Posted on: Sunday, March 7, 2004
How would you invest $100,000 in today's market ?
Investment Portfolios
Advertiser Staff
The Advertiser asked six of Hawai'i's financial professionals to create $100,000 investment portfolios for a theoretical client starting on April 1, 2003.
Today we report on how the portfolios have performed as of the close of the market on Friday and what the professionals who built them have to say about the market.
The professionals were asked to invest for a fictitious client who is 50 years old, a woman, married (husband is also 50 and both want to retire at 65), with a joint income from all sources of $150,000.
They have a net worth (including their home) of $1.3 million, and their assets owned for investment total $400,000. They are in the 31 percent tax bracket and want this $100,000 to be invested for growth.
These portfolios should not be viewed as recommendations. Selecting the right investment depends on your current situation, goals and tolerance for risk. Before investing you should consult with a professional and read all relevant prospectus.
The theoretical portfolios were limited to purchases of U.S. stocks, mutual funds and certain bonds. A flat $25 commission is charged on most trades and cash balances earn interest of 3 percent. Below we list a sampling of each professionals' holdings as of last week.
If you have any questions or comments, please contact: David Butts, business editor, 535-2453 or dbutts@honoluluadvertiser.com.
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A friend jokingly referred to me as “the world’s most conservative investor.” The joke is on him however because this is a moniker with which I am completely comfortable. This very conservative portfolio is on pace for a 25% return since inception last year. Perhaps the most impressive feature of this portfolio is its ability to also perform in down markets. Virtually every investor I’ve met with a portfolio of $100,000 or more has been interested in ‘conservative’ growth. I can not stress the value of a well-balanced, diversified portfolio enough, especially for individuals looking for growth and a reduced exposure to risk.
I would like to congratulate Geal for her phenomenal performance over the last month. Her picks of Chico's and Shuffle Master were superb. I love to see people making money in the markets, it's the name of the game. So kudos Geal. This month Imclone got FDA approval for Erbitux. This is a tremendous positive for the company. Not only can they begin marketing their drug, they also get a $250 million milestone payment from Bristol Myers. Wednesday news came out that Carl Ichan has taken out a significant position in Imclone and can raise that position to
$500 million as his filing states.
It’s wise to remember that investing is a process and not an event. The context is always changing and you need to gauge the trends regularly. The economy and corporate profits remain strong. Inflation is generally subdued. However, we still have a serious geo-political environment to consider, we are in a presidential election year and interest rates are going to rise moderately. Our model portfolio only has a month to go, but our hypothetical couple still has decades of investing ahead. I took some profits this past month and raised some cash, which I expect to reinvest shortly. Stay confident.
Buy and hold versus market timing? Ten months ago the stocks in this portfolio were selected using specific criteria. For instance, I searched for quality stock with a history of increasing profits, in diverse industries. Once chosen they were bought and held. This strategy does not require one to check the stock market daily to buy, sell, buy and sell. It is more consistent with the actions and reactions of an owner of a company, than one betting on a company. Buying and holding can result in lower transaction costs, the ability to defer capital gain taxes, less stress and satisfying returns.
