My Portfolio: Bashed by Banks, Cleaning Up in Commodities

NOTE: This post refers to my personal portfolio, a real-money collection of the stocks I own. These aren’t stock recommendations: The stocks you buy should be a reflection of your net worth, your age, your tolerance for risk, your liquidity needs and a host of other factors. The only reason I put my investments online is that I believe those offering financial advice to others should be willing to put their money where their mouth is. I do, and I am.

The stock market recently reached levels it hasn’t seen since the financial crisis hit in the summer of 2008, thanks to a host of factors: an economy that continues to recover, the recent Republican victory and the Fed’s announcement that they were going in for a massive dose of “quantitative easing“: a technique used by governments to keep interest rates low by essentially going on a government bond-buying binge.

My overall stock portfolio is doing great: up better than 60 percent overall, at least as I write this. (That’s not an annual return – I’ve owned many of these stocks for more than one year.) But I’m not writing this post to gloat. I know better than that – what the market gives it can take away, and gloaters are the first to lose. I’m writing this because of the interesting things we can learn by looking at what’s hot and what’s not: even if you’ve never owned a stock or intend to.

Here are a few of my winners, along with the percentage gain:

  • Cliffs Natural Resources: purchased July 2009: up 230 percent
  • Caterpillar: purchased March 2009: up 175 percent
  • Freeport-McMoRan Copper & Gold: purchased May 2009: up 90 percent

Now check out a few that haven’t done so well:

  • Citicorp: purchased April 2010: down 6 percent
  • Huntington Bancshares: purchased May 2010: down 2 percent

Why the winners are winning

The three big gainers above have something in common worth noting: they benefit from a recovering world economy. While the economy remains tepid here at home, things are much better overseas, especially in developing countries. The best performer above, Cliffs Natural Resources, is a company that sells iron ore, and one of their biggest customers is China: a country that’s dominating the world economy and one that suffered relatively little during the recent (some might say “ongoing”) global recession. Developing economies gobble up natural resources. That’s why Cliffs is selling lots of iron ore, and Freeport-McMoRan is selling lots of copper. It’s also why Caterpillar is doing well. Wherever you see construction – and there’s tons of it going on in places like China and India – there’s probably a yellow tractor sitting nearby.

These stocks are called cyclical stocks – so named because they follow economic cycles. When times are tough, they go down. When the end of a recession is in sight, they start going higher. To make money in cyclical stocks, you buy at the depths of a recession, when there’s virtually no positive press and no sign of a turnaround. That’s why I was able to buy these so cheap last Spring and Summer. When will I sell? At the top of the cycle – when the economy has fully recovered, all’s right with the world, and there’s no place for the economy to go but down. We’re not there yet, however – not even close. Because the world’s largest economy, ours, has yet to fully participate in the recovery.

Why the losers are losing

If I had a crystal ball, I wouldn’t have bought Citicorp or regional bank Huntington when I did. I bought them last Spring because I thought the worst of the housing crisis was behind us. What I didn’t know, however, was that many of our nation’s largest lenders had been screwing people with improperly executed foreclosures, thus potentially extending the housing recovery and in all likelihood costing the offending banks a ton of money. We’ve done extensive coverage of the foreclosure fiasco: see

I still believe that sooner or later the housing market will recover, our economy will improve and these stocks will go up. So I’ll wait patiently, and may even add to these positions. Stay tuned.

What can we learn?

The obvious lesson to learned here is that diversification among stocks is critical. We’re encouraged to think of the stock market as one investment: every night the news anchor tells us how much the Dow went up or down. But as you can plainly see from my investments, some stocks do better than others: way better. As is often said by those in the know, it’s not a stock market – it’s a market of stocks. That’s why owning a bunch of different companies isn’t just desirable: it’s critical. If you can’t afford to buy a diversified portfolio, invest in mutual funds or Exchange Traded Funds (ETFs), where you can put down a small amount and own a slice of a large group of stocks.

And even if you’re not interested in the stock market as an investment, it’s still useful to see what’s happening on Wall Street. For example, the out-performance of commodity-based cyclical stocks tells you that a world economic recovery is well under way. The relative under-performance of US Bank stocks tells you that it hasn’t arrived on our shores – yet.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Ways Your Phone Can Slash Grocery Costs
5 Ways Your Phone Can Slash Grocery Costs

These free apps and websites can help you get cash back on groceries, shop more efficiently or squeeze the most from the ingredients you have on hand.

5 Ways to Put an End to Junk Mail
5 Ways to Put an End to Junk Mail

Here’s how to keep unwanted mail from clogging your mailbox and trash can.

8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

8 Things I Always Buy at Costco
8 Things I Always Buy at Costco

From bacon to birthday cakes, here are my favorite deals at the popular warehouse store.

9 Foods You Should Never Buy Again
9 Foods You Should Never Buy Again

Make the wrong food choices, and you can ruin your health — and possibly shorten your life.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

These Major Appliances Got the Worst Reviews in 2020
These Major Appliances Got the Worst Reviews in 2020

Consumer Reports says these home products got the worst ratings from experts.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

20 Amazon Purchases We Loved in 2020
20 Amazon Purchases We Loved in 2020

These practical products made everyday life a little easier last year — and will do so in the new year, too.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.