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COPYRIGHT 2004 FDCH e-media
Original Source: YOUR MONEY
ALI VELSHI, CNNfn ANCHOR, YOUR MONEY: Welcome back to YOUR MONEY, the show that helps you make it, manage it, and spend it. I`m Ali Velshi. In today`s Money Talks, stocks. We`re talking with Sarat Sethi of Douglas C. Lane & Associate. He is here to take your calls and e-mails. The phone number, phones are open, 1-800-304-3638. The email address is YOURMONEY@cnn.com.
But before we get to the questions, we want to review Sarat`s model portfolio, which he set up for us. He calls it The Lane Turtle Portfolio. It`s a group of 10 stocks that are designed to represent the stock portion of a portfolio that is held outside of a retirement account.
We`re not recommending these stocks; we`re just giving them to you as an idea. Let`s have a look at what we`ve got now. We`ve got Time Warner [Company: Time Warner Inc.; Ticker: TWX; URL: http://www.timewarner.com/] on there. This is from the date of inception, March 14th, 2003, Time Warner up 51.1 percent, Cisco Systems [Company: Cisco Systems Inc.; Ticker: CSCO; URL: http://www.cisco.com/] 56 percent, Coca-Cola [Company: The Coca-Cola Company ; Ticker: KO ; URL: http://www.cocacola.com/] 26.7 percent.
Lets take a look at the next three of the 10, Dominion Resources [Company: Dominion Resources Inc.; Ticker: D; URL: http://www.domres.com/] up 13.5 percent. I think that is the laggard in the pile. Dow Chemical [Company: Dow Chemical Company; Ticker: DOW; URL: http://www.dow.com/] up 45.5 percent. Emerson Electric [Company: Emerson Electric Company: Ticker: EMR; URL: http://www.emersonelectric.com/] up 29.4 percent. And the final stock I believe oh, sorry, that was only six, ExxonMobil [Company: ExxonMobil Corporation; Ticker: XOM; URL: http://www.exxon.mobil.com/]
23 percent. General Electric [Company: General Electric Company; Ticker: GE; URL: http://www.ge.com/] up 16.7 percent, Nucor Corporation [Company: Nucor Corporation; Ticker: NUE; URL: http://www.nucor.com/] 53.4 percent. And now the final stock. OK. Well, we`ll keep you guessing what the final stock. Sarat is with us now. Good to see you.
SARAT SETHI, DOUGLAS C. LANE & ASSOCIATES: Good to see you, too.
VELSHI: Thank you for being with us. Sarat what is (INAUDIBLE). Are you still at Genentech [Company: Genentech Inc.; Ticker: DNA; URL: http://www.gene.com/]?
SETHI: Medtronic [Company: Medtronic Inc.; Ticker: MDT; URL: http://www.medtronic.com/].
VELSHI: It`s Medtronic.
SETHI: We replaced it.
VELSHI: That is what it was. You sold Genentech, which had a remarkable run up.
SETHI: Right. A huge run up.
VELSHI: Yes. And you got into Medtronic. Genentech actually did something just this week.
SETHI: Yes.
VELSHI: But here`s the trick. You`ve got a 10-stock portfolio, or a 20 or 50-stock portfolio.
SETHI: Right.
VELSHI: Which, -- do you always allocate when you start the same percentage in each stock?
SETHI: No. No we don`t. Actually the way we look at our portfolio is we have about 50 in each. And then we look at top down as to what sectors we want to be exposed to, and then bottoms up as to what different areas within the sector we want to be exposed to. So take pharmaceuticals, or take healthcare, we`d like to have our portfolios anywhere from 10 to 12 percent exposure there, which would mean five to seven stocks. We picked Genentech, because that was an example of a biotech, a good company that had good product line.
VELSHI: Let`s put that up while your talking about, and we`ll get a sense of what Genentech did over that time.
SETHI: And basically, one of the things that we - why we wanted to invest in it, because we knew that these products that they had and the R&D that they had would eventually come out to something. And you can never tell, if you knew it already, the stock would have reflected the price. Now what happened was the stock did very well, and what we wanted it to do, and just in the 50-stock portfolio. So say you took a 2 percent position in Genentech, this would be now over 5 percent.
VELSHI: Right.
SETHI: So we would cut it back now.
VELSHI: And we talked earlier about discipline.
SETHI Exactly.
VELSHI: .this is the discipline to say this thing may run up further, but you have got to be careful.
SETHI: You have to be careful, and you have to take the emotion out of it.
VELSHI: Right.
SETHI: OK? You`re managing it, so for the long term, you`re going to take the risk out of it. And what we wanted to then show was what are the other areas in pharmaceuticals and healthcare we wanted to be exposed to. And the other company we liked was Medtronic.
VELSHI: This is a pace - is it a pacemaker?
SETHI: Pacemaker, defibrillators, really medical products. Great company, 15 percent earnings...
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