I liked the line so much I stole it, but at least I tweaked it. Fellow Seeking Alpha contributor Cameron Kaine coined the Giving These Stocks 6 Months To Make Rich title. He's a clever guy. So much so, you should not only follow him on Seeking Alpha, but on Twitter as well.
That said, he did get one thing "wrong." You're not going to get rich on stocks, generally speaking, in six months. It's possible, but, somehow, most of the time, most of us miss the opportunity. That's what I did with Netflix (NASDAQ:NFLX) and Research In Motion (RIMM). Despite prophetic predictions regarding the companies' 2011 downfalls, I was never able to cash in.
That experience, coupled with trading in the $10,000 portfolio during the second half of the year, actually made me a more conservative investor for 2012. While I never really subscribed to it, per se, I often let the notion that I could get rich in six months cloud my thinking. That made me emotional. And, oddly, psychological roadblocks stopped me from nailing NFLX and RIMM with real money and likely contributed to some of the real-life realized losses I did sustain in 2011.
So this year, I set out to steep the core of the $10,000 portfolio in dividend-paying growth stocks, while leaving room for speculation and the types of sensible options trades I focus on in my basic options strategies eBook. In addition, I will track different strategies against one another. For the core, I look at lump-sum investing versus dollar-cost averaging.
In this article, I update the entire $10,000 portfolio's performance, placing focus on the core stocks, as I make my second round of DCA buys.
Initial Buys, December 20, 2011
|Company (Ticker)||Lump-Sum Investment||Lump-Sum Price (Shares)||DCA Investment||DCA Price (Shares)|
|American Electric Power (NYSE:AEP)||$6,000||$39.70 (151.1)||$500||$39.70 (12.6)|
|HCP, Inc. (NYSE:HCP)||$6,000||$39.35 (152.5)||$500||$39.35 (12.7)|
|Rogers Communications (NYSE:RCI)||$6,000||$36.91 (162.6)||$500||$36.91 (13.5)|
|Verizon Communications (NYSE:VZ)||$6,000||$39.04 (153.7)||$500||$39.04 (12.8)|
Since then, I added 200 shares of Time Warner (NYSE:TWX) to the core. Starting with today's DCA buys, I will make monthly TWX purchases of $621 each, which equals the value of the lump-sum investment ($7,454) executed on January 17, 2012.
Also of note, I erred in my last update. VZ did not pay a dividend yet. It went ex-dividend this month. The payout comes on February 1, 2012. I've made the necessary adjustments. In the following charts, I use Thursday's closing prices to calculate performance and buys for all positions.
Status, At The Close, January 19, 2012
|Ticker||Lump-Sum Investment||Lump-Sum Current Shares/Price||Lump-Sum % Change|
|Ticker||DCA Investment #2*||DCA #2 Price/Shares||DCA Cumulative Shares/Cost Basis||DCA % Change|
|TWX||$621 (*DCA #1)||$37.73/16.5||16.5/$37.73||XXX|
I'm excited about that core set of holdings. I really dig the media/telecom plays. As I discussed in a recent Seeking Alpha article, that might just be the market's most interesting broad space right now. I like it so much that's where I am doing a bulk of my speculation, but squarely focused on media stocks.
In my real-life portfolio (but not the $10,000 portfolio) I own shares of Pandora (NYSE:P). I've been DCA-ing into the position since last year. So far in 2012, it's clawed itself back up to around breakeven. Precisely, it was up 0.44% at Thursday's close.
Earlier this week, at the same time as opening the TWX position, I initiated positions in two speculative media stocks - Cumulus Media (NASDAQ:CMLS) and Sirius XM (NASDAQ:SIRI). I hold CMLS in real life now, but SIRI exists only in the $10,000 portfolio.
|Ticker||Shares||Cost Basis||Price, Close 1/19/12||% Change|
|CMLS||500||$3.76 (Stop: $3.00)||$3.89||3.5%|
|SIRI||380||$2.14 (Stop: $1.95)||$2.15||0.5%|
Add up the lump-sum investments in the core and the value of the two speculative holdings and the $10,000 portfolio has a double comfortably in the rear view mirror with a value of $35,144, as of Thursday's close.
Additional disclosure: I am long NFLX June $40 put options.