Saturday, January 8, 2011

Baseline Portfolio: January 2011

In December 2008 we prepared a simple Baseline Portfolio to measure the markets core response to the then incoming Administration. The stocks were selected to each yield a dividend in excess of 5.5% pa and we paid little attention to capital gains, it was a pure dividend play. The above shows the results by date of that portfolio. It demonstrates a consistent 20% annual return since June 2009 and has changed very little. The stocks were also selected to be core economy stocks.

The same as above we show below for a different view:

We also calculate the percent daily change by day and we show that below:

One can see the volatility in early 2009 and then it has settled down considerably for the past six months.

Finally we show the total gains by each stock selection below:

This was surprising. Here DuPont is a core grower followed by Dow and then IBM. Despite all the high tech issue one wonders if these are market leaders and are predictors of growth in other segments. J&J and Verizon have gone no where, the Verizon return has recently been bolstered since late last year it was near zero. The sector returns may very well be predictors of a recovery.