I've always said that investors shouldn't measure results in a month or even a year, as I firmly believe in looking for long-term gains. That said, I think I can safely say that with just two months left in 2015, I was way too early to the dance by picking energy stocks when the year began.
Showing up early to a party isn't really something that I'm usually concerned about, as a patient approach always pays off in the end. However, four of the 10 securities that I chose this year for our Winning Value Portfolio were either energy or commodities bets, and they were the rundown's worst performers of the year.
In fact, the Winning Value Portfolio is actually losing quite decisively year to date, down 28% as of Oct 31, 2015. Here's the ugly rundown:
True, our energy picks fell simply as a result of low oil prices. Unfortunately, trying to predict energy prices' turnaround is like trying to predict winning lottery numbers -- it's a fool's errand. Some say energy will rebound in late 2016, but the CFO of Norwegian energy giant Statoil (STO) predicted today that petroleum will stay at current levels until 2018.
But honestly, energy alone isn't the sole culprit for the portfolio's dismal performance. For instance, Wall Street also battered Whole Foods (WFM) as investors fell out of love with the organic grocer's growth story. The Whole Foods brand remains solid, but the juicy margins of selling organic and natural foods haven't gone unnoticed by conventional grocers like Kroger (KR), which is having a banner year.
The bottom line: I don't expect much from the portfolio for the rest of the year, although names like Kindred (KIN) and Sizmek (SZMK) are decent takeout targets and could still help the rundown's 2015 performance.
And to be sure, our picks' declines don't indicate any lack of confident in these companies. For example, we think our energy recommendations all have the wherewithal to come out of the current cheap-energy environment and rebound.
Unfortunately, the timeframe for such moves didn't turn out to be 12 months. As I noted above, we were simply too early to the dance.
