(By Robert Freedland) The Buy and Hold Value model had a bit of a volatile month and ended on an upswing as the fiscal cliff talks resolved without catastrophic effects on our nation.
Fortunately (or unfortunately depending on your own economic perspective) tax increases were not coupled with additional draconian spending cuts or sequestration that might have further weakened the economy. In any case, let's hope that we can get through the debt-ceiling issue without additional trauma.
During the month, I parted company with my personal favorite Apple (AAPL) as it continued to demonstrate technical weakness.
[Related -eBay Inc (EBAY) Q4 Earnings Preview: About to Be Bid Lower?]
Also during the month, I picked up a position in the insurer AFLAC (AFL) but sold it ten days later as selling pressure resulted in a price decline. I continue to be very averse to losses and am willing to sell shares that fail to perform as I would like them to.
Two other positions I kept for short periods of time were Copart (CPRT) and Valspar (VAL). Copart was purchased 12/5/12 and then sold 12/31/12 in the midst of the fiscal cliff market turmoil. I sold my Valspar (VAL) position 12/11/12 on short-term weakness and chose to return it to my portfolio on 1/2/13.
[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]
Many of the stocks that I include within my portfolio are 'favorites' of mine that I believe have long-term capital appreciation potential. Just as I am not shy about selling a stock after a short-term holding period, I am humble enough to revisit a stock that I have recently sold if it once again 'behaves' properly according to my opinion.
Two other holdings in this portfolio that were eliminated were eBay (EBAY) and Rackspace Hosting (RAX). These are both 'favorites' of mine and while they were sold on short-term weakness, I will certainly consider returning them to the model should funds and the opportunity allow.
Three new positions included ARM Holdings (ARMH), a mobile phone microprocessor-related company and Beacon Roofing Supply (BECN), a building material manufacturer benefiting from the rebound in the real estate market as well as the expected reconstruction after the devastating hurricane Sandy.
I also bought Starbucks (SBUX) a 'favorite' of mine where I often stop for my break as well as a China play and an economic rebound opportunity.
It is probably surprising that with all of the trading I have done in this account that the volatility is a low as it is and that it helped to produce very consistent performance each year.
I believe that this is due to my desire to include some of the superior investment opportunities available, including stocks of companies with strong price performance and growth opportunities in their own sector. At the same time, I am extremely risk averse and try to step aside when individual issues behave poorly.
This model will be unable to avoid the effect of an overall market swoon, but as I believe that long-term the market will be moving higher, I remain, like the old Merrill Lynch advertisement, "Bullish on America".
The investments discussed are held in client accounts as of January 9. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.
Certain information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. The manager believes that such statements, information and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.
Robert has over 40 years of investment experience and is a full-time optical surgeon. He uses his expertise in the…