10 stocks for 10 years

Topic: Investment

I decided to look at selecting a portfolio of stocks I would be comfortable putting into an IRA for 10 years. My main criteria was companies with a history of large positive cash flow (that seemed likely to continue that trend).

The 10 stocks I came up with are (closing price on 22 April 2005 – % of portofilo invested):

  • Templeton Dragon Fund (TDF – 16.40 – 16%) – a closed end mutual fund investing in China, Hong Kong, Taiwan, Singapore… This one doesn’t fit the criteria but does a great job of filling out the portfolio in my opinion.
  • Dell (DELL – 36.43 – 12%)
  • Toyota (TM – 72.42 – 12%)
  • Google (GOOG – 215.81 – 12%)
  • Pfizer (PFE – 27.22 – 8%)
  • Amazon (AMZN – 33.04 – 8%) They are only just starting to generate cash but I like their prospects.
  • Intel (INTC – 23.24 – 8%)
  • Petro China (PTR – 61.68 – 8%) Investing in PTR is based on the potential for China, the prospects for oil over the next 10-20 years and Warren Buffet’s ownership of the stock.
  • Cisco (CSCO – 17.43 – 8%)
  • First Data (FDC – 37.48 – 8%)

Thankfully I don’t have to staying locked into decisions for 10 years. But, if I had to, this is a portfolio I would feel comfortable with today. It is overweighted on technology (which is another reason for including Petro China). Templeton Dragon Fund also provides a nice counter weight to all the technology. I would like to have a higher exposure to heath care, but I couldn’t find the stocks that seemed equal to those above.

I have been using marketocracy, since 2001, to manage a portfolio of stocks (marketocracy does a great job of tracking performance for you which I find quite convenient). This year my fund has suffered. At the beginning of this year the Darvamore Fund has exceeded the S&P 500 by over 10% annually on average). This year however the fund’s overall performance results have been reduced to just 5.5% over the S&P 500 annually. Hopefully that trend will turn around soon.

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