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Testing Simple Investment Ideas in 2009

Thursday January 1, 2009

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Reading Time: 6 minutes

2008 was certainly a bad year for almost all investors. 2009 may be bad also, or not. However, if you sit out then you will miss the recovery, when and if it ever happens.

I thought it would be fun to track some investment ideas in 2009. Tools such as the portfolio at Google finance make this easy to do. For all of our portfolios we will hypothetically invest $10,000 and charge ourselves a discount brokers fee of $10 per transaction. We will also start with the closing prices as of December 31, 2008. Here are the initial set ups:

1. A portfolio of 10 stocks from the December 12 issue of Fortune Magazine. Fortune picked 10 stocks to own in 2009. We will buy $990 worth of each and use up our mythical $10,000 with the brokerage fee. Fortune did make these picks earlier in December and there has been some price movement since then.

Here is our starting value:

Name Symbol Last price Shares Mkt value
Altria Group, Inc. MO 15.06 65.74 990
Annaly Capital Management, Inc. NLY 15.87 62.38 990
Dell Inc. DELL 10.24 96.68 990
Devon Energy Corporation DVN 65.71 15.07 990
Diamond Offshore Drilling, Inc. DO 58.94 16.8 990
Fluor Corporation (NEW) FLR 44.87 22.06 990
Johnson & Johnson JNJ 59.83 16.55 990
Medco Health Solutions Inc. MHS 41.91 23.62 990
Pfizer Inc. PFE 17.71 55.9 990
Potash Corp./Saskatchewan (USA) POT 73.22 13.52 990
Valuation 9900

2. A “low risk” portfolio suggested by Daniel R. Solin in his book The Smartest Investment Book You’ll Ever Read. The portfolio consists of a total stock market index fund, a total international index fund, and an bond index fund, weighted 28%, 12% and 60%. We will use index funds from Charles Schwab.

Name Symbol Last price Shares Mkt value
Schwab Total Stock Market Index In SWTIX 15.37 181.52 2790
Schwab International Index SWINX 13.16 90.43 1190
Schwab Total Bond Market SWLBX 8.93 670.77 5990
Valuation 9970

3. A “medium risk” porfolio also suggested by Daniel R. Solin in his book The Smartest Investment Book You’ll Ever Read. This is similar to the low risk portfolio except it is weighted 42%, 18% and 40%. For fun, we will use Vanguard Funds rather than Schwab.

Name Symbol Last price Shares Mkt value
Vanguard Total Bond Market Index VBMFX 10.21 390.79 3990
Vanguard Total Intl Stock Index VGTSX 10.68 167.6 1790
Vanguard Total Stock Mkt Idx VTSMX 21.44 195.43 4190
Valuation 9970

4. Rebalance. We will start with 50% cash and 50% an S and P 500 exchange traded fund. Each month we will rebalance to the 50-50 allocation, spending $10 to make the trade.

Name Symbol Last price Shares Mkt value
iShares S&P 500 Index (ETF) IVV 90.31 55.31 4995
Cash 4995 4995
Portfolio 9990

I plan to post on the first Wednesday of each month the standings of each portfolio. I may add one or more in January, but the idea is to track these ideas going forward.

Do you have any you want to add?

Let the games begin.


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