It’s all about expectations
Indeed, the following table shows a snapshot of the IPIG portfolio as of last Friday’s market close. Looking across the entire portfolio, there were only two picks that showed a net capital loss through that date, Kinder Morgan and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). The recent bearish reports help explain the additional fear priced in to Kinder Morgan.
In Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s case, things are a bit more complicated. For one thing, its key cash-cow drug, Copaxone, is under assault and at risk of losing its patent protection earlier than originally anticipated. For another, as the company is based in Israel, the tensions in Syria are creating additional risk. Iran and Syria have vowed to counterattack Israel if the U.S. bombs Syria. Even if a company is fundamentally strong, it’s hard to focus on operational excellence when dodging bombs.
Still, as the table shows, a fundamentally solid portfolio of companies with reasonable expectations priced into their shares can absorb some risks and losses like that and still wind up fine:
| Company Name | Purchase Date | Total Investment (Including Commissions) | Current Value | Current Yield |
|---|---|---|---|---|
| United Technologies | 12/10/2012 | $1,464.82 | $1,858.14 | 2.07% |
| Teva Pharmaceutical | 12/12/2012 | $1,519.40 | $1,464.52 | 3.12% |
| J.M. Smucker | 12/13/2012 | $1,483.45 | $1,801.83 | 2.19% |
| Genuine Parts | 12/21/2012 | $1,476.47 | $1,809.18 | 2.73% |
| Mine Safety Appliances | 12/21/2012 | $1,504.96 | $1,760.40 | 2.45% |
| Microsoft | 12/26/2012 | $1,499.15 | $1,713.25 | 2.95% |
| Hasbro | 12/28/2012 | $1,520.60 | $2,063.57 | 3.33% |
| NV Energy | 12/31/2012 | $1,504.72 | $1,969.80 | 3.24% |
| UPS | 1/2/2013 | $1,524.00 | $1,735.20 | 2.86% |
| Walgreen | 1/4/2013 | $1,501.80 | $1,978.40 | 2.55% |
| Texas Instrument | 1/7/2013 | $1,515.70 | $1,841.46 | 2.86% |
| Union Pacific | 1/22/2013 | $805.42 | $929.52 | 2.04% |
| CSX | 1/22/2013 | $712.50 | $865.30 | 2.36% |
| McDonald’s | 1/24/2013 | $1,499.64 | $1,540.16 | 3.20% |
| Becton, Dickinson | 1/31/2013 | $1,518.64 | $1,788.84 | 1.99% |
| AFLAC | 2/5/2013 | $1,466.35 | $1,576.26 | 2.40% |
| Air Products & Chemicals | 2/11/2013 | $1,510.99 | $1,750.83 | 2.76% |
| Raytheon | 2/22/2013 | $1,473.91 | $2,041.47 | 2.91% |
| Emerson Electric | 4/3/2013 | $1,548.12 | $1,721.16 | 2.67% |
| Wells Fargo | 5/30/2013 | $1,525.48 | $1,532.91 | 2.90% |
| Kinder Morgan | 6/21/2013 | $1,518.37 | $1,479.24 | 4.54% |
| Cash | $398.30 | |||
Data from the IPIG portfolio brokerage account as of Sept. 6, 2013.
The article Low Expectations Are Wonderful Things originally appeared on Fool.com and is written by Chuck Saletta.
Chuck Saletta owns shares of Aflac; Texas Instruments; Microsoft; McDonald’s; Genuine Parts; United Technologies; Wells Fargo; Teva Pharmaceutical Industries; Emerson Electric; Becton, Dickinson; Walgreen; Union Pacific; Hasbro; UPS; CSX; J.M. Smucker; Air Products & Chemicals; Mine Safety Appliances; Raytheon; Kinder Morgan; and NV Energy. Chuck also has an options position open on Apple. The Motley Fool recommends Aflac; Apple; Becton, Dickinson; Emerson Electric; Hasbro; Kinder Morgan; McDonald’s; Mine Safety Appliances; UPS; and Wells Fargo and owns shares of Apple, CSX, Hasbro, Kinder Morgan, McDonald’s, Microsoft, Raytheon, and Wells Fargo.
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