Proctor & Gambling

We're talking about PG's selloff of a lot of its brands, and the impact that had on stock price. We bought some shares of PG before the divestiture, and since then the stock barely trended upward (about a 1% return). So, does this mean their selloff was good for profits? They only reduced their sales by about 15%, even though they sold off 95 of 160 brands. This made them a leaner company. This was supposed to make them more profitable.

We bought PG as a proxy for the whole the consumer staples sector, which would bolster the overall stability of our portfolio. We were betting that it would mirror or do better than that sector. Although that didn't really happen (a few of their competitors in the sector outperformed PG), it didn't do much worse. It has been pretty stable. Looking back, we missed some opportunities to make more, but it would be nearly impossible to know that at the time.

As a side note, it didn't hurt that PG pays dividends. Their dividend yield is 3.2% of the stock price, which isn't bad. This means that we get 3.2% on our investment each year.

PG wasn't selected because we thought a selloff would happen, and then it happened, and it didn't really do much for profitability. So ultimately, even though the stock didn't increase like we were anticipating, dividends saved us again. The stock price didn't really go up all that much, the dividend yield didn't change, etc. This is just another case of the market being unpredictable and not necessarily rational.

It is better to regret something you have done, than to regret something you haven't done.

Non, Je ne Regrette Rien

At this point ENZL has balanced out our losses with EWZ. I guess this proves the value of diversification.

Today we're looking at Home Depot, CVS, Proctor & Gamble.

Both Home Depot and CVS have been outperforming respective their sectors (consumer discretionary and staples). They also have higher dividends than their funds (VCR & VDC, respectively).

We can do two buys, and we'd like to do one consumer discretionary and one staples. For consumer discretionary we liked Amazon, but it was too expensive, and we hated Comcast on principle, because that's only a rung above investing in privatized prisons.

On a side note, what sector would even fall under?

This means that for consumer discretionary Home Depot looks good.

We talked to someone we knew who was a sales rep who worked quite a bit with Home Depot, and he had a lot of good things to say anecdotally about how they do business. While this isn't really data-driven, it does seem to bolster our case.

Anyhow, let's narrow our decision on staples. We had been considering CVS and Proctor & Gamble. P & G was 12% of VDC and CVS is 5%. Basically, these are companies we are looking at making a substantial investment in anyway if we were to go with the ETFs. However, we are hoping to pick the winners, at it were, from those funds. Another reason for going with a single stock is investing solely in the companies we like, either economically or with respect to values (Philip Morris, Comcast, Wal-Mart), but that's getting off track again.

Even though P&G has been underperforming relative to its index, it still has a better dividend than CVS, making it more appealing to us, given our strategy. In theory, it is a (relatively) more guaranteed return.


P&G has a low beta and  a reasonable dividend. Those aspects fit very nicely with our generally risk-averse strategy and mindset. We like something safe that will give us a steady, even if small return. The purpose of the consumer staples sector is to have a stable investment. Our thought is to pick a representative component of a stable consumer staples fund. Additionally, we are due for two purchases, which means making a simple decision may be best for moving forward. Or as the great poet laureate Gibby Haynes once said, "It is better to regret something you have done, than to regret something you haven't done."

It looks like we are going to buy PG, so next week we will look at Home Depot vs. its fund and whether or not we want to purchase it.

Profit!

Can we just pick one stock? Part one will attempt to answer this and will ultimately fail.

From the ever depressing world of EWZ comes this quote:

"Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the iShares MSCI Brazil Capped ETF (EWZ), where 7,150,000 units were destroyed, or a 7.2% decrease week over week." - Forbes

Attempting to simplify, let's narrow a search down to one stock.  We can take a peak at the ETFs that we've been overviewing and just select one company.  First, we'll check out the main components of the Asian ETFs.

First, here is TSM, which is Taiwan Semiconductor and is the main component (20%) of EWT.  Unfortunately, there is no real way to get to Samsung, the major component of EWY, through the US market.  You can pick some up as over-the-counter (OTC) or through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S - a BofA subsidiary), but that's not the way we want to go.  If we want to grab some of that juicy Samsung growth, then we'll have to stick with the ETF. 

How about the consumer discretionary or consumer staples which were VCR and VDC, respectively?  VCR has the holdings in the chart below.  The spread is nice, and if you remember from a few weeks ago this ETF was solidly outperforming SPY.  We can take a look at the top few, but they aren't necessarily a strong force pushing the value of this fund around.  Maybe, we just start with the ones that we know.  Amazon and Comcast come to mind, even though we don't necessarily want to support Comcast.

Top 10 Holdings (32.95% of Total Assets)

Company Symbol % Assets Amazon.com, Inc. AMZN 5.08 Walt Disney Company (The) Commo DIS 4.78 Comcast Corporation CMCSA 4.42 Home Depot, Inc. (The) Common S HD 4.27 McDonald's Corporation Common S MCD 3.65 priceline.com Incorporated PCLN 2.29 Time Warner Inc. New Common Sto TWX 2.24 Ford Motor Company Common Stock F 2.13 Starbucks Corporation SBUX 2.07 Twenty-First Century Fox, Inc. FOXA 2.02

VDC has the holdings shown in the chart below.  As you can see, the fund isn't quite as diverse.  Choosing one stock from this bunch is a little easier.  The fund has been tracking SPY very closely.  

Top 10 Holdings (60.71% of Total Assets)

Company Symbol % Assets Procter & Gamble Company (The) PG 12.11 Coca-Cola Company (The) Common KO 8.55 Wal-Mart Stores, Inc. Common St WMT 7.37 Philip Morris International Inc PM 7.25 Pepsico, Inc. Common Stock PEP 6.93 CVS Caremark Corporation Common CVS 4.89 Altria Group, Inc. MO 4.06 Colgate-Palmolive Company Commo CL 3.47 Mondelez International, Inc. MDLZ 3.10 Walgreen Co. Common Stock WAG 2.98

 
For next week, Procter & Gamble, Coca-Cola, and Amazon.

Profit!

Norway: fit for some kings!

Norway has a king.  We love kings.  Let's buy some NORW!

Well, let's at least research some NORW.  The fund has fluctuated between $12 and $17 since its inception.  The last dividend was $0.42 back in December of 2012.  Since the price was around $12 then, that's not too bad.  The breakdown of NORW has 50% in the energy sector.  This will throw the sector breakdown of our portfolio a bit out of whack.

While revisiting our spreadsheet breakdown of portfolio weighting, we noticed that EWZ greatly shifted its portfolio around and now is much more focused on consumer staples than energy.  Also, we're now including T in our calculations.  Taking price into account, EWZ has also dropped in terms of the percentage of our portfolio.  Since SPY, ENZL, and T are all up, they are pushing their weight around even more.  We included NORW to see its impact.  It looks like we're very heavy in telecom (T and ENZL) and energy.

For the next buy, we're going to look into consumer staples for something with defensive potential.  We'll also need to try to get the portfolio back into balance.

Profit!