13 for ’13: First Quarter Results

If you joined with me and invested in some (or all) of my “13 for ’13” recommendations at the start of the new year, you may be interested to see how we have faired so far in 2013.  The ride has been exciting … because it’s always more fun to ride investments up than to watch them crash down!  In my opinion, the equities market really has nowhere to go but up for the foreseeable future.  For this, we can thank Ben Bernanke and “the Fed” as they continue to pump billions and billions of dollars into our sputtering, debt-laden economy.  I am certain this will not end well, but in the meantime you and I should be heavily invested in stocks so that our gains can keep up with (and surpass) real life inflation.

In Barron’s this weekend, I read another disturbing statistic on retirement savings in a smart article by Jason Zweig entitled, “How to Save More for Retirement Without Really Trying.”  He quotes stats from the Employee Benefit Research Institute revealing that 68% of workers “think they need to save at least 10% of their household income to live comfortably in retirement.”  That’s a good thought, however, only “24% report that they have saved at least $100,000, and just 57% say they are saving for retirement” (emphasis mine).

Hopefully, these numbers trouble you as much as they do me.  If you’re not saving for your (and your spouse’s and your family’s) future, who is?  *Hint: No one.  Do you really want to entrust your final 20-30 years on this earth to Social Security?  Yikes!  I sure don’t.

In light of this, I implore you to start saving at least 10% on your take-home pay every month. If you can’t stomach this, then you need to change your lifestyle, get a raise, get a second job, or do all three.

Your next step should be to open a Roth or Traditional IRA and set up automatic monthly transfers from your bank account to your brokerage account.  Start small if you must, but you must start!  Every six months, re-evaluate your contributions and try to increase them by a little or–preferably–by a lot.

Okay, I’m off the Savings Soapbox.  Following are the 13 for ’13 First Quarter Results.

*Note: To evaluate our performance, I placed hypothetical investments of $1,000 into each of the 13 stocks and reinvested the dividends. 

Stock Buy-in Price Current Price 3-Month % Return
MCD  $88.21  $99.69 13.89
TWO  $11.08  $12.61 25.40
SBY  $18.83  $20.70 9.98
CAT  $94.88  $86.97 -2.94
SBUX  $55.70  $56.95 6.58
CSCO  $20.50  $20.90 6.34
PSEC  $11.23  $10.91 3.41
HCSG  $23.50  $25.63 11.05
BP  $43.40  $42.35 3.00
BX  $16.76  $19.78 29.57
AAPL  $523.90  $442.66 -16.32
VFC  $149.38  $167.75 11.69
TGP  $39.69  $41.43 11.45
13 for ’13 9.68
S&P 500 10.03

As you can see from the table above, our 13 for ’13 portfolio is neck-and-neck with its closest index marker: the S&P 500.  The results are slightly misleading as I used the publication dates of my three different 13 for ’13 articles as starting points for our stocks.  This means that several of the later stock picks missed many days of gains in early January, which were included in the S&P 500 index fund.

Even with those missed days, we are still returning 10%.  This is a very strong start for risk-averse, value-oriented investors like ourselves, as compounding our reinvested dividends will lead to market-crushing results over the mid- and long-term!

Our biggest winners have been BX (29.6%) and TWO (25.4%).  Both of these stocks remain excellent ways to play the recovering housing market and I’m planning on holding onto them for a good while to come.

Our biggest dud is the infamous AAPL (-16.3%).  While it is currently in every investor’s dog house, I recommend holding onto your shares.  It is the least-shareholder-friendly stock of our bunch, yet it still remains a cash-gushing value play.  Hold your shares and–if you’re feeling wild–buy a few more.

One final note is that TWO has undergone a stock-split, and we will be receiving our anticipated SBY shares in the 2nd quarter of 2013.  If you own TWO you don’t need to do anything other than check your brokerage account in about a month.  You should see some new SBY shares in there just for being a faithful TWO shareholder!

As always, remember that I am not a professional investment advisor.  These ideas are just that . . . ideas.  Invest at your own risk (and reward), do your due diligence, be wise and have fun!

Jeffrey W. Ross, MD is a Motley Fool investment freelancer.