OFF THE WALL: 2013’s winners and losers in the bull market

sstocksBy Rene Pastor

Just around Christmas, guys who play the market like taking a look at their stocks to see who did well, who did lousy, and who did so-so.

The fund managers do it because they have to show to their clients how spectacularly well they did and use that as a selling point to future customers.

In my case, I am happy that, on the whole, many of my stocks are up over 10 percent, with a handful up over 30 percent. Those stocks up over 30 percent include Apple, which just happens to be the biggest company in the world, and something as obscure as Trinity Industries, which makes railcars and other highway transportation.

I also have holdings which have grown less than 10 percent: Procter & Gamble, which churns out household items from Tide to Gillette; and Union Pacific, the biggest railroad firm in the United States.

I also have positions where I am losing money. One is in Kinder Morgan Inc., one of the biggest energy transport companies. I still have to make up my mind on what to do with Kinder, but the dividend is good so I may hang in and wait it out.

The other two stocks where I am down are small biotech companies, with one trading just a little over a dollar and the other is below 50 cents. I am up on another biotech stock that seems to be on the way to higher ground. Both are developing cancer drugs, but they are pure speculative plays and I am willing to wait there several years to see if it will work out. They are volatile, go up and down like crazy, and you need a cast iron stomach to stay calm and not panic when you are down nearly $2,000 each.

That is where my investment window comes into play. Since I have a timeframe of over 15 years, I can wait out these biotech stocks.

The math is fairly simple. I bought one stock for around 50 cents on the nose and the other for about $1.43. If both stocks go through all the drug testing by Food and Drug Administration, pass the tests and make it to commercial launch and earn billions – let’s just say it should be enough to retire on.

Let me get one thing straight though.

The odds are long. At any point, a test can come up negative and the stock blows up in your face and the stock sinks to a level below the Mariana Trench. The whole thing requires patience. Let’s face it. Most investors tend to go into panic mode when they see their stocks go negative for days and weeks on end.

Remember that any speculative stock should not be more than 10 percent of your portfolio tops.

I think 2014 may be even better than this year since a global economic expansion will mean stronger profits for many companies in the market.

The Dow is now around 16,000. I think 18,000 is possible in 2014.

I believe the companies I chose to put my retirement funds in will be performing well over the next 3-5 years, maybe even longer. A good example is Boeing, which recently jacked up its dividend by 50 percent, and whose backlog of commercial jet plane orders stretches almost a decade into the future. I think Boeing’s stock could well triple in 3-4 years.

I feel the same way about Celgene and Gilead, the best biotech companies in the world. Celgene has a pipeline of billion-dollar drugs which should keep investors happy in the years ahead. Gilead is the main source of AIDs drugs and has a new hepatitis drug that was approved by the FDA.

For small investors, the way to go really is to put your money in good companies and follow the Warren Buffet Way, which is to stay put for a very long time.

‘Off the Wall’ is a weekly column on the stock market. The comments expressed here are the author’s personal views and are not meant to recommend the buying or selling of stocks.



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