The TSD 5 Index: How Did My Gut Picks Do In December?

On December 6, I announced the TSD 5 index, a collection of five stocks that I picked mostly based upon my gut feeling about the company. Here’s what was in the index on December 6:
Apple (AAPL, @ 90.01)
Hasbro (HAS, @ 27.19)
Whirlpool (WHR, @ 86.70)
Riverbed Technology (RVBD, @ 32.65)
Lowe’s (LOW, @ 31.64)

Let’s see how we’re doing.

Apple (AAPL)
December 6: 90.01
January 1: 84.84
Change: -5.76%

Apple’s sales fell mostly due to fear over Microsoft’s Zune, an underwhelming iPhone (from LinkSys?), and fears about declining iTunes Music Store sales. After Christmas, these worries were alleviated: iTunes saw a huge surge in popularity, while the Zune’s unit sales were flat. I still feel good about this one.

Hasbro (HAS)
December 6: 27.19
January 1: 27.25
Change: +0.22%

Pretty uneventful period for Hasbro.

Whirlpool (WHR)
December 6: 86.70
January 1: 83.02
Change: -4.24%

There was a pretty strong sell-off in mid-December based on whispers of bad earnings, but those were quelled and the stock recovered somewhat.

Riverbed Technology (RVBD)
December 6: 32.65
January 1: 30.70
Change: -5.97%

This is a newer stock, and I picked it right before a small profit-taking, but the business is still doing very well. It just sold a bunch of wireless equipment to Hilton Hotels, among other deals.

Lowe’s (LOW)
December 6: 31.64
January 1: 31.15
Change: -1.55%

Largely uneventful period for Lowe’s, but it was given some improved analyst ratings.

Overall, it wasn’t good. Only one of the five stocks was up and, as a whole, I was down about 4%. Here’s the damage:

Apple (AAPL, @ 84.84, -5.76%)
Hasbro (HAS, @ 27.25, +0.22%)
Whirlpool (WHR, @ 83.02, -4.24%)
Riverbed Technology (RVBD, @ 30.70, -5.97%)
Lowe’s (LOW, @ 31.64, -1.55%)
Overall: 257.45, -4.00%

Ouch. There’s a reason I don’t pick stocks for a living. I still believe in the companies, so I’ll take a few looks throughout the year to see how they’re doing.

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  1. Hi Trent,

    Good companies, bad timing. Do some reading on technical analysis so that you can pick these stocks up at the right time.

    FT
    http://www.milliondollarjourney.com

  2. Jim Lippard says:

    Apple also has had some downward pressure from its involvement in the executive stock option timing scandal. It got a 4% kick in the upward direction on December 29, when Apple’s internal investigation cleared Steve Jobs of any wrongdoing with regard to improper dating of stock option grants.

    I disagree with the previous recommendation of technical analysis methods–nearly all such methods are pseudoscientific nonsense on a par with tea-leaf reading and astrology, mistaking short-term stock movements that are random walks for technical patterns. When they “work,” it’s for the same reason that astrology and health quackery “works”–subjective validation, crediting the successes and making post-hoc excuses for the failures. John Allen Paulos’ _A Mathematician Plays the Stock Market_ gives a mathematical grounding on the stock market that includes an evaluation of some common technical analysis claims.

  3. If you’re looking for another member of this hypothetical investment club, I’d love to play along.

  4. Bill says:

    Trent,

    The only thing that scares me is that you only take a few looks throughout the year on the stocks. I don’t know if you’ve read any of Jim Cramer’s books but he’d tell you you’re not doing your homework. My brief review of his older book is at http://www.emptynotebook.com/2007/01/02/book-review-real-money-sane-investing-in-an-insane-world-by-jim-cramer/

    Take Cramer or leave him, but I do believe Buy & Homework is the way to go… and an hour a week per stock might keep you from “believing” in a company for longer than you need to believe.

  5. AM says:

    The iphone has nothing to do with Apple. The real Apple “iphone” – by another name, presumably – is expected to be unveiled this month.

  6. Trent Trent says:

    The disadvantage for Apple is the use of the obvious iPhone trademark. It’s a piece of intellectual property that would have had some strong value for the company; watching Linksys use it instead is far from a positive thing.

  7. Phil says:

    I learned my lesson back in the late 90’s (or actually in 2002 after all those stocks I bought in the late 90’s were worth a fraction of what they were when I bought them). The lesson being to avoid single stocks. Buy mutual funds or even better yet ETFs (Exchange Traded Funds; they have much lower expenses and tax advantages over mutual funds). You can’t be anywhere near as diverse as an ETF can. Also buy ETFs the cover a range of different areas, for example I have gold, european stock, emerging market and bond funds in addition to a US stock index ETF. Over periods of time when the US market is down, often certain foreign markets or gold are up and vice-versa.

  8. J.D. @ Get Rich Slowly says:

    I know I was skeptical of your Apple pick earlier, but I’ve been reading up on the rumored (almost certain) unveiling of their phone product later this month, and I woudn’t be surprised if it were a mini-iPod in terms of success. The Apple pick might not be so bad after all. (And again, though I don’t own their stock, I’m a huge Apple supporter. All my work is done on Macs.)

  9. Matt says:

    All the companies you’ve picked are good companies and I think that if you held them over a longer term you might see more growth rather than loss. I’ve always believed that stock purchases should be made more on the long term.

  10. Rob says:

    I had a similar “pounding” with RVBD, ADBE and AAPL. I’m still kicking myself for not being diversified, but these stocks are only a small portion of my portfolio.

    I just wish that I had dumped some of the AAPL when it went above 90. And, I wish that I didn’t buy the RVBD on it’s high point. And, doggonit, the ADBE blipped on the reportings, but then it stalled out…

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