stocks. Seven stocks were chosen. These stocks will be held for a minimum of one year.

At the end of the year, these stocks will be compared to our benchmark, the S&P 500.

Boring? Yes. But, if I actually made 29.33% on my money over the last 27 months, I would be a happy guy.

How's 13% Annual Return for Not Even Doing Anything for 2 yrs?

Now, I admit that not even trying to manage these stocks is almost flagrant disregard for your money.

But, how can you argue with a 29.33% return over the last 27 months?

Compare that to the S&P 500, which returned 19.5% over the same period.

OK. So now I am revisiting this same strategy and will be posting my current selection of stock picks in the near future.

It begins

OK. Let me make this clear. I am not a stock expert, or even an amateur, to tell the truth - so I can't say that anything I write here about my stock adventure makes investing sense.

However, let me say this, too. I am not a kid, not by any means. I am probably older than you. I still work, and I don't have a lot of time to research stocks everyday. So what is this all about?

It's about picking stocks. I plan on setting up a portfolio of approximately 20 to 30 stocks. I may choose to actually buy these stocks, or I may not - but I will adhere to my portfolio as most stock pickers do. I will use a set amount of money, whether real or imagined, and track the performance of this portfolio, and I will see how I compare to the big guys.

I am looking for value stocks - stocks that are solid and are presently undervalued. I will not pick the stocks of small companies which have a higher risk of failure. I will choose stocks that have a minimum market cap of at least $500 million to $1 billion. I will share these stocks with the community here so entry and exit points will be easily tracked.

The initial portfolio will have maybe 5 to 10 stocks. Then, each quarter for the next year, I will "purchase" an additional 5 to 8 stocks until I have reached my portfolio of 20 to 30 stocks. The portfolio will not have a lot of turnover to reduce transaction costs and capital gains taxes. The initial investment will create equal amounts of each stock, say $1000.

I plan to post at least whenever I execute a transaction, but may post more frequently if the mood strikes.

I will measure my success as any would - compared to the S&P 500. So wish me luck and here goes.

Below you will find the stocks to initialize my portfolio. The $10 net loss for each stock represents the commission to purchase each stock. The Change and %Change columns represent the movement of each stock during the day. The assumption here is the stocks were purchased at the closing price today. Click on the image below to see it full size.