Mock Portfolio Investing: Managed Portfolio

Last but not least, is my Mock Managed Portfolio. Here are the assumptions I am making:

  1. I will start again with $100,000.
  2. Generally speaking purchases will be made in in 5% – 7.5% increments and no more than 10% of my portfolio when reasonably possible.
  3. All avenues of trading will be allowed, indexing, buying on the dip, shorting, swing trades, etc.
  4. I like to think that I am a value investor seeking some growth along the way.
  5. This particular portfolio may resemble my other two mock portfolios in some respect, but this will likely change as time goes on. I have found it difficult to pick quality stocks and ETF’s to buy when they are this overvalued.
  6. I will remain heavy in cash as well anticipating some form of correction in the near future.

This is the portfolio:

Ticker Shares Paid
(SH) TSLA 22 $327.22
GE 189 $26.38
TEVA 250 $30.00
KR 220 $22.63
TGT 148 $50.41
SH 224 $33.45
PSQ 187 $40.00
GDX 232 $21.84
AXL 186 $16.13
BGS 228 $33.50
HBI 220 $22.69
LB S @ 55 171 $43.79
SKT S@ 33 290 $25.79

KR- Earnings and guidance reporting has not been all that positive lately, however I believe this is still a strong company. A 20 billion dollar market cap and reasonable fundamentals are why I like this pick. The over reaction to the Amazon-Whole foods merger is why I love this pick right now. KR’s debt is a concern for me, but not enough to scare me away at this point. Granted they have shown some weakness over the last few weeks, however a 30% drop in stock price is an over reaction in my opinion. I think Kroger can bounce back at least 10% in the next 6-12 months.

TEVA- This has been a difficult position for me to take. The government healthcare disaster, the industry as a whole is a mess. However, I like the generic market that TEVA is in. A robust revenue growth along with expanding income and profit margins make this even more attractive. The selling point, is the fact that all of the negatives are built into the current price and it has been beat up over the last year or so. With a 4.3% dividend, I’m willing to sit on this and wait, I find it hard to believe the price will drop more than another 4%, if it does at all.

GE- General Electric is likely my favorite position to be in right now. They are selling off arms of the business that classify it as a too big to fail. The strategies that they have taken on this far in regards to the cloud space, the internet of things, robotics, etc seems to be under the radar. Earnings are projected to rise 9% this year and another 13.5% next year. This is huge for a 226 billion dollar company. They have a little more debt than I like, but GE has worked hard to get this debt under control and off the books. Cash flows appear to be slowing down, but with their sell offs of under producing segments, this should improve very soon. With almost 50 billion dollars in cash, they are hardly in any financial jeopardy. The only issue I have right now, is where will GE show support for a bottom. I am seeing quite a bit of support around the $26 level with huge support @ $22. Ill wait a few weeks to see what happens, if it drops much further below $26 Ill ride it out to $22, then I’m a buyer. Otherwise, I’ll wait for it to cross a 20 day moving average on the way back up. The 3.67% dividend is almost appealing enough to take a half position right now.

TGT- I like TGT as a buy at this point as well. This is another example of an Amazon-Whole Foods merger over reaction. Target is an industry leader and solid business, it’s not going anywhere any time soon. Target is starting to show some strength @ the $50.50 level and the technical’s show some very strong support at this level from a 5 year perspective. I think it has put in a bottom. With a dividend approaching 5%, this is an attractive buy point.

BGS- I like BGS in the space in the market for two distinct reasons. I absolutely believe the reaction from the market regarding Whole Foods and Amazon is grossly overblown. There is no reason to believe that Amazon entering the online food space is going to take this significant of a space away from the big boys like TGT, KR, WMT, etc. If anything this move (even if it actually goes through) will force these companies to improve in this space. The second reason I love BGS here is that the markets are starting to roll over, and when they do, investors gravitate toward the staples and utilities. BGS has been beaten up quite a bit and still remains fundamentally sound. This is a buy as soon as it starts to show any signs of strength on a chart. It has hit some strong support at $33.50. If it bounces up here I’m a buyer, if it falls through, it could very well go to $24 before it rebounds and I am a buyer all day at that price. I think we will see a rebound here, however it may be worth the wait to be sure.

HBI- An 8.3 billion dollar company trading below market and industry PE, with a 2.64% dividend. Earnings have increased both one an annual basis and quarter to quarter comparison. Operating income, revenue and cash flows are all on the rise. Very strong ROE, however this may be somewhat inflated due to the above average debt, which is still respectable. Over the last several months HBI has shown strength in OBV, MACD, RSI as well as crossing above the 20, 50, and 200 day SMA. So really, who really thinks people are going to stop buying underwear?

GDX- I think gold has another run in it. The dollar is weakening, and that usually means gold is on the rise. I’m not sure how high it will go, but I think it has a chance to equal the run it had over the summer of 2016. The markets are showing weakness, and gold generally performs in bear markets. I would actually prefer to go with individual mining companies like ABX or MUX, but I think there is some safety in this ETF at this time.

PSQ and SH- I have been stating this like a broken record, the markets are showing weakness and I believe they are starting to roll over. These two ETF’s are my hedge (along with gold).


BWLD- This is a fundamentally sound company that has had a recent drop in earnings and sales. Technically this is setting up for a nice little run. It may be worth a small position and see where it goes. If BWLD can correct this most recent dip in sales, I can see a 25% gain over the next 12 – 18 months easily. This is definitely a trade interest.

AXL- A fundamentally sound company that is in a poor market. Earnings are showing positive growth despite being in the auto industry. Margins are very good with an operating margin 3 fold higher than the industry average. My concerns are the debt, the industry it lives in, and technically this stock appears to be in limbo, it cant figure out if it wants to pop higher or lower. I really like AXL @ $12 a share, but…we don’t always get what we want. Just like BWLD, with no dividend, the risk vs reward of buying here just isn’t there, so I will buy a half position and see where it goes.

TSLA- Im shorting Tesla. This is the most over valued company that I know of. The rest of the industry is quickly catching up, and Tesla has remained stagnant. I am confident that Tesla will file for bankruptcy protection in the next 3-5 years, start over with new investors and someone else running the company and it will take off. I love Tesla as a product, but hate it as a business.

LB & SKT- These are strictly technical trades for me. I like the companies, but I am retail heavy in my portfolio. I think they can easily hit $55 (LB) and $33 (SKT) and then I am out with profit. If it takes a while to get there, I’m collecting over 5% dividend on each to sit and wait. I don’t see either of them falling in price significantly as they appear to have hit multi year bottoms at their current price.

HEDGES: Currently I am hedged in PSQ, SH, GDX, and 17% position in cash. Post correction, I expect to sell these positions and look toward other opportunities or put it all in VTI and let it ride back up.


AOBC @ 18, BWLD cross above 20 day SMA, DG @ 66, DUK @ 81, RGR @ 48, SNR @ 9, T @ 35, TSCO @ 20 day SMA. If there is a significant correction, remaining cash in VTI.

Mock Portfolio Investing: Index Portfolio

This is my sample of an index long term investment account. To be honest, I wasn’t going to post this, because superficially it looks like a cop out, but there is a method to my madness. Once again here are a few assumptions:

  1. This will assume a starting value of $100,000. Sounds like a lot, but I don’t think anyone should have anything other than a S&P index until they reach the $100,000 level or higher. If you are under 30, I would keep it all in a small and mid cap index.
  2. This is long term investing, not day trading. However, I will opt to sell any securities and go to a larger position in cash should the markets show significant weakness, however I will buy back in with any significant market strength.
  3. I like ETF’s over Mutual Funds to index for the simple reason of fees and expenses. ETF’s, in my opinion, are a much more efficient vehicle, and without the hassle of end of day trading.
  4. I use mostly, well actually predominantly, Vanguard funds for indexing. I am not married to Vanguard and will explore other options, but for the most part, I think they offer the best product for most applications I use.
Ticker Shares Paid Last Current Value % Gain $ Gain
SH 598 $33.40 $33.39 $19,973.00 -0.03% -$5.98
PSQ 495 $40.40 $40.08 $19,980.00 -0.80% -$158.40
Cash $60,008.02

My plan is to short the market with SH and PSQ anticipating a correction sometime soon while maintaining cash to jump back in when I believe the markets have stabilized. Who knows where that will be, a 5% correction or a 25% correction, I don’t know. Either way I will ride that 5% – 25% on the way down and ride it back up when I jump back in. There will be plenty of skeptics out there regarding this form of market timing, but I have been doing it for years, and it has worked well for me.

If I were to start a new portfolio today, this is exactly how it would look. This is not the market to be buying in at this point as it is long due for a correction and very overvalued. My actual index portfolio, looks very different than the one seen here. My real portfolio has been maturing over several years. I want to keep this as realistic as possible with a start date the same as my other mock portfolios to maintain some sort of consistency.


VOO @ 165 – 180, VTI @ 90 – 101, VYM @ 75, VNQ @ 80, VCLT @ 88, VPU @ 105, VDC under 135, VWO under 37, VOE < 95, VBR under 110, VGT < 125, VPU < 105, MGV < 61, VWO < 36, MGK < 87,  VB < 118,

Mock Portfolio Investing: Income Portfolio

Keeping in line with this MOck portfolio series, this is an overview of my mock income portfolio. I made a few assumptions:

  1. I would anticipate the reasonable investor to have at least $1,000,000 in their portfolio when they retire. Hopefully you will have more, but this is a good place to start.
  2. The overall goal of this strategy is to maintain at least half of the funds invested in the market. The remaining funds will be parked in a money market account waiting for other opportunities to invest. Granted this money is making a pathetic return (1.25%), but it is safe.
  3. I have opted for a number of higher yield, relatively inexpensive stocks (on evaluation), that I consider at very good buy points. Some are dividend aristocrats*, but all are at a very good buying position.
  4. The goal for me is most certainly income generation, however, I will also take growth when I can get it.
  5. The overall income goal is 4% yield on an annual basis.
 Ticker  Shares  Price Paid  Last  Initial Investment
TGT* 1,474 $50.88 $50.88 $74,997
HBI 3,522 $21.29 $21.29 $74,983
SKT 1,929 $25.91 $25.91 $49,980
GE 2,865 $26.17 $26.17 $74,977
SYY* 1,010 $49.49 $49.49 $49,984
TEVA 2,380 $31.50 $31.50 $74,970
VDC 357 $139.90 $139.90 $49,944
BMS* 1,070 $46.71 $46.71 $49,979

The total value of this portfolio is $1,000,000 with roughly half of this invested. I think it is reasonable to purchase any investment in this portfolio in 5% – 7.5% blocks ($50,000 – $75,000). I will buy on the higher side (7.5%) when I believe these purchases can make a stronger impact on my overall portfolio through growth opportunities as well.

Ticker Shares Purchase Value Div $ Div % Annual Dividend Income
TGT* 1,474 $74,997 $2.48 4.82% $3,655
HBI 3,522 $74,983 $0.60 2.66% $2,113
SKT 1,929 $49,980 $1.37 5.35% $2,642
GE 2,865 $74,977 $0.96 3.65% $2,750
SYY* 1,010 $49,984 $1.32 2.69% $1,333
TEVA 2,380 $74,970 $1.36 4.28% $3,236
VDC 357 $49,994 $3.68 2.63% $1,313
BMS* 1,070 $49,979 $1.20 2.58% $1,284

Annual dividend income for these securities is $18,326. The remaining $500,000 should accrue $6,250 if left in the money market account (1.25%) over the next year. Income from these two sources will account for $24,576. The goal is 4% annual income from this portfolio, so based on this, we are $15,424 shy of our goal.

This is the point where risk vs reward is critical. I could place all of the funds into income seeking investments and at an average dividend rate of about 2% – 3%, we still fall short of our goal, and place this portfolio at significantly more risk. This is where the growth component comes in. I fully expect names like Target, GE, Teva and Haines Brands to grow and increase their value over the next 6 – 12 months, thus giving us additional income.

Over the next 6 – 12 months, I also expect to see some sort of market correction and we have tons of cash on the sideline to take advantage of this. Should this correction not happen (do you really think it won’t?), we still have plenty of funds available to take advantage of any opportunity the market should give us in the form of pullbacks.

As a side note, we have not discussed several very important aspects related to income investing, additional revenue sources and Social Security. We also have not discussed the amount of income needed by the owner of this portfolio.

Let’s tackle the last question first. The answer is simple, we have no idea. This is a generic exercise and everyone concerned will be different. I have based my interest in this as a method of providing income using a specific strategy. If I were reading this blog I would take from it overall concepts rather than a specific number. After all this is not investment advice to anyone, simply an exercise to improve techniques of investment and my interest in sharing and receiving feedback.

Additional revenue sources. Again, this exercise cannot account for this. Maybe Mr. Retiree works part time at the local golf course as a starter in the morning or drives a school bus five days a week and makes $10,000 in additional revenue each year, who knows. This exercise will assume no additional income other than investments, but it is worth discussing as a practical matter.

Social Security. Motley Fool wrote an article in late 2016 regarding average Social Security income for U.S. retirees. In this articles the average monthly S.S. income for males was approximately $1,500 and $1,200 for females.

We cannot assume that just because someone had been able to save and invest one million dollars over their lifetime for retirement, they had a high income job for most of their working career. This particular portfolio owner could have been the sole income generator for a family of four making a six figure salary for the last 20 years but investing poorly. This could also have been a very astute investor that made reasonable decisions and lived below their means for forty years, never making more than $50,000 as a family.

We will make no assumptions here and use the Fool’s research for additional Social Security income using $32,400 ($1,500 x 12) + ($1,200 x 12) as the Social Security annual income source. Of course having said this, I have already made the assumption that this is a two income retirement, but this appears to be the relative norm, so I’ll go with that. We have to draw the line somewhere. Please feel free to make any adjustments you feel necessary.

So there it is, we have started our income revenue portfolio. Let’s see how we do over the next several months or years, hopefully this portfolio owner can live care free for the rest of their golden years.


VOO @ 165 – 180, VTI @ 90 – 101, VYM @ 75, VNQ @ 80, VCLT @ 88, VPU @ 105, T @ 35, DUK @ 81.

Up next…….Managed Portfolio.



Mock Portfolio Investing

I had a thought. I’m interested in creating an income strategy, but I’m too far away from retirement to actually do anything about it. Why not create a mock portfolio, and see how it does over time.

I had another thought. Why not create a few portfolios and compare them all over time. I’ll create three separate strategy portfolios: An income portfolio, a managed portfolio and an index portfolio.

I’ll report my progress in % gain/loss, $ gain/loss, dividend gains as well as any associated fees. The fees will be estimated of course, as best as I can.

In order to make this a more realistic exercise, I think each portfolio should have an overall value that can be built upon over time (I hope). The index and managed strategy will be assigned $100,000, and the income portfolio will have a value of $1,000,000, after all this is a portfolio representing retirement.

I’ll try to report on this on a monthly basis, generally around the middle of the month, give or take. However, this does not limit my activity to once a month. I will maintain these portfolios as I would manage in real life. There will be times of a fair amount of activity (trades) and there will also be times of little or no activity, it all depends on the markets.

Well, enough of this, I have some work to do. Up first, the index portfolio!