Monday, December 31, 2007

2007 final portfolio summary

Well, 2007 has come to a close in the financial markets and here are how some of the major indices fared:

S&P 500 = +3.5%
DJIA = +6.4%
TSX = +7.1%

Let's take a look at 2007, the year in review for our non-registered portfolio.

Volatility = Good Buying Opportunities
By all accounts 2007 will probably be heralded as a volatile year in the markets. I am thankful for the volatility that we experienced because it gave me some good opportunities to buy a few great dividend growing companies on sale. For example, in August I picked up quite a bit of Yellow Pages Income Fund (YLO.UN) at around $12.60, and since then it has recovered back to a trading range of $13.50 - $14.50. Another blessing that came in mid August was Bank of Nova Scotia (BNS) trading in around $47.50, where I scooped some up for my dividend growth portfolio as well.

Currency Squeeze
The strength of the Canadian dollar this year really took a bite out of my portfolio. The loonie appreciated about 18% over the course of the year against the greenback. U.S. stocks that I bought in 2006 or early 2007 look really red on paper currently. For example I bought Procter & Gamble in two lots during March of 2007 and since then the stock is up about 17% in real terms, but because of the rapid appreciation of the loonie on paper I am actually down 1% on the stock.

Worst Performers
Walgreen Co. (WAG) down 17% on the year
Telus Corp. (T.A) down 8%

Best Performers
Procter & Gamble (PG) up 14% on the year
Sun Life Financial (SLF) up 13%

Portfolio Returns and Statistics
This was a year of furiuos buying for my non-registered portfolio, so this combined with the currency squeeze mentioned above have been a real drag to my portfolio.
  • 2007 Return = +0.2% (incl. dividends) (fully time/value weighted)
  • 2007 Dividend Growth Rate = 529% (incl. new funds)
  • 2007 Final Div./Dist. Income Per Year = $1,430
  • 2007 Final Portfolio Value = $35,574
  • Largest Asset = Financial Services (30%)
  • Smallest Asset = Technology (0%)
  • Geographic = 65% Canadian & 33% U.S.
  • 2007 New Funds (Savings) = $23,513 or $1,959/month
In Summary
Overall I am pleased with our progress in 2007. When I look back on 2007 I'll probably mostly see the strong appreciation of the loonie as the story of the year for my portfolio. Also, 2007 will probably bee seen as an accumulation year as we deposited about $24,000 and bought 10 new stocks in the calendar year. I don't expect to deposit anywhere near $24K into the portfolio in 2008. Also, I expect my emphasis in 2008 will be adding to existing positions, although I may still purchase a couple new dividend growing stocks or Exchange Traded Funds (ETFs). 2007 was a really bad year to use any type of benchmark to judge my portfolio performance as the currency move and scale of new funds that my portfolio experienced were unprecedented. Next year I am going to try to develop a good benchmark to evaluate my performance.

Happy New Year!


4Life said...

> Volatility =
> Good Buying Opportunities

MG: I think you have the right attitude. Few people will look at 2007 and view it as a banner year. The down times are where we pick up the bargains that we proudly point to in the future.

In case I don't get back over here tomorrow, I hope you have a happy and prosperous new year. Your blog is one that I enjoy reading on a daily basis.

Best Wishes,

pitz said...

Not bad...considering most of the TSX's gains came from just a very small handful of stocks (AL, BCE, RIMM, POT), its remarkable that a stock picker was able to keep the portfolio flat during these market conditions.

ChefJJ said...

Great perspective on 2007 being a time of opportunity. Very pleased with the PG pickup as well.

Happy 2008

uno1taxpayer said...

Great work and best wishes for 2008. It is always a pleasure to read your blog.

Canadian Capitalist said...

IMHO, given your 100% equity allocation, you should use a 65% TSX Composite and 35% US Total Market (unhedged) as your benchmark.

MG said...

Thanks for all the comments.

CC, Where can I find a US total market unhedged index?

Canadian Capitalist said...

MG: You can simply use VTI as a proxy for the US Total Market. I believe the Wiltshire 5000 is the more familiar US Total Market Index.

MG said...

VTI is in US funds though.

I thought there might be some sort of U.S. index fund that is in Canadian funds so that you can see the affect of unhedged currency to compare a year's results with a currency exposed portfolio like mine...does that make sense? is there one that anyone knows of?