Footsteps Of Buffett Retirement Portfolio: A Lucid Moment In A Market Of Discontent

Jun. 27, 2013 11:38 AM ETIBM, KO, MPC, NSC, PG, WMT3 Comments
Jarrod W. Jacinth profile picture
Jarrod W. Jacinth
132 Followers

It's been an interesting past couple of weeks. We have seen the ebb and flow of the market's volatility with multiple three digit sessions. Investors are unsure of what will occur in the coming months with the fed and QE3. Some days investors are depressed and lose all hope and sell. The following day investors are manic and can't get enough. Suffice it to say this is not a rare occurrence and building a portfolio to not only sustain itself during these waves but absorb them to become stronger.

We have opened two new positions in our retirement portfolio as well as added to a position. We also received two dividend payouts and have reinvested the dividend to add to our share count.

Currently, we are long: International Business Machines (IBM), Coca-Cola (KO), Marathon Petroleum Corp (MPC), and Wal-Mart Store (WMT). This month we opened two small positions, the first in Norfolk Southern (NSC) and the second in Proctor & Gamble (PG).

Q1 2013

Q1 Div.

Q2 2013

Q2 Div.

Q3 2013

Q3 Div.

Q4 2013

Q4 Div.

Shares Purchased

Total Shares

Increase

KO

73

0

61

0.5054

0

0

0

0

134

134.5054

0.38%

IBM

0

0

23

0.1059

0

0

0

0

23

23.1059

0.46%

MPC

0

0

29

0

0

0

0

0

29

29

0.00%

NSC

0

0

13

0

0

0

0

0

13

13

0.00%

PG

0

0

13

0

0

0

0

0

13

13

0.00%

WMT

8

0

29

0.1005

0

0

0

0

37

37.1005

0.27%

Compared to our last report we see that IBM as well as Wal-Mart has paid a dividend. IBM allowed us to purchase 10.59% of a share, not much but a decent start. Wal-Mart allowed us to purchase 10.05% of a share.

On the news of Wal-Mart increasing their stock buyback we added 21 more mores to the position for a total of 37 shares. This was done after the ex-dividend date so the dividend does not reflect this increased position. Every two years since 2009 Wal-Mart has announced a very aggressive buyback program. In all three announcements Wal-Mart said they plan to repurchase $15 billion in shares over the next two years.

We also opened two new, but small positions in Norfolk Southern and Proctor & Gamble. You can read my review of Norfolk Southern here. Proctor & Gamble is a very defensive stock, as you may know. Both companies received small positions each for their own reasons.

Norfolk Southern's price action is rather volatile. Although a great company with a solid balance sheet and history of returning profit to shareholders the price has a rather wide range. At this point I want to ease into this company as an investment and will consider increasing our stake as a percentage of the portfolio once we see a less volatile and more predictable price action.

Proctor & Gamble is in the middle of a restructuring phase. They realized they need to be more aggressive in foreign market penetration and are changing their battle plan to accommodate the market. I will also consider increasing as a percentage of the portfolio in the future as we receive more news on how P&G plans to move forward as well as their results.

Looking Forward

Everyone tries to look for that advantage. That one piece of information that will give the investor the edge so they can buy into a stock before a catalyst hits. There really is no need for this when investing and planning retirement.

It's a trap really; spending time and energy trying to find a couple investments that will outperform the market. Opening and closing a position only to continue to look for the next company; lather, rinse, and repeat. With the inevitable conclusion that once retirement approaches we have a pile of assets that we need to turn into cash flow then ultimately invest in companies that provide high yields but little in the way of principal preservation.

We should at the very least set a foundation of companies in our portfolio that have a long standing history of not only solid profits but also a culture of returning value to shareholders. Companies that are in a position to take advantage of declining markets to return value.

Today if you started your own business, expectations should be that you won't see a significant profit for at least five years, maybe even ten years. After that time your business will take care of you as long as you take care of it. This is really all we should ask for when investing. We have become too acclimated to immediate results. Instead take solace in long-term investment decisions, as we do not know what tomorrow will bring.

Disclosure: I am long IBM, KO, MPC, NSC, PG, WMT. 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.

This article was written by

Jarrod W. Jacinth profile picture
132 Followers
My background is in Sociology, I have redirected my focus to economics and finance. I followed conventional wisdom led by Gurus and professionals that made their living off of selling advice. After being completely wiped out, and realizing family is the most important aspect of life. I'm using my background to build wealth over the long term. I want to help others with low income and the working class to realize wealth is not an overnight phenomenon, but takes time and patience. That even a small amount of money invested today in stable companies that are the foundations of our society can grow over time. That wealth is not something exclusive to a select few; but a goal anyone can achieve, ultimately shaping their legacy.

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