Saturday, March 13, 2010

Baseline Portfolio: March 2010

We continue to track the Baseline Portfolio which we created in early December 2008. The first observation is that the annualized gain, albeit still high, has been slowly declining. The portfolio showed significant volatility at the beginning of the current Administration but has since shown a slow but continuing decline.

The major stock which is a surprise is still Verizon. The reasons for its decline are still somewhat a mystery since we see significant top side as LTE and other technologies are deployed. IBM and Dow Chemical are the greatest returns showing over 60% in this period. IBM has been a solid predictor of a recovering business climate and Dow Chemical is a harbinger for strong economic growth. In many ways Verizon would be a lagging stock in such a combination.

Kraft and J&J show a 15% return, modest and better than the Treasury rates especially when dividends are added in. Both are also market laggards. They await for the consumer to return.