I haven’t posted anything for awhile, but I’m starting to get some free time again and have a bunch of half written articles, so if you’re lucky, I’ll get some of them finished up and posted soon. Anyway, an easy one to do is simply an update on the stock picking contest that gets run by a bunch of blogs that I read. Though I’m not ‘officially’ in the race, I threw my hat in with them at the beginning of the year to see how I would do. The ground rules were that you had to pick four stocks or stocks or ETFs from the Canadian or US exchanges, and then track them over the year. Now, as the contest was only for a year, a typical value strategy may underperform, so I went crazy and made some macro calls on the economy. Let’s see how things went.
#1 – Bank of America (BAC)
The only stock I picked for the contest that I actually own has done very well. It continued its rebound off of its December lows and is trading at closer to what I would consider fair value. It’s still below tangible book value though and I think it has further to run (not like I could sell it anyway for this contest). Anyway, it closed on December 30th, 2011 at $5.56 and closed the first quarter at $9.57 for a gain of $4.01 per share. Throw in the 1 cent dividend for a total return of $4.02 per share or 72.3%. Note that I didn’t adjust for changes in the Canadian dollar. I’m going with US dollar returns only just because it’s easier.
#2 – Research in Motion (RIMM)
Amazingly enough RIMM eked out a 1.4% return in the first quarter even with all the bad news. Who knows what it’s going to do in the future, but if their new BB10 release exceeds expectations at all, this could end up a big winner.
#3 – FAS– US 3x Bull Financial ETF
Time for the fun stuff. I figured the financial sector in the US was beaten down too much at the end of the year. This is why I tend for this leveraged ETF, which would normally be terrible to buy and hold. Anyway, so far my bet has worked out with this ETF returning 72.7% in the first quarter. Now, the performance of this holding the rest of the year will be interesting as the US financials are more reasonably priced in general. In any case, two big winners so far so can’t complain.
#4 – UPRO– 3x Leveraged S&P 500 ETF
For my last choice I went with the broad S&P figuring that the sell off last year was overdone. So far my choice has paid off as the S&P put up its best quarter since the 90’s. What does that mean for this ETF? A quarterly return of 40.9%. Not bad for betting on the index.
So where does that leave me? Well, combining everything together, I end up with a quarterly return of 46.9%, handily beating the other bloggers so far. For reference, here’s the ‘official’ results for the bloggers and links to their sites for those who may be interested.
- Where Does All My Money Go: 35.91%
- Intelligent Speculator: 16.37%
- Dividend Mantra: 13.71%
- Wild Investor: 11.78%
- My Traders Journal: 11.17%
- Beating The Index: 10.87%
- Million Dollar Journey: 7.84%
- The Passive Income Earner: 4.77%
- Dividend Growth Investor: 4.43%
- The Financial Blogger: 0.10%
Now, there’s no way I see myself repeating this performance in the 2nd quarter, so I guess we’ll have to see if my early lead holds up. Just remember, this is all for fun and not the way I would actually construct a portfolio for myself (though perhaps I should given the results).
Until next time,
Nathan @ EngineeringIncome.com
The data and opinions presented above are for educational purposes only and should not be construed as individualized investment advice or as a recommendation to buy or sell the securities in question. The investing methodology outlined on this site assumes that a stock will perform in the future as it has in the past. This is generally not true. It is the responsibility of individuals to perform their own due diligence and/or consult their investment adviser to determine the suitability of any given investment product for their specific situation. For more information, please see my disclaimer.
Full Disclosure: Long BAC as of the time of this writing.