It's been a nice little run we've had here the last few weeks, coming off of the pitiful March 8 lows.   While things are starting to look a little better, let's not forget that year-to-date the Dow is still down 8.5% and the S&P 500 is down 5.6%. 

Over the last couple of years I have done a lot of reading, research, observing, and CNBC watching!  I'm sure everyone believes that they have an above average sense of things, but I do believe that.  I still have a lot to learn, but I have learned about what moves the market and how to make solid decisions with investments.

So I got to wondering this morning, as Ansley decided she wasn't going to let me sleep in the early AM hours.   How are my picks doing?  

First, I want to draw a few distinctions.  I think there are really three types of stock investments:  short-term trading (1 day to 3 months), medium-term investments (3 months to 3 years), and long-term investments (3 years to 30 years).  I only partcipate in the latter two and also believe that medium-term stocks can turn into long-term holds.  Most of the stocks that I have actually bought have been what I would consider more safe and long term... companies like Microsoft, GE, Pfeizer.  So looking at individual stocks I bought over the last 6 months, I'm doing so-so (down 2.5%, relatively good to the market).  Weighing me down is a combination of buying a little too early, buying mostly "safe" long-term positions, and also maybe a little crowd-following.  Actually my biggest winners have been those that were non-mainstream and less "safe".  As a consequence (darn it) they are generally the stocks that I took only a small position in:  Wendy's-Arbys (WEN) +68% and Dr. Pepper-Snapple (DPS) +42%.  (Interesting side note: both the #3 players in their industry... maybe there's something to #3s)

So the stocks below I did NOT buy (except for two:  AT&T and Verizon), but it shows me maybe I should start trusting my medium-term gut more!

Picks I made in a December post

On December 18th, I made a blog post here with recommendations of stocks that were buys.  Some I said were good buys at that level but suggested holding out for certain buy price for a limit order.  Others I just said "buy now".  Here is how they have returned... (listed with then price, now price, and return %)

Hit my suggested limit price...
AT&T (T)              $24.00*   $25.45      6.41%
Limited (LTD)     $7.00*     $10.38      48.29%
Macy's (M)           $7.00*     $11.56      65.14%
Verizon (VZ)        $27.00*   $31.69      17.37%

Did not hit my limit, but assuming you bought at Dec 18 price...
Administaff (ASF)                     $19.50**       $23.48      20.41%
Research in Motion (RIMM)   $38.44**       $63.90       66.23%
Scotts-Miracle Gro (SMG)      $28.76**        $35.08      21.97%
Yahoo (YHOO)                         $13.00**        $14.02       7.85%%

So you see if you would have put in limit orders on all eight of those, four would have hit and they would have collectively returned 34.30% for you!   Assuming you bought those did not hit the limit on December 18 they would have given you 29.12%.  Not too shabby, eh?

My Watch List

I use Google Finance to watch my portfolio, and I keep a second "portfolio" there that is my "Watch List".  They are stocks that I am interested in.  I keep it so that I can easily keep tabs on their price and look for good entry points.  I made some recommendations on January 20 in another blog post that mentioned a few of the ones blow... mainly dividend earners since that was the topic of the post, which would mean they were mainly large ("safe") companies that don't return as much.

Anyway.... so below are ALL of the stocks from my watch list (that were not already listed above from Dec 18).  This is assuming that you bought all of the stocks from my watch list on January 1, except for the *ed ones I used the January 20 price since I specifically made the recommendations for those on that date.  One other thing, the ** on Palm is because I did not add Palm to the watch list until after January, after the announcement of the Pre.  So I didn't want to cheat there because the return was even better from January 1... the Palm price is the day after the Pre was announced when the price popped and I added it to my watch list.

3M (MMM)                                        $57.54            $53.73     (6.62%)
Adobe (ADBE)                                $21.19            $23.64    11.04%
Amazon (AMZN)                             $51.28            $74.71     45.69%
Apple (AAPL)                                  $79.00*          $117.64    48.91%
Barnes & Noble (BKS)                 $15.00            $21.91      46.07%
Books-A-Millon (BAMM)               $2.54               $4.62        81.18%
Borders Group (BGP)                  $0.40               $1.45       265.5%
Chesapeake Energy (CHK)        $16.17            $20.93      29.44%
Chevron (CVX)                               $68.31*           $66.70     (2.36%)
Cisco (CSCO)                               $16.30             $17.56       7.73%
Coca-Cola (KO)                            $42.88*           $45.03        5.01%
CVS Caremark (CVS)                  $28.74             $29.24        1.74%
Exxon (XOM)                                   $79.83            $68.14     (14.64%)
Google (GOOG)                            $307.64          $379.50   23.35%
Heinz (HNZ)                                   $37.60            $34.16     (9.15%)
Hershey (HSY)                              $34.74            $35.89        3.31%
Intel (INTC)                                     $12.86*          $15.62      21.46%
Intuitive Surgical (ISRG)              $126.99          $117.41    (7.54%)
Kimberly-Clark (KMB)                  $52.04*           $49.13     (5.56%)
Johnson & Johnson (JNJ)          $56.75*          $51.77      (8.78%)
McDonalds (MCD)                        $62.19            $53.95       (13.25%)
Palm (PALM)                                  $5.96**           $9.22           54.69%
Netflix (NFLX)                                 $29.89            $46.59         55.87%
Nike (NKE)                                     $51.00             $52.11           2.18%
Tata Motors (TTM)                         $4.45               $7.81           75.51%
Toyota (TM)                                    $65.44             $77.11         17.83%
Transocean (RIG)                         $47.25            $66.31       40.34%
Wal-Mart (WMT)                             $56.06            $51.29       (8.51%)
Walgreen (WAG)                           $24.67            $29.04        17.71%
Yum (YUM)                                     $28.66*           $30.26         5.58%

So collectively, if you'd have bought an index of my watch list you would have made a 26.12% return... relative to the market that is over a 30% return!  Now... this is just a watch list.  I actually have to confess.  I would not have had the cajones to buy Borders Books at 40 cents.  So if you take Borders out of there and its collosal ascent, the above stocks would have returned you 17.86% (about 25% relative to the market as a whole).  So if I'm going to fess up and take off Borders, then I would also argue on my side that I would not have bought ISRG at the January 1 price (I was watching it at around $98) and would not have bought some others like MCD, WMT, or NKE at their January 1 prices... I was lookign at them a bit lower. I also don't know why Best Buy is not on my watch list because I have been wanting that stock since Circuit City died and it has returned over 30% YTD. But oh well, I'll eat those for the sake of the overall point:  my picks have hugely out-performed!

Additional Observations

The stocks performing the worse on the list this year?  It is the "safe" picks, the conservative picks, the ones all of the talking heads on TV are telling you to buy, and the "recession-resistant" stocks.  Those are your food stocks, medical stocks, your customer staples, and your budget-concious consumer stocks... McDonalds, Wal-Mart, Johnson & Johnson, Heinz, 3M, etc. 

It is your consumer discretionaries that are performing well:  like Best Buy, Macy's, Limited (Bed Bath and Beyond), and Barnes & Noble.  And your tech of course like Google, Amazon, Apple, RIM, Netflix, Intel, etc.

Maybe it's just false optimism, but based on the way stocks are acting this year, the market is shifting away from safe, recession plays and seems to be anticipating a return to propserous times.  I haven't been around that long, but based on what I have learned and read from the people who have made billions over the years.... if you believe that we won't fall into a deeper, longer recession lasting into 2010, you should be shifting your portfolio right now.  You should be getting out of the stocks that the people on TV loved for the last 6 months like health care (JNJ), kitchen and bathroom stocks (Kraft, Kimberly-Clarke), and discount stores (Family Dollar, Wal-Mart).  Get into your tech, consumer goods, retail, luxary goods (Coach), travel (Carnival, Royal Carribean), etc.  If you want to get really crazy get back into your real estate and finance.

On the other hand, if you think this is a temporary bounce and we're headed back toward 7000 and below for a long period of time then double-down on all of those recession-proofs I mentioned in the last paragraph plus others like Coca-Cola, Kellogs, Heinz, etc. (or maybe just bonds of even gold, you pesimist!)

Or if you're just going long-term macro investor like I mostly am, then just buy a mixed bag of solid companies and stop thinking so micro anyway!

Am I wrong?

I like to be right.  But I'd kinda also like to be wrong here... would make me feel a little less bad about not following my gut on these!  So if you see false logic in my numbers above, tell me so in the comments!!!  But it seems pretty clear to me.... market down, my picks up big.