Rough Month for the Fat Pitch Financials Portfolio
The numbers are in for the Fat Pitch Financials Portfolio and they are not pretty. My Marketocracy portfolio is down 3.74% this month while the S&P 500 was only down 1.86%. Currently, the Fat Pitch Financials Port is only acheiving an 8.18% annualized rate of return since inception versus 11.79% for the S&P 500.
In July, I added Mothers Work (MWRK) to the portfolio at an average price of $24.31. I added this position just a few days ago on July 26th, and sure enough, the price plunged. The stock ended the day yesterday at $20.18. I can’t believe MWRK is down 17% in such a short amount of time. It appears the market did not appreciate the news that the Chief Merchandising Officer David Mangini resigned right after a disappointing quarter. I think the market has overreacted. If the price of MWRK shares drops below $20, I am likely to add to my stake.
I’m down to a 10% cash position in this portfolio. Therefore, I’m considering which stock in the portfolio is most richly valued in case I find a better opportunity. Merck (MRK) and Unilever (UL) are the prime contenders for most likely to be sold. I think Merck is probably my first choice right now, since there is more risk a drug could blow up versus some problem developing with Unilever.
Finally, I’m trying to build a position in a microcap stock. However, the trading volume is fairly low for this stock and it is taking quite some time to fill my order. The Marketocracy system simulates how hard it can be for mutual funds to fill orders in smallcap stocks. Once this order is filled, I look forward to telling you about this interesting new stock pick that I’ve made.
I certainly agree with your thesis that MRK would likely be the one to sell over UL. UL still looks like a pretty good value and should do relatively well even in rough times for the overall market.
I feel your pain in that I too have recently bought a couple of stocks that, if I’d just waited a matter of days, I could have bought much cheaper. My two cents is that we should try to ignore what happens over the very short term. Buying a stock and seeing it suddenly drop doesn’t make us stupid anymore than buying a stock and seeing it suddenly take off makes us brilliant.
It’s what happens over the long term (several years) that confirms whether we’re right or wrong in buying the stock.
Unloaded 2/3 of my MRK about 3 weeks ago. Thinking about dumping PFE as well.