Income Portfolio – Quarterly Update 1H09
One common question that I continue to receive is about the efficacy of long term investing. The notable factor is almost all of them use two specific examples to explain that long term investing is not a viable solution. These examples are (1) Stock market tanking in 2008; and (2) Satyam going kaput.
To begin with, it tells me that many do not understand what is investing. Folks who ask these questions do not understand long term investing. I keep wondering, how to best explain what is long term investing.
In general, first half of 2009 can be characterized as roller coaster ride. While we saw multi year lows, at the same time, we also saw historical one day rally. In my post bull running for red flag, I showed that majority of SENSEX companies are showing reduced earnings. And surprisingly, it is being rewarding by increase value. I continue to believe, there is no way any individual can predict the markets. So who bother wasting time on it?
Against all these sky is falling scenarios; I am continuing to invest in some really good companies which are available at bargain prices. At this point in time, my income portfolio consists of only stocks. Since all of them are dividend focused and provide cash flow, I look at this together (and not standalone). Here are stocks in income portfolio.
TIPBlog Portfolio Update - 1H2009
The status or update is as follows:
- Dividend cash flow was Rs 10,701 (increased from Rs 8140 in 2008);
- Yield on original investments (YOC) is 4.70% (reduced from 4.90% in 2009);
- Year-to-Date portfolio value increase by 10.2% of the total value;
- Life-to-Date portfolio value is at 312%; and
- At present, the portfolio has 11 stocks.
Following is the summary of changes that were made during 1H09:
- Initiated starter positions (i.e. new purchases) in Tata Investments and Great Eastern Shipping.
- Added to existing position in Larsen and Toubro, ONGC, HDFC Bank, ABB, Reliance Capital, and NTPC.
- Did not sell any position or any stock.
So far I have never discussed this before on this blog; following are the goals for income portfolio for year 2009:
- To increase portfolio’s dividend cash flow to Rs. 15,000. So far it has reached up to Rs. 10,701. Read this post for long term goals of Income Portfolio.
- To bring portfolio diversification to pre-determined level (more discussion in next upcoming post)
This post shows a very simple way to document your updates. Please note these are only for equity investments. For privacy reason, I will not be disclosing actual values of income portfolio. I will also not be disclosing when I buy the stock and for how much I bought a given stock. If you want to follow my stock purchases, you may do so on MoneyVidya.com site.
In next upcoming post, I will discuss risk analysis for this income portfolio.
I have started this new series of articles in which I will present quarterly update of income portfolio. I will also present quarterly risk analysis. Now, for this one time only, I am going to publish these two updates on this blog. From next quarter onwards, I will only email it to readers who have subscribed to feed from this blog.
goals, HDFC, LNT, NTPC, ONGC, Pidilite, risk analysis, SENSEX, TIP portfolio
To my mind, investment – long term investment – means two things:
1. Put money into something that will grow over years at an annualized rate that is a few percentages higher than the average ten year inflation rate of the country whatever that rate may be. In other words, if the ten year average inflation rate is 10%, I would like to get a return around 14-15% – This return may include dividends. ( I believe this will automatically exclude putting all the money in Fixed Deposits)
2. Earn this amount while taking ownership in businesses of the country. In other words, grow as the country grows. There are few better ways to be a owner of a company like TCS, Larsen and Toubro etc. other than possessing stocks of these companies.
Anybody who invests long term has to agree to these two above points or it does not make sense to invest.
Warm Regards, Student of Market
TIP guy,
thank you for the update. this is nice way to show how one can measure progress.
what is unique about this update is you measure dividned cash flow. this is something i have not heard of. I have not seen anybody measuring or focusing on dividned cash flow. almost everybody focuses on value of the holdings. Any reason why you are doing that.
Thank you.
TIPGuy
Nice article.
Student of Market has made nice comment. I would like to re iterate that owning business phase comes very late in investing life cycle. Once you have enough amount of cash & you can depend upon that for rest of the life then you won’t mind investing that huge amount in some good stocks like you mentioned L&T or TCS. Also you will get chance to preach the world how you are practicing value investing using Buy & Hold