I am pretty certain that all of my readers know what the Young And Restless Retirement Portfolio is all about by now (click here for the investor profile). Given the high risk nature of this growth portfolio, it is more than just selecting high reward stocks. Portfolio management, market rotation cycles, and a little good fortune can generate capital appreciation even in a down month, such as the one we just had.
The S&P 500 dropped by more than 3% in August, yet with the good fortunes of Facebook (FB), the Young And Restless Portfolio increased by about .75%. That is nearly a 4% swing from down to up.
Any gain is a good gain in my book.
How Could This Have Happened?
Having a portfolio that consists of higher risk, higher reward stocks, offers investors an opportunity to catch some fast gains as folks seek out the stocks that can make them some money. In a market that has been in a state of flux, many investors will rotate out of the traditional blue chips and book some profits, if valuations have become a bit too lofty, and plunk some of those profits down on the risk/reward stocks that might not have moved.
In the case of this portfolio, any good news on any of the stocks held in the core, will move up, or down, much more quickly than the stocks in a portfolio like the Team Alpha Retirement Portfolio. That is precisely what happened this past month.
For a quick glance of our last update, check out this article. We started with $80k 10 months ago, and reinvested all gains back into other stocks, or existing ones. It took about 4months to round out the portfolio with 8 positions, and $10k invested in each stock.
As of now we have an overall increase from the original $80k of roughly 50%, as the total value has reached more than $120k.
Here is the breakdown:
|Stock||Orig.Price||Price Now||Orig. Invst||Value Now||%+/-|
The two stocks that have disappointed thus far, are small cap stocks that I believe will pay off handsomely, sooner than later. Specifically, my latest choice to add to the portfolio, AMBA.
I wrote this article about AMBA in which I detailed the various reasons that I believe this stock will reward shareholders. Subsequently, several other authors chose to write articles about this company, and much to my dismay, the stock has taken a hit of 16% in the course of just one month. Bad timing?
Actually, a negative article was penned during the company's "quiet period" just prior to earnings release next week. It was written by an author with a short position, and the timing of the article, as well as the basis for its opinion, was questionable in my opinion.
The company could not respond during this time period, however Morgan Stanley wasted no time in refuting the article's premise:
This just out. Morgan Stanley cites Seeking Alpha article induced panic sell off as buying opportunity, maintains $18 price target.
The share price dropped under $13.75 and in my opinion, gave investors an amazing entry or add on price, if they believe in the company and its future. I suggest you take a look at this article which contains the Morgan Stanley response and recommendation re-iteration.
If the portfolio had enough dry powder, I would have doubled down on our position in AMBA, as I did in my own personal account.
The Bottom Line
I know that this higher risk portfolio is not for the faint of heart. While the returns could be quite dramatic, so can the losses, which is why I defined the investor profile, as noted in the first paragraph here, so there is no mistaking what this portfolio is all about.
That being said, we are doing quite well and hope to continue our good fortune with prudent portfolio management, profit taking, and stock picking based on sound research.