It’s time to have a look at how the last three months have treated the Model Portfolio (Top Twenty). I’ve also included each company’s corresponding beta as well as that of the portfolio as a whole. As much as I believe in the limitations of beta (insofar as the definition of risk can’t be limited to mere volatility), it at least provides ‘some’ objective comparison to market risks.
This is a debate that could go on forever. In an attempt to seek closure, allow me to quote from the master. In his most recent letter to shareholders (2011 annual report page 17), Warren Buffet illustrates what I’ll call the ‘opportunity cost’ of risk. Specifically, the risk of not owning common stocks when stacked against inflation and taxes. Take heed gold bugs, mattress stuffers, passbook savings worshippers and other ne’er do wells!
Using our trusted longrundata calculator we can easily find:
| Symbol | 3 Months (%) | 12 Months (%) | Beta |
|---|---|---|---|
| CL | 6.50% | 24.70% | 0.33 |
| KMB | 1.40% | 17.80% | 0.24 |
| KO | 6.50% | 13.30% | 0.40 |
| PG | 1.50% | 11.80% | 0.35 |
| PM | 13.90% | 42.20% | 0.84 |
| ABT | 9.90% | 28.80% | 0.25 |
| JNJ | 1.40% | 14.90% | 0.43 |
| MRK | 3.00% | 21.60% | 0.30 |
| NVS | 1.20% | 6.74% | 0.47 |
| PFE | 5.70% | 15.840% | 0.61 |
| GE | 13.00% | 2.30% | 1.67 |
| ITW | 23.00% | 8.51% | 1.23 |
| MMM | 9.80% | -1.65% | 1.13 |
| UTX | 14.20% | -0.45% | 1.16 |
| XOM | 2.80% | 4.89% | 0.61 |
| BAC | 72.40% | -28.11% | 2.07 |
| C | 38.90% | -17.82% | 2.04 |
| JPM | 39.20% | 1.97% | 1.66 |
| USB | 17.80% | 21.35% | 1.08 |
| WFC | 24.30% | 8.40% | 1.54 |
| Averages | 14.90% | 9.85% | 0.92 |
Disclosure: The author is a direct owner of the companies mentioned here.
