Portfolio +1.3% YTD

THE ENLIGHTENED-AMERICAN PORTFOLIO SPREADSHEET

  • Enlightened-American Portfolio: +1.3% through Mar, 2010 (my actual IRR, including cash balance)
  • DJIA: +4.1%
  • Nasdaq: +5.7%
  • S&P 500: +4.9%
  • DJ Wilshire 5000: +5.8%%
  • Russell 2000 (smallcap): +7.0%

What a difference a month makes. In the span of 31 days, the Enlightened-American portfolio went from outperforming the indices for the year to trailing all of them by a fairly wide margin. However, as mentioned in the 2009 portfolio review, I expected to underperform the market for a time if the rally continued and as the Dow nears 11,000, my expectations are unfortunately bearing fruit.

While current holdings have lagged the market, the largest culprit is the 45% cash horde. While I do think the market is somewhat overvalued, the cash holding is not a market-timing call but rather, stems from a lack of attractive investment opportunities in my view.

The nature of value investing precludes any immediate actions ¬†which could reduce our cash holding other than lowering our investment standards. Our strategy and long-term outlook is such that most of our returns will be generated during brief periods of action — in the meantime, we wait patiently for our opportunity.

As the market starts to believe in an economic recovery taking hold, several anticipated scenarios are occurring in conjunction. While I didn’t take a strong side in the recovery vs. recession debate, it was always my assertion that any economic recovery would spur increased commodity prices. The positive jobs report last Friday spiked the price of oil to post-crisis highs and gold remains close to the $1,200/oz level. In the intermediate to long term, investors will want exposure to these commodities, though perhaps not at these price levels. Otherwise, we do as always — wait patiently for strong, cash-flowing companies to come available on the cheap. We’ll wait as long as it takes.

More on this topic (What's this?)
Dow Dogs Are Front Of The Pack
Glassman Strikes Back
Read more on Dow Jones Industrial Average (DJI) at Wikinvest

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