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Summary

  • The Stress Free Portfolio achieved a 3.56% Alpha, posting a 4.86% quarterly increase.
  • This is me, documenting my journey in portfolio management towards financial independence via a DGI/value based strategy.
  • An overview of quarterly regrets and lessons learned.

This is the Q1 2014 report for the Stress Free Portfolio, a project that I recently introduced here on SA. In short, this is my personal portfolio. I am a young investor who has learned a lot from the DGI community that we have here on Seeking Alpha. I've always thought that experience is the best teacher though, so I've decided to take on a much larger role in the management of my family's finances with the hopes of taking complete responsibility for my investments in the relatively near future. I hope that others can learn from my triumphs and defeats,documenting my journey into the investment world via the Stress Free Portfolio is my attempt to give back to the DGI community that has already taught me so much.

I have broken down this report into three main segments: positions held at the start of the quarter, positions added throughout the quarter, positions bought with dividend reinvestment, and finally, overall performance results. I won't make this article suspenseful (drum roll please), I am pleased to announce that my portfolio's value increased 4.86% during the quarter. This represents a 3.56% out performance of the S&P 500, which increased 1.30% during the quarter.

Positions Held At The Start Q1

Ticker SymbolCompany name Quarterly Gain/Loss %
VTRVentas Inc 5.74%
TGTTarget Corp -4.36%
CSCOCisco Systems Inc -0.09%
TAT&T Inc -0.22%
EDConsolidated Edison Inc -2.94%
SOSouthern Co 6.86%
WMTWal-Mart Stores Inc -2.87%
SWKStanley Black & Decker 0.07%
AAPLApple Inc. -4.33%
BAXBaxter International 5.80%
PMPhillip Morris International Inc -6.03%
VVisa Inc -3.13%
DLRDigital Reality Trust Inc 8.02%
CMICummins Inc 5.70%
CAT**Caterpillar Inc -0.08%
MOAltria Group Inc -2.50%
COHCoach Inc -11.51%
QCOMQualcom 6.20%
OReality Income Corporation 9.45%
DEDeere and Co -0.58%
POTPotash Corp. of Saskatchewan 9.89%
ESVEnsco PLC -7.69%
IBMInternational Business Machines Corp 2.74%
KOThe Coca-Cola Company -6.41%
MKCMcCormick and Company Inc 4.07%
INTCIntel Corporation -0.57%
WFCWells Fargo & Co 9.55%
AFLAflac Inc -5.62%
XOMExxon Mobile Corp -3.47%
Overall Gain/Loss % 3.41%
** CAT shares were sold on 1/30/14

Positions Bought During Q1

Ticker SymbolCompany NameDate Purchased Quarterly Gain/Loss %
SBUXStarbucks Corp03/03/14 4.06%
BLKBlackrock Inc03/03/14 4.68%
GEGeneral Electric Company03/03/14 3.56%
KMIKinder Morgan Inc02/26/14 1.02%
PEPPepsiCo Inc02/13/14 5.67%
CBThe Chubb Corporation02/12/14 5.40%
CAGConagra Foods Inc02/12/14 6.96%
SJMJ M Smucker Co02/07/14 4.13%
OHIOmega Healthcare Investors Inc02/07/14 10.48%
TRVTravelers Companies Inc02/06/14 5.84%
MAMastercard Inc02/11/14 1.88%
DISThe Walt Disney Company02/05/14 12.39%
KRThe Kroger Company02/05/14 22.70%
BRK.BBerkshire Hathaway Inc02/05/14 14.84%
KOThe Coca-Cola Company02/21/14 3.72%
KOThe Coca-Cola Company01/13/14 -2.49%
PMPhillip Morris International Inc01/07/14 -3.33%
COFCapital One Financial Corp01/07/14 -0.45%
HCPHealth Care Properties Investors Inc01/03/14 7.03%
ARCPAmerican Reality Capital Properties Inc01/03/14 8.60%
JNJJohnson and Johnson01/02/04 6.42%
KMIKinder Morgan Inc01/02/14 -9.11%
Overall Gain/Loss % 5.30%

Positions Bought Through Dividend Re-Investment During Q1

Ticker SymbolCompany NameDate Purchased Quarterly Gain/Loss %
CSCOCisco Systems03/21/14 3.03%
DISThe Walt Disney Company03/21/14 -0.34%
KMIKinder Morgan Inc03/21/14 4.20%
ARCPAmerican Reality Capital Properties Inc03/21/14 -0.49%
ARCPAmerican Reality Capital Properties Inc02/21/14 -1.19%
KOThe Coca-Cola Company02/21/14 3.78%
ESVEnsco PLC01/22/14 -3.24%
OReality Income Corporation01/22/14 3.46%
WFCWells Fargo & Company01/22/14 6.48%
Overall Gain/Loss % 1.86%

Overall Portfolio Performance

Total Return Without Dividends 4.24%
Total Return With Dividends Re-Invested 4.86%

Being the "Stress Free Portfolio" one of the major goals for this portfolio is to eliminate stress and regret by staying within myself and playing it safe. Even so, there were still events throughout the quarter that I wished had played out differently. Everything is a learning opportunity though. Managing this portfolio has been a wonderful ride thus far and I don't expect for that to change as I continue to find myself as an investor.

Quarterly Regrets / Lessons Learned

I need stop second guessing myself. I want to be cautious when entering into positions but I also need to trust myself; there were several times when I was very close to hitting that "confirm purchase" button, but held out hoping for a better price. This cost me money in a theoretical world; I would wait and wait, watching a stock hover just barely over the number I had in my mind, only to see its momentum change and shoot right back up to price levels where I was no longer interested. Examples of this during the quarter were McDonalds (NYSE:MCD) at $93, Boeing (NYSE:BA) at $121, AT&T (NYSE:T) at $31, Encso (NYSE:ESV) at $47, and most recently Gilead (NASDAQ:GILD) when it dipped below $68 last Friday. Now that I know when it feels like to miss out on owning these companies at attractive prices I know I won't miss the opportunity again, should it ever arise.

I regret not buying more Berkshire (NYSE:BRK.B). I look back and ask myself, "what were you thinking?" At $108/share I knew that if the shares weren't trading at the mythical 1.2x book value buyback range, that they must have been close, essentially setting a bottom on my purchase. Minimizing downside risk is one of my primary goals when investing. Obviously, I'll never know for sure if my estimations of potential risk are accurate or not, only time can be the judge to that; however, with Berkshire and a potential buyback setting a solid foundation for the shares, I probably won't have another opportunity in the near future where I can be so sure.

I should have been more patient with Caterpillar (NYSE:CAT). I sold the stock after its big earnings bounce because I wasn't particularly thrilled with the conference call and I thought that the shares would remain range bound. I thought I was selling at the top of its recent range at a decent overall profit (up slightly more than 7% since my original purchase) and that I would have the opportunity to buy shares back at a lower price in the relatively near future. I'm not ruling this out as a possibility just yet, though as CAT rises higher and higher I become more and more convinced that I was mistaken. I still think CAT remains shaky and could even be a short candidate for an investor more aggressive than me. Regardless, I tried to time the market - and got it wrong. Congrats to all of those who've held onto their CAT shares, currently reaping the benefits of this recent run.

Obviously I could complain about all of my positions that are currently in the red. As an investor, I hope to hit it big with every purchase. I also understand how highly unlikely that scenario is, I expect to take some lumps every now and then. The fact remains, that I feel comfortable owning all of my shares (if I didn't, I would dump them) and although I am down on several of my positions, I feel confident that these companies have what it takes to turn things around. In the meantime, I will watch and wait, happily collecting my dividends.

And lastly, I want to note how truly amazing it feels every month when its time to purchase shares with the balance in my Flexible Re-Investment Program at Scottrade. I know that dividend growth investing isn't for everyone, but I am certain that it is the right style for me - I find great enjoyment in scouring the market for value, making confident purchases within the perameters of my investment philosophy, and then sitting back and watching my portfolio grow organically.

Disclosure: I am long AAPL, AFL, ARCP, BAX, BLK, BRK.B, CAG, COF, COH, DE, DIS, DLR, ED, ESV, GE, HCP, IBM, INTC, JNJ, KMI, KO, KR, MA, MKC, MO, O, OHI, PEP, PM, POT, QCOM, SBUX, SJM, SO, STKL, SWK, T, TGT, TRV, V, VTR, WFC, WMT, XOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.