Saturday, October 23, 2010

* 2010-Q3 Progress Review

After each quarter-end I review my asset allocation and year-to-date total returns by category. The attached PDF contains my actual asset allocation as of 2010-Q3. Below is a high-level summary of the information contained in the PDF:

Asset Allocation Actual Target Diff.
Cash/Fixed Income 28.4% 28.0% 0.4%
Equities-Domestic 40.0% 42.0% -2.0%
Equities-International 25.4% 24.0% 1.4%
Employer Equity 6.2% 6.0% 0.2%
Total 100.0% 100.0%
Cash/Fixed Income 28.4% 28.0% 0.4%
Large Cap. 48.9% 51.0% -2.1%
Small/Mid Cap. 16.5% 15.0% 1.5%
Employer Equity 6.2% 6.0% 0.2%
Total 100.0% 100.0%

Asset Allocation

In the third quarter, my asset allocation was reasonably close to my target. My philosophy is to buy the best dividend stocks available and adjust my allocation using my 401(k) and other investments, when needed. None of the variances are above my 2.5% tolerance, so I will adjusted them with future purchases.

2010-Q3 Performance

Through the third quarter, my portfolio is still comfortably ahead of the S&P, but gave up a little ground. Below are the YTD performances of various categories along with my S&P 500 benchmark (VFINX):
Portfolio Wtd. Avg. 2010 YTD 2009 2008
Income Stocks 3.8% 9.3% 23.9% -20.4%
Pocket Change (9/08) 12.1% 8.6% 21.1% -7.3%
Income ETFs -0.3% 11.8% 17.6% -27.3%
S&P 500 (VFINX) -2.5% 3.8% 26.5% -36.3%
BRK.B -3.5% 26.9% 2.2% -32.1%
Income Stocks vs S&P 6.3% 5.5% -2.6% 15.9%
Income Stocks vs BRK 7.3% -17.6% 21.7% 11.7%
When weighted with 2009 and 2008, all my income investments out-performed the S&P. As I have previously stated, it is my desire to beat the S&P over the long-run, so I don't pay a lot of attention to short-term performance either positive or negative.

Passive Income

For Q3/2010 my passive income averaged $1,010/month, up slightly from the $992/month in Q2. The increase resulted from additional investments, dividend growth and from higher income on cash holdings as I moved them from a MMA to short-term bonds. The above amounts include all sources of passive income in my taxable accounts, primarily interest and dividends. It excludes my Roth IRA, 401(k) and blog income (which is not passive).

The next update will be in mid-January. As always, thanks for reading!
(Photo: sanja gjenero)