Portfolio Checkpoint - 2006 Q4

This was not a good year for me. My much smaller trading portfolio was more or less destroyed by a couple bad trades (specifically, AAPL and PLAY). On the bright side, the long-term portfolio delivered S&P 500 beating returns. However, the net result is a year of underperformance.

Long-term Portfolio: +17.1%
Trading Portfolio: -67.2%

S&P 500 Total Return: +16.3%
Dow Jones Wilshire 5000 Total Return: +16.5%
Dow Jones Industrial Average Total Return: +19.0%
Nasdaq Total Return: +10.4%

Average Diversified Domestic Equity Fund: +12.9% (source: Lipper)

If you're curious, here is last year's much better report card: 2005 Results

It is definitely disappointing to see net underperformance, but live and learn. Oversized positions in the trading account that turned out to be large losers really hurt. Going forward, I plan to be more cautious with the trading portfolio, and reduce the portfolio's concentration on a few large positions.

I don't currently plan on making any major deposits into the Trading Portfolio, as it is pretty obvious to me that I am not a good trader. I think the evidence points strongly to me being a much better investor, but who knows. I don't claim to have enough of a track record to be that sure of anything. I still have a lot to learn.

Company	Ticker	Q4	Q3	Change
Altria Group	MO	18.6%	17.0%	1.6%
Student Loan Corp.	STU	8.1%	7.7%	0.4%
General Electric	GE	6.1%	6.0%	0.1%
Form Factor	FORM	5.7%	3.4%	2.3%
Constellation Brands	STZ	5.6%	5.7%	-0.1%
Capital One Financial	COF	5.5%	2.9%	2.6%
International Gaming Technology	IGT	5.5%	5.1%	0.4%
Eastman Kodak	EK	5.3%	4.8%	0.5%
Fortune Brands	FO	5.0%	4.5%	0.5%
American Eagle Outfitters	AEOS	4.5%	4.4%	0.1%
Linear Technology	LLTC	4.1%	2.5%	1.6%
Amgen	AMGN	3.9%	2.8%	1.1%
Montpelier Re	MRH	3.6%	* * *	* * *
First Marblehead Corp.	FMD	3.2%	5.5%	-1.7%
Home Depot	HD	3.1%	2.9%	0.2%
Chevron	CVX	2.9%	2.6%	0.3%
Coventry Health Care	CVH	1.9%	* * *	* * *
Sun Bancorp.	SNBC	1.7%	1.6%	0.1%
Deb Shops	DEBS	1.5%	1.7%	0.0%
Kongzhong	KONG	1.5%	0.6%	0.9%
TODCO	THE	1.3%	* * *	* * *
Lifetime Brands	LCUT	1.3%	* * *	* * *
Equity Office Properties	EOP	0.0%	1.8%	-1.8%
Abercrombie and Fitch	ANF	0.0%	2.8%	-2.8%
Apple Computer	AAPL	0.0%	3.1%	-3.1%
North Fork Bancorp.	NFB	0.0%	2.9%	-2.9%
Harrah's Entertainment	HET	0.0%	7.9%	-7.9%

Notes:

Percentages do not account for any cash held in the portfolio.

During this quarter, additional shares of the following existing positions were purchased: AMGN, FORM, LLTC, KONG.

NFB shares were converted to cash and COF shares as a result of the buy-out.

EOP and HET were sold after being purchased for cash by LBO firms.

FMD position was reduced in October.

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Current Trading Portfolio Positions: Advanced Micro Devices (AMD), Yahoo (YHOO), eBay (EBAY) and some EBAY Jan 32.50 Calls.

Happy New Year, everyone! May everyone's portfolio get bloated during a prosperous 2007.