The Year 2010 can be summarized as continued optimism, scams, change of guard at IPL, food rotting in warehouses, revolutions in middle-east, deflection from fragile European economy, etc. As an individual investor, should I care about macro economics? or Should I care what a bollywood celebrity’s dog does? They are all interesting stories, beyond which it has no value. This post summarizes TIPBlog portfolio update and measures progress. Earlier updates are listed under progress updates.
The 2010 year end status update is as follows:
- The annualized dividend cash flow was Rs 22,371 (increased from Rs 15,148 in 2009).
- Yield on original investments (YOC) is 4.3% (dropped from 4.9% in 2009). There was no goal for YOC as it is difficult to determine a target. The drop in YOC is expected because I am still in portfolio building phase. I am continuously buying stocks which do not yield higher. The real benefit on the portfolio basis is when I stop buying (probably after 15 years) new positions. However, when I really look on standalone specific lot-basis (i.e. capital with which I bought that lot), the YOC keeps increasing.
- Year-to-Date portfolio value increased by 29%. This is calculated as, value of portfolio at the end of 2010 vs. value of portfolio at the beginning of 2009. This includes all buy/sell activities in both of my portfolio.
- Life-to-Date portfolio value is at 389% on cost basis. This is calculated as, value of portfolio at the end of 2009 vs. my original cost basis. In addition, it includes all the dividends received and sales I have done in those years.
- The dividend portfolio has 12 stocks, and 1 position as opportunistic.
- All stocks in long term buy-n-hold portfolio continue to give XIRR of greater than 12%, while three new positions are still in early stages to have any meaningful results.
Following is the summary of activities during 2010:
- Initiated new position in Sutlej Jal Vidyut Nigam Ltd (SJVNL). This was through an IPO.
- Added to existing position in Power Grid through an IPO.
- Initiated new position in Visaka Industries.
- Started opportunity portfolio. Bought and sold positions in Aditya Birla Chemical India Ltd, Transpek Industries, Jyoti Ltd, and Camphor & Allied Products. These were not my typical buy-n-hold position, but more of valuation driven opportunistic ideas. I have decided to sell them when my desired growth is achieved. I will discuss this more in future posts.
Some more observations and thoughts:
- I had set a goal to reach annualized dividend cash flow of Rs 23,000. I came closer, but I could not meet this goal. I had an ability to reach this goal based on availability of funds. But the challenge was to find good sustainable dividend paying company at a price I would be willing to pay.
- Percentage allocation to single position like LNT, ONGC, and HDFC Bank has started to come down. Most of it is coming from either change in value of shares in the market and buying other companies.
- In year 2010, total portfolio dividends reached critical mass where I can now buy at least one or two additional stocks per year.
- Similarly, the income from this blog has also reached critical mass where I can now buy at least one or two additional stocks per year.
For me, the highlight of the year was starting opportunity portfolio. The combination of total dividends and blog income reached a critical mass wherein, I do not need to allocate funds from my primary source of income. Considering my allocation limits and portfolio size, I can easily maintain four to five positions using these funds. While I have decided to limit my total exposure on opportunistic positions to 20%, I do not believe I will remain fully allocated. The opportunity portfolio is on auto pilot now.
On this blog, I have not discussed any of my opportunity positions, in detail, similar to my long term position. The reason being; this was my first year and I wanted to identify and experiment with process to determine valuation. Readers, who are fan of TIPBlog on facebook, would likely know that I provided regular updates on my buy/sell activities. This year, 2011, I will add more on this aspect.
That’s all for the update. I hope all of you made some good progress. Can you share some of the highlights of your 2010?