4Q ’07 Portfolio Review

This post is way late and A LOT has happened since 12/31/07! So, to keep things relevant, I will show some performance numbers but focus most of my commentary on how I am positioned as of the end of January, 2008.

Here’s the full year compounded monthly return of my portfolio compared to the S&P 500:

 

2007-investment-returns.jpg

Notes:

  • Between 12/31/07 and 1/29/08, my portfolio has declined by 8.2%. The S&P 500 declined 7% during the same period.
  • My two best performing stocks of Q4 ’07 were both in the agriculture sector: John Deere (up 23%) and Potash Corp of Saskatchewan (up 31%)

Over the last few days I have been raising cash in my portfolio.I think we will have a bear market this year and I want to be prepared to buy stocks later on when they are cheaper.

Here’s how my portfolio is allocated today:

     

    portfolio-allocation.jpg

     

     

    allocation-chart.jpg

    Noteworthy Changes:

  • I have brought my cash position to 35% of the portfolio
  • Gold is right at my target allocation of 10%
  • I am still extremely “underweight” the financial sector. I’m sure there will be a time to buy financials at some point this year, but I still think there’s a huge amount of risk there.
  • Even though I have a lot in the materials sector, I have actually lightened up here by selling my position in Compania Vale do Rio Doce (Valle). My largest holding in this sector is now Potash Corp.
  • A note about agriculture: John Deere and Potash have become incredibly popular stocks and everyone is talking about them. I realize there is risk here and I am prepared for a correction. I have not sold any for two reasons. First, I have big gains (still short term) and I don’t want to pay tax. Second, the growth prospects for these companies (especially Potash) are HUGE. I think the stocks are priced as if the ag-boom will not continue.
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