Author: Bob Freedland
Covestor model: Buy and Hold Value
The month of March was reasonably kind to me as I managed to once again keep my performance in this Buy and Hold Model close to the S&P 500’s performance. Wasn't quite as good as February but considering everything I was satisfied as the month came to a close.
It appears that April may well be a bit more challenging as the latest figures on domestic job creation was a little less than exciting and the international political climate remains every bit as daunting with daily crises in Iran, North Korea, Syria, Afghanistan, and the Middle East in general.
This month also closes out the third year of this model with Covestor and I hope that I shall be able to continue to perform in this fashion going forward. One of the strategies I employed during the month could be considered investment 'swaps' as I continued to evaluate each of my holdings and 'swapped' them with other positions as they appeared to weaken.
This has had variable success as the quality of the holdings from my perspective has been quite good and their long-term record of each of the stocks is impressive. This has required me keeping essentially one position's worth of cash in the account as I have chosen to stay out of margin in this model.
March started out with me swapping Colgate-Palmolive (CL) for Diageo (DEO). Since that swap, Colgate outperformed Diageo during the month so I cannot claim that this was a big plus for the account:My next swap was short-lived as I sold my Polaris (PII) for Green Mountain Coffee (GMCR).
Green Mountain weakened and I swapped it for Costco (COST). This swap worked out well as after making this exchange on 3/7/2012, COST outperformed GMCR. On March 7, 2012 I swapped out my SolarWinds (SWI) for QUALCOMM (QCOM). QCOM outperformed SWI during the rest of the month so that exchange also worked out well.
On March 12, 2012, with some weakness in same-store sales numbers, I chose to sell my shares of McDonald's (MCD) which has been a terrific performer for me yet appeared to be technically hung-up in the $100 range. I 'swapped' this position for a new holding, W.W.Grainger (GWW). This worked out well as GWW outperformed MCD during the rest of the month. I am still very much interested in being a stockholder once again in (MCD) as I believe their 'hang-ups' are temporary and the long-term growth investor needs to be a holder of this stock.
Finally I made my most difficult exchange of the month. On March 23, 2012, I sold my remaining shares of Apple (AAPL) and purchased shares of Amazon (AMZN). Apple appeared to be stalling at the $600 level after climbing to this level in an almost vertical chart move. (As a footnote, early in April I found I couldn't stay out of Apple and made another swap to get back in.) But that is a story for next month! At least during the remainder of March this swap made sense as Amazon exceeded the performance of Apple.
This account shall not always beat the S&P. I shall have smart moves and moves I later regret. I am always prepared to revisit stocks I have parted with such as Apple and I anticipate McDonald's as well. Many of the other holdings have otherwise been quite steady. I shall continue to try to balance patience with the long-term potential of these holdings with my impatience with short-term weakness. As always, this is the challenge of every seasoned investor.