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The Brown Bag Portfolio February 2020 Results

Mar. 03, 2020 12:03 PM ETDOW, EPD, MAIN29 Comments
Michael Hesse profile picture
Michael Hesse


  • Market enters correction territory over coronavirus fears.
  • Panic isn't a strategy.
  • A gut-punch to the BBP.
  • Strategy going forward.

Wow. I started the Brown Bag Portfolio on July 5, 2016, and began writing about it a year later. Although I've seen my holdings go up and down, for the most part, it has been a steady rise. Due to my inexperience and overall enthusiasm the first six months or so, after I started my portfolio, I made a lot of beginner mistakes. I chased stocks up, panicked when they came down and sold at a loss. I discovered that the ease of being able to open a brokerage account and trade stocks did not make it easy to make money, especially when emotions get involved.

I went and searched for information and I found a great deal of it here on Seeking Alpha. That was when I truly discovered the strategies behind investing and actually learned that what I had been doing was trading, not investing and what the differences were. One of the most valuable pieces of information that I discovered and took to heart was dividend investing. That reoccurring payment, whether it be monthly (love monthly) or quarterly, has gone a long way towards soothing my mental waters and ride out the fluctuations in the market.

However, I had never experienced a correction like the one we just had. Actually, we are probably still having it and may continue to for some time. Watching positions that were showing at 25%+ lifetime return suddenly plummet into a negative return is difficult and if I hadn't learned what I had over the past four years, it would probably have been enough for me to panic and cash out. I didn't, mostly because I utilize DRIP (dividend reinvestment programs that automatically purchase additional shares when the dividends pay) and I'm invested in companies that I believe will produce strong results in the long term.

This article was written by

Michael Hesse profile picture
I'm a field support analyst for a large information technology company and author. I am primarily interested in building a strong dividend-oriented portfolio to supplement my income when I retire.

Analyst’s Disclosure: I am/we are long DOW, APLE, EPD, EPR, T, MAIN, NEWT, BP, ECC, OXLC, NRO, GLO, JQC. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (29)

Feel your pain everything went to hell pretty fast expecting more issues next week.
Markets don't know what to expect so their selling off.
With this being a election year brings just more uncertainly and if a Dem is elected massive selloffs. That recession they have been taking about will be reality.
I want to buy but am holding off feel more pain is coming.
I own some of stocks you have or similar ones it's just been plain bad lately.
Be very selective now quality matters more now than ever
Anything travel related oil are becoming no mans land the yields keep climbing and stocks keep dropping I'm waiting it out.
Good Luck just don't jump out to fast buy small positions.
Michael Hesse profile picture
Thank you @olde1two. Although I’m tempted, I’m staying away from the energy sector for a while. I think your comments are spot on.
@Michael Hesse, I been following your journey for a couple years and like reading it. I have noticed uptick in CEFs over the last year. Nothing bad about that, just an observation that 23% of your current income is from CEFs. Just something to note. I too have OXLC and keep an eye on it. Plus OXLC/ECC pretty much the same thing--so something to ponder. You're heavily weighted in OIL. Nothing wrong with 3-4%'s like BMY, WBA, CSCO, etc. My strategy has morphed over the last couple years too. This is just my 2-cents. Keep up the good work and look forward to the next article.
Michael Hesse profile picture
@mrboodon thanks for your comments...although the yields are tempting, I think I’ll keep my eyes off the oil patch for now
Helistin profile picture
Doesn't seem like a winning strategy of regularly selling your winners and holding the losers.
Trying2Save profile picture
It's not selling them forever, it's locking in profits and then re-entering at a lower cost basis. I did the same with $GAIN this year - sold just shy of $13, and re-entered today under $12.
Michael Hesse profile picture
@Helistin the idea was to take the profits and buy back in at lower prices...it may not work, but we’ll see.

You have solid holdings.

If you feel tempted to sell something, just remind yourself about buyandhold2010.

It's inspiring to watch your journey .
Michael Hesse profile picture
@Moises Behar Thank you. Amazingly enough, I'm not tempted to sell anything else. Blackstone Mortgage was close to its 52 week highs when I sold and that was to raise cash to buy others that were tanking. Whether or not this was a prudent move will likely take another 12-24 months to prove itself. Hopefully, I'll be able to buy back into BXMT close to where I originally bought it, if not, I'll have to re-evaluate. Otherwise, as indicated I'm planning on adding to MAIN and perhaps EPD while they're depressed. Thanks for reading and commenting!
Great article, I enjoy your writing style, it's very approachable. My portfolio is fairly similar to yours, I'm long EPR, MAIN and OXLC and was able to significantly average down my cost basis for MAIN and EPR last week. I'm out of dry powder so I'll ride out the rest of this downturn and hope it's short lived. Best of luck to the Brown Bag Portfolio, I'm looking forward to future updates!
Michael Hesse profile picture
@lucky 8 of 8 Yes, I was out of dry powder, thus the sale of BXMT. EPR is looking very attractive at these levels, so I may try and nibble around the edges
littlecubbie2019 profile picture
Thanks for the monthly write up. I know some of my holdings deserved a pullback aka v and msft. I was kinda pissed when main went down almost 10% last week. I had had a gain for months but went negative even just for a few days. I wish I had more money because I would add to just about ever holding maybe minus bac. So v, msft, main, csco, pg, xom, Dow, jnj, bmy, utx. Oh well! If I can get a new job, I will add to a probably 2 of them that are most attractive at the time. Tax return might add a 3rd. Like you, I’m just trying to add to positions. Good luck!
I agree with you that his articles a nicely written.
Michael Hesse profile picture
@littlecubbie7 Thanks for the comments as always. Once zero commissions hit the market, it was easier to stay fully invested. I no longer had to build cash for months before making a purchase. Unfortunately, that has also led to me having little or no dry powder. When I get paid next, I'll add (hopefully to MAIN) and then at the end of the month see what else is down. If nothing else is below my cost basis, CSCO is looking rather interesting at these levels...just saying...
littlecubbie2019 profile picture
Yes csco is interesting, just disappointed by the recent dividend increase. Just about everyone was hoping it was more.
Jqc looking good today (up over 2% ) on a very down day. I plan to stick with it ( because of high dividend ) until Nuveen ceases NAV return next year.
Michael Hesse profile picture
So far so good!
hpestes profile picture
Re-entered JQC today after selling out in Dec 2019. The third year of the NAV return plan, 2021, may be yield % tricky because the supplemental amount will be reduced ratably each month to zero by December 31,
Aren't the Nuveen funds a high fee fund group?
Just found this article and great read. Look forward to the next thanks.
Michael Hesse profile picture
Thank you and I’m glad you enjoyed.
I too am long NEWT, opened a position in DOW (should have waited a few days), and just initiated a position in OXLC today. I have been long PK, and was curious if you chose APLE solely due to monthly pay on the dividends, or if there were any other factors in that decision, as I'm considering a lateral move from PK to APLE. Otherwise I sold out of all my energy holdings, the last to go were AM and MPLX. For too long, and I'm dating back to BBEP and LINE, regardless of company, not a single investment made in that sector has worked out well for me. Seems the shareholders pay for the infrastructure and expansion, and the dividends are a ruse.
Michael Hesse profile picture
I’ve owned aple since I started the BBP. I continue to own for the dividend and for the fact that they’ve historically had very low leverage. It is difficult at time, however!
Nate the Great profile picture
MH - yep....steady as she goes. I'd like to grab some BA at around $270, but cash is a little tight currently. I also believe we'll flop around for a month or two, so I may get a chance along the way. Good investing to you!
Michael Hesse profile picture
Yes, BA is getting quite interesting. Good luck!
Trying2Save profile picture
I'm in exactly the same boat - cash is all gone because of all the opportunities. I'll free some up over the next few days, though, and see what else I can nibble at. Potentially looking at $ALLY and/or $ACC
I always like reading about BBP because it seems to be in the same boat I am in.
Michael Hesse profile picture
Thank you, I hope my struggles are useful!
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