Patience Pays Off Quickly

This year started off ugly for the market, with the S&P 500 falling around 3.6% in January. For the real-money Inflation-Protected Income Growth portfolio, it was a sign of just how important patience is in investing successfully. Indeed, last week's update focused on how dividends make it easier to have the patience to hold on during troubled times.

Somewhat surprisingly, that patience was amazingly quickly rewarded. The market rallied, carrying the IPIG portfolio with it. As this chart shows, the portfolio has since recovered everything it lost in the January swoon, and is now retesting its recent high-water mark:

Chart from the IPIG portfolio brokerage account, as of Feb. 14, 2014.

How did that happen?
In the past week, the IPIG portfolio gained more than $1,000 in market value, a significant rise in such a short time for a portfolio that's worth around $39,000. As is often the case, a big chunk of that gain was due to the market's own 2.3% rise on the week. Still, good old-fashioned fundamentals, activist investors, and industry-level successes played their parts in helping the portfolio gain.

Mine Safety Appliances (MSA -1.05%) was the IPIG portfolio's biggest winner on the week, gaining about 10% thanks to a surprisingly strong earnings announcement. As its name states, Mine Safety Appliances is in the business of providing safety equipment, primarily to the mining industry. That makes it a very economically sensitive stock and one where the positive news truly took the market by surprise.

Air Products & Chemicals (APD 0.17%) took second on a percentage gain basis, up around 7.5% on news that activist investor Bill Ackman set a $200 price target for the company over the next three years. Ackman's claim is that Air Products & Chemicals can improve its operating margin has some merit. Still, the company has to remember to balance the needs of margin with the need to keep making long-term investments to grow the business.

Walgreen (WBA -1.18%) rounded out the top three percentage gainers, on a combination of its own bullish views at a London investor conference and a strong earnings report from archrival CVS Caremark (CVS -0.65%). CVS's strength may bode well for Walgreen, as the two drugstore titans generally face similar economic conditions and risks. Still, while bullish sentiment from management may project good earnings from Walgreen, it needs to be backed up with actual results in upcoming announcements.

In spite of the overall strength in the portfolio, not every pick rose on the week. J.M. Smucker (SJM -2.84%) put in the worst performance, falling around 1.7%. Weak earnings results and a softening forecast drove Smucker's decline, which knocked its shares down to around 5% above the IPIG portfolio's purchase price from December 2012. While Smucker's namesake jams and jellies remain staples in people's homes, it's becoming clear that its growth story isn't what it once looked like.

Still -- you had to be there to get it
The IPIG portfolio's quick recovery from its January drop certainly was a pleasant surprise. Still, had it taken longer to recover, the IPIG portfolio would still lean on its key investing criteria of dividends, valuation, balance-sheet strength, and diversification to see it through. Those key fundamentals underpin the overall portfolio and will, through good times and bad. Put it all together, and as of Friday, Feb. 14, 2014, the portfolio looked like this:

Data from the IPIG portfolio brokerage account, as of Feb. 14, 2014.

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