Weathered Oak's  Instablog

*This post is for a paper-traded portfolio and transaction details do not reflect real-market activity*

Not much time before market close and I want to be honest about my price at the time of my blog posts. Walmart is a cash-making machine, and this drop in share price will hopefully prove to be a good entry point. I'm keeping exposure minimal as there may be troubled waters ahead with this bribery probe. Apollo Group, in my opinion, is making long-term decisions that best position their brands and future earning potential. I don't believe that investor-funded education will fizzle out as many fear, and I believe this industry leader is well oversold.

Buy:
200sh WMT @ $57.72
600sh APOL @ $34.51

Cost:
-$32,250.00

http://weatheredoak.blogspot.com/2012/04/buy-wmt-and-apol.html

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

**This post is in regard to a paper-traded hypothetical portfolio and does not reflect real market activity**

I'm allocating about 6% of the fund into these securities. Long term I want to have 50-70% invested in stock, but I'm counting on better opportunities further in the future, and will continue to take my time.

ARCC, Ares Corp, is a disciplined private investment firm, that specializes in lending to high yield grade companies. The security currently yields 9%, a majority of the cash flow. This company behaves like a hybrid between a high yield bond fund and a mid sized company. GE and PG are both great companies at good prices. GE gives some, but not too much, exposure to the financial sector and other goods. PG holds very strong competitive advantages and growth looks predictable and dependable. TAP is a solid performer in a steady industry, and I like it at this price.

There is much more behind my stock picks than these brief descriptions, but I'll choose to keep that information private and just give a general explanation of my actions.

Buy:
ARCC 1500 shares $15.90/sh
GE 500 shares $19.04/sh
PG 200 shares $66.62/sh
TAP 300 shares $40.80/sh

Cash spent: $58,934.00

Current Portfolio:
APOL 400 shares
ARCC 2500 shares
ATVI 4500 shares
BRK.B 600 shares
COP 300 shares
GE 500 shares
PG 200 shares
TAP 800 shares
VZ 300 shares
P May 11 Put -30 contracts

$752,415.00 Cash

Disclosure: I am long ARCC, TAP.

**This post is in regard to a paper-traded hypothetical portfolio and does not reflect real market activity**

Many financial models, like the Capital Asset Pricing Model, have many given assumptions that you'll never discover in reality, like "everyone has the same goal", "everyone acts rationally", "everyone can borrow or lend unlimited funds at the risk-free rate".

Investors in TLT, the iShares ETF for long term US Treasuries, currently receive a 3.15% dividend yield. They do this by investing in long term bonds which have a duration of 15.5 years. Duration is a measure of % Risk for a 1% increase in market rates. The way I see this is that these investors require a 3.15% rate of return on an investment that will lose them >10% if the investors of tomorrow seek a 4% return. What this really means is that these investors are seeking security, even at a loss, over other investments. Another factor is that people may be investing for reasons other than return- for instance, the central bank of China, who prefers a strong dollar for their economy to continue exporting goods.

Either way, I made this investment less than 2 weeks ago because I believed there would be the flight to safety that we've seen. Although I feel that I may be selling too early, I feel uncomfortable waiting for more "greater fools" to step to the plate, bidding up an investment that may have a negative risk-adjusted return given the growth potential of the world's economies and the global pressure for the Federal Reserve to devalue US Dollars.

Again I'll stress that I want to position this fund for long-term growth, and the more I feel uncomfortable about something long-term, the more I'll be willing to forfeit short-term gains. This results in a 3.7% gain on invested capital in 11 days- I could annualize this number, but in order to keep myself humble I'll just leave that for next time.

Also, included below are dividends earned from holding VZ and TLT. I continue to look for great stocks at great prices as this market is selling off.

Sell:
800 TLT @ 116.66/sh

Receive into account:
$0.50 dividend * 300 shares VZ
$0.29 dividend * 800 shares TLT

Cash Generated:
$93,710.00

Current Portfolio:
APOL 400 shares
ARCC 1000 shares
ATVI 4500 shares
BRK.B 600 shares
COP 300 shares
TAP 500 shares
VZ 300 shares
P May 11 Put -30 contracts

$811,349.00 Cash

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.