Finishing off the average 10, the slightly better 5…
Deltic Timber
Deltic Timber was an idea that I gleaned from Jim Grant. They have a lot of timberland in the Southern US, a decent amount of which is next to Little Rock, Arkansas. The land near Little Rock, once developed, could be quite valuable in a bull market for residential real estate. I ended up selling because I lost confidence in the residential housing market.
Honda Motors
I still own Honda. Does the world need cars? Does the world need small cars? Yes! Is Honda cheaply valued? Yes. Can they beat the cost levels of Ford, GM, and Chrysler? Yes. I like Toyota as well, and have owned it in the past. I have owned American auto part manufacturers, but never the automakers themselves; their credit quality is too low.
Mueller Industries
This is a case where I found a cheap industrial, bought it, and waited. The price rose, and I concluded that I had cheaper opportunities, so I sold. Also, their raw materials prices were going to rise…
American Power Conversion
American Power Conversion was a cheap tech stock with products that are difficult to obsolete. Eventually I had cheaper investments to buy, and I sold. This is another example of how the rebalancing discipline can turn a flat stock into extra profits.
Australia & New Zealand Banking
This seemed to be a cheap, well-run foreign bank so I bought some. As with many of my average investments, I sold it to fund other more promising investments.
Summary of Part II
- Rebalance your portfolio regularly to fixed weights.
- Dividends matter.
- Buy cheap.
- Trade away for better opportunities when you find them.
It is important in investing to have something to compare investments against. Make them compete against each other for your dollars, and be rigorous about it. Don’t invest because “That sounds like a good idea,” rather, is it better than what you currently have? Keep improving the quality of your portfolio, in terms of cheapness, quality, and future prospects.
Full disclosure: long HMC
