The end of June 2011 marks roughly the one year milestone of the Innovative Companies Covestor model. Since inception on June 18, 2010 to end of day June 30, 2011 the model achieved a performance of +62%. The Russell 2000 was +24% in this period, and the S&P 500 +18% in this period.
While the model’s performance has significantly exceeded its benchmarks, I am always aware of the fact that what is past is past, and I should always look forward to the next opportunity.
During this first year I did not use any leverage and I limited my short-term trading. I continue to maintain the majority of the positions as long-term holdings. However, this long-term focus is always subject to revision. The model achieved this better than benchmark performance because of my major allocation to Cypress Semiconductor Corp. (NASDAQ: CY) and I expect to continue this higher allocation for now.
The main economic sector for the model continues to be technology, because technology innovation has proven to be a major driving force for world economies. No matter how the world economies perform, there will always be compelling technology stories to capture my interest and investment funds. The great thing about technology is that it continues to provide more capabilities to the customer at ever decreasing relative prices. In my observations, this "performance" factor in new products, in many cases, has a significant impact on the financial performance of the Innovative Companies and increases the probability for positive stock price performance.
As of 1 July 2011, the Innovative Companies model is fully invested. However, some current positions may be closed out in the near term.
In this report, or any future report, I do not intend to make comments about the general market, government actions, world economies, etc. This information is available elsewhere. I try to limit the noise and focus on the individual company and the supply and demand for the company stock in the markets.
The Bottom Line... the only thing that really matters with a business is whether it is making money, and the only thing that matters with this model is how it performs in the Covestor universe of models.