The wild swings in the market continued this past week, aided and abetted by both Goldman Sachs‘ trading glitch and the unexpected mid-session Nasdaq shutdown. It was another crazy week in the market, but for investors focused on companies and their strengths rather than Wall Street and its gyrations, it was a fine time to be invested.
When all is said and done, the noise in the system from human-caused or technical glitches is just that — noise. Over time, a company’s operational performance will dictate its market performance, even if day by day or hour by hour, glitches and machine trading rule the airwaves. For the real-money Inflation-Protected Income Growth portfolio, last week’s market machinations helped the portfolio surge forward, picking up a hair over $325 since the prior week’s update.
What drove those gains?
That gain pushed the portfolio’s total returns to 20.3% since inception, just edging out the potential total returns on the S&P 500 tracking SPYDERs, including dividend reinvestment. By far, the biggest driver of the IPIG portfolio’s performance this past week was Microsoft Corporation (NASDAQ:MSFT), whose shares surged ahead on Friday on the news that longtime CEO Steve Ballmer is retiring.
That’s company-specific news that moved the stock, and the IPIG portfolio was able to benefit from it, because it has owned Microsoft Corporation (NASDAQ:MSFT)’s shares since last December. Back then, the company’s shares had been trading so cheaply that the company still looked like a reasonable value even if it could never grow again. That made it an attractive buy candidate, and the market’s reaction to Ballmer’s retirement suggests there may still be life and potential future growth in that technological behemoth.
Ballmer’s retirement actually marks the second time in the IPIG portfolio’s brief existence that what amounts to a “change of control” substantially boosted a pick’s stock price. The first was when electricity generator NV Energy, Inc. (NYSE:NVE) agreed to be acquired by Berkshire Hathaway‘s MidAmerican energy unit. Of course, the two stories aren’t exactly the same, as Microsoft Corporation (NASDAQ:MSFT) will continue to exist as an independent company, while NV Energy, Inc. (NYSE:NVE) will soon be subsumed by Berkshire.
In other news, the other high-tech titan in the IPIG portfolio, Texas Instruments Incorporated (NASDAQ:TXN), also played its part in those returns. Last Monday, the company paid its most recent dividend, and the IPIG portfolio picked up $13.16 from that payment for the 47 shares it owns. That was the second payment by Texas Instruments Incorporated (NASDAQ:TXN) at $0.28 per share and part of the company’s continued tradition of rewarding its owners with increasing dividends on a regular basis.
Of course, not every stock in the IPIG portfolio rose on the week, with Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) earning the dubious distinction at the fastest faller. Concern that the generic pharmaceutical powerhouse’s key non-generic drug, Copaxone, is nearing the end of its patent protection is leading Wall Street analysts, including Goldman Sachs, to downgrade the stock.
While the loss of Copaxone’s patent protection will hurt Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) in the short run, the company’s strength has long been its generics business, which continues to do well.
All told, a solid week
Put together the gains, the losses, and the dividends, and you wind up with a portfolio that finished the week like this:
| Company Name | Purchase Date | Total Investment (Including Commissions) | Current Value, Aug. 23, 2013 | Current Yield, Aug. 23, 2013 |
|---|---|---|---|---|
| United Technologies | 12/10/2012 | $1,464.82 | $1,850.40 | 2.1% |
| Teva Pharmaceutical | 12/12/2012 | $1,519.40 | $1,455.40 | 3.1% |
| J.M. Smucker | 12/13/2012 | $1,483.45 | $1,843.82 | 2.1% |
| Genuine Part | 12/21/2012 | $1,476.47 | $1,826.66 | 2.7% |
| Mine Safety Appliance | 12/21/2012 | $1,504.96 | $1,861.20 | 2.3% |
| Microsoft | 12/26/2012 | $1,499.15 | $1,911.25 | 2.7% |
| Hasbro | 12/28/2012 | $1,520.60 | $1,982.73 | 3.5% |
| NV Energy | 12/31/2012 | $1,504.72 | $1,994.16 | 3.2% |
| United Parcel Service | 1/2/2013 | $1,524.00 | $1,743.40 | 2.9% |
| Walgreen | 1/4/2013 | $1,501.80 | $1,951.60 | 2.6% |
| Texas Instruments | 1/7/2013 | $1,515.70 | $1,836.29 | 2.9% |
| Union Pacific | 1/22/2013 | $805.42 | $948.36 | 2% |
| CSX | 1/22/2013 | $712.50 | $862.24 | 2.4% |
| McDonald’s | 1/24/2013 | $1,499.64 | $1,522.08 | 3.2% |
| Becton, Dickinson | 1/31/2013 | $1,518.64 | $1,782.36 | 2% |
| AFLAC | 2/5/2013 | $1,466.35 | $1,615.41 | 2.3% |
| Air Products & Chemicals | 2/11/2013 | $1,510.99 | $1,768.00 | 2.7% |
| Raytheon | 2/22/2013 | $1,473.91 | $2,096.55 | 2.8% |
| Emerson Electric | 4/3/2013 | $1,548.12 | $1,734.88 | 2.7% |
| Wells Fargo & Co | 5/30/2013 | $1,525.48 | $1,582.12 | 2.8% |
| Kinder Morgan | 6/21/2013 | $1,518.37 | $1,563.66 | 4.3% |
| Cash | $345.09 | |||
Data from the IPIG portfolio’s brokerage account, as of Aug. 23, 2013.
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The article Who Cares What the Market Does? originally appeared on Fool.com and is written by Chuck Saletta.
Chuck Saletta owns shares of Aflac; Texas Instruments; Microsoft; McDonald’s; Genuine Parts; United Technologies; Wells Fargo; Teva Pharmaceutical Industries; Emerson Electric; Becton, Dickinson; Walgreen; Union Pacific; Hasbro; UPS; CSX; J.M. Smucker; Air Products & Chemicals; Mine Safety Appliances; Raytheon; Kinder Morgan; and NV Energy. The Motley Fool recommends Aflac; Becton, Dickinson; Berkshire Hathaway; Emerson Electric; Goldman Sachs; Hasbro; Kinder Morgan; McDonald’s; Mine Safety Appliances; UPS; and Wells Fargo and owns shares of Berkshire Hathaway, CSX, Hasbro, Kinder Morgan, McDonald’s, Microsoft, Raytheon, and Wells Fargo.
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