Portfolio Teardown – Stock #1

I am kind of a messy person by nature. I try my hardest not to be messy, but it’s just easier to be lazy and not pick up after myself than it is to take the extra few minutes to (for example) take those dirty socks out of the back of my hatchback where I’ve left them after golfing and put them in the dirty laundry hamper where it belongs (I may or may not have a decent pile of dirty socks hanging out in the back of my car). I’m getting better at not being messy, but some things slip through the cracks that cause a little bit of stress when people are coming over.

My RRSP portfolio is part of the mess that exists in my life. My investments can be split into two distinct timeframes – the period of time before my wife and I were married (over 6 years ago), and the current period, which is from last fall until now when our house was paid off and we started investing. My “old” investments are my financial mess, and don’t really line up with my current financial goals. Most of the securities aren’t bad investments, if fact, most of the investments I made over 6 years ago have done well.

Over the next few weeks, I’m going to align these “old” investments to fit my current (and hopefully future goals). This exercise will tidy up these old investments, while at the same time let me organize my portfolio.

Stock # 1 – PowerShares DB Oil Fund

Current Percentage of Portfolio: This investment makes up a very small portion of my portfolio, at 1.17%

Reason for the Investment: I bought this security as a method of hedging against steadily climbing fuel prices in the spring of 2008. This seemed like a really good idea – figure out how much my fuel costs would be in a year, and buy a stock that closely followed the gas market, in order to profit from rising fuel costs to balance off the rising costs.

Of course, almost immediately after I purchased this security, there was a significant dip in the oil market, and the panic buying of this particular security leveled out, causing it to drop significantly. Since purchase, this stock (as of today) has dropped almost 70%.

Instead of using the sale of this asset to do something useful, I’ve held onto this stock, hoping it would rebound, which I don’t believe will ever happen,

Current action: Sell, and buy something with either better potential for an increase in value or something that will provide steady income to me going into the future.

I really wish this purchase was up 100% after not doing anything to it for 7+ years, but that’s just not the case. I’m going to chalk this up to a “learning opportunity” and move on.

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