Investing on Vacation

For a good chunk of the time since last week's update, I was actively neglecting my duties as portfolio manager of the real-money Inflation-Protected Income Growth portfolio. In celebration of our 10-year wedding anniversary, my wife and I made a little getaway to a cabin in the middle of nowhere -- some 20 miles from the closest town, with no Internet connection and little to no cellphone service.

What stock market?
Yet without even casual oversight from this small-time investor, the companies in the iPIG portfolio somehow continued to operate! The stock market saw some ups and downs last week, but when all was said and done, both the broader market and the iPIG portfolio were virtually unchanged. The portfolio's net balance increased a whopping $10.64 to close the week at $37,923.98. 

While the portfolio may have ended the week flat, many of its constituent stocks moved significantly. Those movements are largely artifacts of October's being peak earnings season. That the movements largely counteracted one another is a testament to the diversification pillar of the iPIG portfolio's overall strategy of dividends, valuation, and diversification.

Who moved where?
Teva Pharmaceuticals (TEVA 1.01%) fell the farthest of any iPIG pick, down nearly 11% on the week. Teva fell on the combination of lackluster earnings and the surprise departure of CEO Jeremy Levin. Operationally, the biggest problem facing Teva is the pending patent expiration of its blockbuster treatment for multiple sclerosis, Copaxone.

It's more than a little ironic that Teva, well known for being the world's largest generic-drug maker, finds itself caught by the exact same sort of patent expiration cliff it usually benefits from. Still, its generics business remains solid, and even if Copaxone's revenue can't be fully replaced, Teva will continue to profit from those generics it makes so well.

On the flip side, defense contractor Raytheon (RTN) rose the most of any iPIG pick, up nearly 5%. Raytheon's shares have been climbing for a bit more than a week since the company announced strong earnings and boosted its forecast. Raytheon also issued its $0.55-per-share dividend this past week, and the $14.85 the iPIG portfolio received from that payout was just the little extra it needed to show positive total results for the week.

All told, Raytheon's shares are up an astonishing 53% since being selected for the iPIG portfolio, and it's one of the portfolio's top-performing holdings. The iPIG portfolio benefited from being able to pick up shares during Raytheon's temporary share-price weakness during the government's defense sequester earlier this year. As the world remains a dangerous place, and Raytheon remains skilled in navigating the political-appropriations environment, the company has stayed capable of securing contracts.

Semiconductor giant Texas Instruments (TXN 1.25%) also gained strongly for the iPIG portfolio on the week in what looks like something of a "snapback rally." The previous week, Texas Instruments had announced earnings that looked weak on the surface but were really in line with what should be expected, given the wind-down of its mobile business.

That's a fairly convoluted message, and it looks like it took the market a little while to get past the headline disappointment and realize that Texas Instruments' business is really performing as expected. To paraphrase Benjamin Graham, the father of value investing, sometimes it takes a while for the market's "voting machine" to turn off and its "weighing machine" to start working.

The best part about going nowhere
Whatever the reasons (or lack thereof) behind the individual companies' movements, the overall iPIG portfolio remained remarkably stable. So after our wonderful getaway, my wife and I did not return to the aftermath of a market freakout. That's a great way to extend a vacation -- and a good case for an investing strategy that doesn't require constant babysitting to do well.

The table below shows the current snapshot of the iPIG portfolio:

Data from the iPIG portfolio brokerage account, as of Nov. 1, 2013.

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