Retirement Strategy: Portfolio Update And Actions To Take Now (Part 13)

by: Regarded Solutions

It is nearing the end of the month and we have yet to see the anticipated correction or pullback in the market. I think that the market is closing in on overbought territory. And while we take a look at how our "Team Alpha" Retirement Portfolio has done, we also should be considering the moves I have made within or portfolio here, and the actions I believe YOU should take now.

Our current portfolio consists of ExxonMobil (XOM), Johnson and Johnson (JNJ), AT&T (T), General Electric (GE), Annaly Capital (NLY), Southern Company (SO), Exelon (EXC), Procter and Gamble (PG), Philip Morris (PM), Intel (INTC), Realty Income (O), ConocoPhillips (COP), Pfizer (PFE) Chevron (CVX), E.I. du Pont (DD), Duke Energy (DUK), PPL Corp. (PPL), Coca-Cola (KO).

Our Retirement Portfolio Performance Since 11/23/2011

Stock 2-26-PPS #Shares 2/1 Value Action
XOM 88/shr 100 8800 sold 100
JNJ 65/shr 100 6500
T 30/shr 100 3000
GE 19/shr 100 1900
NLY 16/shr 110 1760
EXC 0 0 sold 2/13
PG 67/shr 200 13400 bbcall
KO 69/shr 50 3450 buy 2/16
PM 83/shr 140 11620 bbcall
INTC 27/shr 300 8100
O 37/shr 100 3700
COP 0 0 sold 2/16
PFE 0 0 sold 2/16
CVX 109/shr 100 10900
DD 51/shr 100 5100
DUK 21/shr 100 2100
PPL 0 0 sold2/16
SO 45/shr 300 13700
Cash Rsv 0 22027
Total x x 116057

We began our journey with $100,000 invested in our core portfolio, sold some covered calls, and collected some dividends as of the end of January, 2012.

In a previous article, I advised that we hold, and buy judiciously as we began waiting for a pullback or correction. Since then, the market has moved even higher, the Dow went over 13,000, and the S&P has reached 4 year highs.

This has been great for our portfolio as you can see, but I believe that we are closer to a correction than another leg up. I have made the following adjustments to our core portfolio:

  • I bought back to close covered calls for $1,610 (leaving $20 in reserve)

  • I sold ConocoPhillips, Pfizer, PPL Corp., and 1/2 of our Exxon position for $21,400

  • We collected $607 in dividends (or will collect by next review) in Duke, Dupont, Chevron, Pfizer, ConocoPhillips, Realty Income, Intel, Coca-Cola, Procter & Gamble, GE, Johnson & Johnson and Exxon.

Prior to this, we sold Exelon and purchased Southern Company which you can review here, to reduce our exposure to the natural gas issues as well as the questions I have about Exelon going forward. We also used cash reserves to purchase Coca-Cola (read this) which I believed we missed out on and did not want to miss out any longer.

All of the actions that we have taken ( and obviously suggest you do as well) has given our portfolio a new look, as you can see. Our performance is a healthy gain of 16.06% since 11/23/2011 and we now have $22,027 in cash reserves (roughly 20%) to keep for the inevitable pullback, to repurchase shares we sold or seek greener pastures.

We also have several sold call positions that we will allow to either expire, or have the shares taken in; GE, Annaly, Intel, Chevron, and Dupont. If the shares are taken we will simply re-buy the shares in the following trading week after the expiration date, or if we are experiencing the pullback at that time, we will wait for a better re-entry price for each stock.

My future chapters in this series will show the updated portfolio and what actions we could be taking at that time.

My Opinion

"Team Alpha" has done a wonderful job of managing its portfolio, and has a 16.06% gain while the S&P has risen approximately 180 points during the same time frame (1180-1365) or roughly a 15.06% gain. While slightly outperforming the S&P, we also have increased our cash reserves to $22,027, and reduced our portfolio exposure by selling shares in stocks that have run up, and had some overlap which affected diversity.

In a period of anticipated correction, it is my opinion that we need to have a well-balanced diversified portfolio with less overlap and a greater cash position to take advantage of lower entry prices as they occur. We continue to have a solid income stream and are ready to do another round of covered call selling as the opportunities present themselves.

Well done "Team Alpha", we are doing a great job. Stay tuned!

Disclosure: I am long XOM, JNJ, NLY, T, SO, INTC, O, GE, KO.

Additional disclosure: We could make changes between updates as needs arise, without advance notice.

Disclaimer: Please remember to do your own research prior to making any investment decisions. This article is not a recommendation to buy or sell any securities or stocks, and is the opinion of the author.