2009 Stock Portfolio Performance and 2010 Outlook

We started 2009 fully invested and as the stock market went straight up from the March lows, we exited some of our more aggressive positions while also writing covered calls on other positions. The portfolio was shifted to the defensive side by accumulating stocks with a history of paying out good dividends. With the addition of another defensive name in Exelon (EXC), our cash position has come down to around 8%. Our plan for 2010 is to continue building a defensive stock portfolio with a focus on stocks that pay good dividends and has historically grown dividends.

Our portfolio is about 3% in the red. Given that we started the year more than 35% down, the performance is reasonable as we out-performed most of the major indexes except for the technology laden Nasdaq. The total realized gain (loss) came in marginally positive at 0.66%. Dividends accounted for around 2.75% of the performance while small losses from our stock transactions and ESPP sales combined to dampen the total return. Dividends came in about 10% less than last year as many of the high-yielding companies in the portfolio reduced or completely stopped paying dividends this year. We had a small capital-loss carry forward and that along with the stock losses from this year should allow us to claim the $3000 capital loss allowed in the 2009 tax year. Below is our updated portfolio:

Stock	Buy Date	Buy Price	Current Price	Current % Of Portfolio	Unrealized % Return	Yield as % of Portfolio Value
Altria (MO)	Various	16.69	19.63	3.00	17.65	0.38
Philip Morris International (PM)	1/4/2005	32.19	48.19	5.85	49.69	0.45
Kraft Foods (KFT)	Various	24.03	27.18	2.77	13.09	0.23
Pfizer (PFE)	Various	24.37	18.19	4.64	(25.35)	0.30
ICICI Bank (IBN)	5/18/2006 and 08/01/2008	25.28	37.71	9.62	49.19	0.30
Advantage Energy Fund (AAV)	11/2/2006	11.22	6.52	1.66	(41.91)	0.17
Central Europe & Russia Fund (CEE)	Various	39.23	32.99	5.89	(15.90)	0.03
Itron Inc. (ITRI)	11/07/2007	85.01	67.57	3.45	(20.61)	None
Anthracite (ACPI – formerly AHR)	11/09/2007	7.97	0.10	0.02	(98.79)	0.00
iRobot (IRBT)	12/18/2007	18.65	17.60	3.59	(4.82)	None
LDK Solar (LDK)	01/22/2008	30.49	7.01	1.07	(77.01)	None
Aegon N.V. (AEG)	04/28/2008	15.99	6.41	0.98	(59.90)	0.00
TD Ameritrade (AMTD) – Call Value	05/21/2008	17.68	19.38	3.96	9.59	None
Costco (COST) Call Value	08/01/2008	62.28	59.17	3.02	(4.99)	0.07
Frontline Limited (FRO)	10/06/2008	36.95	27.32	2.09	(26.05)	0.17
DryShips Incorporated (DRYS)	02/09/2009	6.96	5.82	2.08	(16.43)	0.00
Plum Creek Timber (PCL)	07/23/2009	30.50	37.76	7.71	23.81	0.46
CPFL Energia S.A. (CPL)	07/28/2009	50.45	61.78	6.30	22.46	0.55
BP plc (BP)	08/05/2009	51.49	57.97	5.92	12.59	0.45
AT&T (T)	08/27/2009	26.38	28.03	5.72	6.24	0.39
Sysco Corporation (SYY)	10/13/2009	25.23	27.94	5.70	10.72	0.39
Exelon (EXC)	12/30/2009	49.38	48.87	8.89	(1.04)	0.45
Cash				8.39
Total Portfolio					(3.20)	4.26

• For Altria and Philip Morris International, cost basis is calculated using the spin-off ratio of 30.5:69.5.
  
• For Ameritrade (AMTD), we wrote Jan 10, 17.5 Covered Calls on them at $2.80 on 9/10/2009. Since the current price is above exercise price, exercise price is above.
• For Costco (COST), we wrote Jan 10, 60 Covered Calls on them at $2.90 on 9/21/2009
• For ICICI Bank (IBN), we wrote March 10, 40 Covered Calls on them at $5.90 on 10/06/2009 against 40% of our shares

Below is a summary of transactions during the year:

Stock	Buy Date	Buy Price	Sell Date	Sell Price	% Gain (Loss)	% Portfolio Return*
DryShips (DRYS)	Various	11.66	01/29/2009	8.96	(23.29)	(1.39)
DryShips Feb 15 Calls (OOCBC)	01/29/2009	0.20	01/16/2009	2.50	922	0.58
Companhia Siderugica Nacional (SID)	Various	11.03	01/29/2009	16.01	44.86	1.73
Taiwan Semi Feb 7.5 Calls (TSMBU)	Expired	NA	01/09/2009	0.90	NA	0.77
Taiwan Semi (TSM)	7/27/2006	8.70	03/03/2009	7.76	NA	(0.78)
Direxion Financial Bull 3X Shares (FAS)	03/16/2009	5.09	03/19/2009	6.53	28.31	1.26
Direxion Financial Bull 3X Shares (FAS)	03/23/2009	5.94	03/23/2009	6.22	4.63	0.19
Direxion Financial Bull 3X Shares (FAS)	03/24/2009	6.45	03/24/2009	7.12	10.30	0.44
Direxion Financial Bear 3X Shares (FAZ)	03/26/2009	19.67	03/27/2009	19.91	1.22	0.05
Direxion Financial Bull 3X Shares (FAS)	03/30/2009	5.49	03/31/2009	5.20	(5.35)	(0.23)
Direxion Financial Bear 3X Shares (FAZ)	04/09/2009	10.47	04/13/2009	11.03	5.40	0.22
RQCDU – Ericsson April 7.5 Calls	1/21/2009	NA	04/18/2009	7.50	NA	0.65
Ericsson ADR (ERIC)	5/5/2008	11.83	04/18/2009	7.48	(36.80)	(3.04)
FASEB – May 10 calls on FAS	4/27/2009	0.58	04/22/2009	0.90	NA	0.14
FASEJ – May 8 calls on FAS	5/01/2009	0.93	04/30/2009	1.47	NA	0.14
Direxion Financial Bull 3X (FAS)	4/13/2009	9.86	06/18/2009	8.78	(10.95)	(0.47)
FASFI – June 9 calls on FAS	6/18/2009	0.28	05/18/2009	1.52	NA	0.54
Trina Solar (TSL)	Various	24.90	6/20/2009	22.50	(9.65)	(1.05)
TSLFX – June 22.5 calls on TSL	6/20/2009	0	05/27/2009	2.77	NA	1.21
Click Software (CKSW)	11/09/2007	4.61	07/01/2009	6.84	48.37	1.95
Conoco-Phillips (COP)	7/29/2009	43.08	08/05/2009	44.44	3.16	0.24
Patni (PTI)	8/10/2007	20.87	11/02/2009	19.24	(7.79)	(0.60)
Harvest Trust Energy (HTE)	11/28/2007	21.02	12/31/2009	9.48	(54.90)	(3.43)
Company Stock	Various	NA	Various	NA	NA	(1.06)
Dividends	-	-	-	-	-	2.48
Net Realized 2009 Gain/(Loss)	-	-	-	-	-	0.67

• % Gain/Loss Relative to Portfolio Value at Beginning of Year + Deposits
• The table assumes realization of profits associated with selling options only after the option is exercised or expiry.