Here's How the World's Greatest Retirement Portfolio Did in 2011
Fellow Fools, it's been a roller-coaster ride this year. What had once looked like a promising year for stocks quickly gave way to a summer of discontent. Our recovery from the Great Recession of 2008-2009 has been nothing if not slow.
But that doesn't mean that you have to resign yourself to piddling returns.
This summer, I went in search of the best long-term investments available for my retirement portfolio, picked 10 stocks, then ensured I had $4,000 invested in each of the companies.
Like many Fools, I chose to invest over a minimum three-to-five-year time horizon, so I'm not declaring victory yet. But the portfolio's performance so far has me feeling good! Click on the purchase dates listed and you can read my original thesis for investing in each one of these companies.
vs. S&P 500's Return (% points)
|June 26, 2011||33%||33|
|PriceSmart||June 28, 2011||41%||42|
|Activision Blizzard (NAS: ATVI)||July 15, 2011||3%||6|
|Intuitive Surgical (NAS: ISRG)||July 25, 2011||16%||21|
|National Oilwell Varco (NYS: NOV)||July 28, 2011||(16%)||(14)|
|Coca-Cola (NYS: KO)||June 21, 2011||7%||9|
|Whole Foods (NAS: WFM)||July 5, 2011||10%||14|
|Amazon.com||July 12, 2011||(18%)||(15)|
|Apple (NAS: AAPL)||July 30, 2011||2%||3|
|Johnson & Johnson (NYS: JNJ)||Aug. 1, 2011||4%||5|
Source: Google Finance, Fool.com. Includes dividend reinvestment. As of Dec. 29.
Although an 8% return isn't something that'll put me in the record books, it's pretty good considering the portfolio began when the market was near its top this summer. It is also doing considerably better than it was just one month ago.
Looking forward, there are two losers and two winners I'll be watching closely in 2012.
First, the losers
National Oilwell Varco has been a loser for this portfolio from the get-go. I don't think it's a case of a bad investment, just bad timing -- as the company was nearing yearlong highs when I bought in late July.
But this is a minimum three-year investment, and I'm confident that National Oilwell will come through for us in the end. With the days of cheap oil likely gone forever, and with National Oilwell's hand in both oil and natural gas plays, energy extractors will be relying on the company for years to come. And because the price of oil will likely be high, it'll be worth the investment to go searching for it in places that require National Oilwell's equipment.
But CEO Jeff Bezos is legendary for playing the super-long game. He's willing to give the new Fire tablet away for basically nothing, because he knows it will eventually lead to more and more spending on his website over time. It also doesn't hurt that while shareholders wait for those returns to come in, they can rest easy knowing that Amazon just finished first in customer satisfaction for the 14th consecutive year.
Two winners that make me nervous
Activision Blizzard doesn't have the most impenetrable competitive advantage. The company's success relies on its continuing to produce blockbuster hits like Modern Warfare 3 and World of Warcraft. For sure, in Modern Warfare 3, Activision looks to have another megahit.
But part of the reason I invested in the company in the first place was because of the regular, reliable revenue it was able to generate through digital subscriptions. With news of a defection of World of Warcraft subscribers, I'll be watching closely to see if this is a one-time event, or a long-term trend.
And finally, we come to Apple. Obviously, Steve Jobs can't be replaced, but what we're really waiting to see is whether the ingenuity he injected into the company has become part of its DNA. Sure, a dividend will likely help in the medium term, but what of the distant future?
After reading bits and pieces of Jobs' biography, I'm starting to wonder how the company will continue to innovate without him. Only time will tell, and I'll be watching closely.
The Fool's top stock for 2012?
It was with great pleasure that I recently discovered that one of the 10 stocks in this portfolio has recently been chosen as the Motley Fool's top stock for 2012. To find out which one it is, and get all the details behind our reason, get your copy today; it's absolutely free!
At the time this article was published Fool contributor Brian Stoffel owns shares of all the companies mentioned. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of Coca-Cola, Apple, Google, Whole Foods, National Oilwell Varco, Activision Blizzard, and Johnson & Johnson, and has also written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Google, Johnson & Johnson, National Oilwell Varco, Intuitive Surgical, Whole Foods, PriceSmart, Coca-Cola, Apple, Amazon.com, and Activision Blizzard, as well as creating a bull call spread position in Apple, a diagonal call position in Johnson & Johnson, and a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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