Year End Reflections

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I don’t have to work these days. Besides reading the Peter Lynch’s book, checking out Crocs and Heelys in the stores, I also had a little time to review how I did with my 401K and taxable stock account. The good news is my 401K is getting a 18% gain, and for the first time in 3 years, I did not lose money in stocks. Of course for 401K one year’s gain does not mean too much, because we are looking at 20 or 30 years down the line. But I think I did one thing right: allocate my 55% contributions to value fund, and 30% to international (value) fund. In year 2006 international fund was a big winner partially due to the weakness of dollar. And from my observation value fund outperformed index fund and growth fund in most cases.  For the year 2007 I will boost the international value fund to 35% for the reasons I mentioned above. This way I am putting 60% in the value funds. The following are the mutual funds in my 401K account.

Fund Name            Fund Symbol  Price as of      Average Annual Return
                                                12/29/2006     1-Year 5-Year

Royce Total Return Serv*   RYTFX 6394  $13.61    13.53%   na 
Vanguard 500 Index Fund  VFINX 0040 $130.59    15.64%   6.07%  
Vanguard Explorer Fund     VEXPX 0024 $74.71      9.70%   8.21%  
Vanguard Windsor II Fun*  VWNFX 0073 $34.75    18.25%   10.12%  
Vanguard Intl Value Fun*   VTRIX 0046 $ 40.34     27.37%   17.21%  

*value fund

I started investing (or more accurately, speculating) in US stocks since late 2003, I made a little money in year 2003 because I was very cautious in the beginning: I bought GE and OPSW and hold it until it went up. I don’t want to go into the details of why I lost money in year 2004 and 2005. But the most important thing is: I learned a few things from my mistakes, and I started to control my emotion, learned to buy only stocks I have some knowledge and after did some analysis. In other words, learn to play the stock game (in my favor). I bought and sold the following stocks in 2006:

Symantec (bought in Dec 2005, sold in Aug 2006, Nov 2006)

HouseValues (July, Aug 2006)

Ninetowns (Oct, Nov 2006)

Chesepake Energy (Oct, Nov 2006)

Red Hat (Oct, Nov 2006)

Currently I still have the following.

Home Inns (Oct, Nov, Dec 2006)

Mindray (Nov, Dec 2006)

Heelys (Dec 2006)

Crocs (Dec 2006)

I lost money only in the Ninetowns (again!!!). I made money (more or less) on other stocks. I remember Warren Buffett once said the rules of investing in stocks:

1) Don’t lose money

2) Refer to No 1

I remember in Dec 22 both my Home Inns (HMIN) and Mindray (MR) went back to the price I bought, in other words, I let the stock go up about 15% and go back down in about 3 weeks. But I hold on this time. HMIN hit new high in just a week (Dec 29); MR also recovered a bit.

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