Updating everyone on the outstanding performance of the Young and Restless Retirement Portfolio, for young, aggressive, growth seeking investors, will clearly be fun this month. Let's get right to it.
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I took the time to put actual numbers in this time so folks can see more clearly than with just a percentage change. The total portfolio is equally weighted with $10,000 invested in each stock, to keep it simple.
After making two major stock sales and one major purchase in February, the total value of the portfolio has increased by roughly 25%. The increase is over a 3 month period, and on an annualized basis, would be an increase of just about 100%. Selling Apple (NASDAQ:AAPL) was the most controversial move made, and taking our profits in Netflix, but keeping the original $10,000 "in play" was really a no brainer for me.
By taking profits, and dumping Apple, we created a cash reserve of $20,600. We also purchased Blackberry to bring our total invested back to $80,000.
Aggressive Growth Is Not For The Faint Of Heart
It would be foolish of me to urge everyone to invest in a portfolio of this nature. This type of portfolio is designed for the type of investor I outlined in this article.
Our young investor is between the ages of 21 and 25 and fresh out of whatever educational institution they attended. It could have been college, trade schools, or even their first job to cut their teeth on.
Now they are ensconced in a well paying job, career, or entrepreneurial enterprise with a very bright future ahead of them. Probably lasting for the next 35-45 years.
Their income level is strong and they have just begun socking away the maximum amount of money allowed into all the tax deferred savings plans available, and are well on their way towards saving another 10-20% outside of those plans.
These investors are off to a great start.
Recently, they inherited a bunch of money from a long lost Uncle and have money to invest with. Normally, I would say let's start the dividend investment strategy now so you can create wealth for the long haul.
Today I will focus on the possibility of creating enormous wealth. If there was one time in investors' life that I think they should give this a shot, it would be under the circumstances I have outlined above.
Keep in mind that this portfolio could undergo rapid changes as events dictate. Selling Apple happened rather quickly, but I made the determination that the company has been facing product development issues, as well as margin erosion. The fact that they are sitting with $150 million in cash and not using the money to innovate right now told me that the company has become a value stock rather than a growth stock. Even though we sold the position in this portfolio, I have kept it in the Team Alpha portfolio as a dividend producing blue chip, with pristine fundamentals for a retired investor.
Furthermore, I will be keeping a close eye on the Blackberry product launch of the new Z10 smartphone, in late March, here in the US. If the product falls flat, I probably will not wait long before dumping that stock as well. That does NOT mean it will be a flop, but it should tell you that I will not be sitting around waiting for any miracles if any company fails to deliver.
What We Need To Watch In The Near Term
I will be keeping a close eye on several of our stocks next month. Achillion Pharmaceuticals should have more results in on their phase II trials of their hepatitis C drugs, and even though the company has made a secondary offering (which sold out already) at $8.40/share, the company raised over $133 million to further their research and trials. Could that mean the company is "going it alone" and not willing to be bought out on the cheap? Hmmm.
We just do not know yet, but I believe that the company is putting a full court press on development of their pipeline to actually make the company worth much more. As a matter of fact, if you have not already purchased ACHN, the share price right now looks like a good entry point.
As previously stated, I will be watching the US launch of the Blackberry Z10 phone. The US is by far the most important market and a solid launch could set the share price on an upswing that will have the shorts covering quickly. That in turn could push the share price even higher than the $19.50/share analyst estimate I noted in this article. If the launch is a flop (which I do NOT anticipate but could happen of course) I will sell the stock.
Finally, I will be keeping a close watch on Zynga as the company moves closer to its goal of entering the online gambling industry, as I outlined in depth in this article. With this stock, I will not be in a hurry to make any moves unless I actually add shares to our position. I believe that this will be a slow to develop story that could be a year or two away. Since our purchase price was in the low $3/share range, we most definitely wait for this to bare fruit.
The Bottom Line
As stated previously this aggressive portfolio is not for everyone. These are my opinions and I urge anyone contemplating either buying or selling any security mentioned here to remember that all of this is just my opinion based on the information at hand.
Please be sure to do your own research and due diligence prior to making any investment decisions.
Disclosure: I am long AAPL, BBRY, ACHN, ZNGA. 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.