Selling JNJ

Now that the portfolio page is updated, I can mention that I sold Johnson & Johnson (JNJ) earlier this month (check the portfolio page for details). We made a small gain on it but mostly it was a portfolio allocation and strategy issue.

My girlfriend actually made the call to sell (I do all of the research but she has a big say in the actual decision -- we came to this arrangement as I am kind of an action junkie and her detached perspective helps keep me in check). I don't doubt JNJ will perform alright in the years ahead but in the context of a weakening dollar, this may not be good enough. Also, she's somewhat uncomfortable with the whole Big Pharma sector in general (she's a do-gooder liberal) and didn't like JNJ's low growth profile.

To be honest, I bought JNJ before the market turbulence in August. Since then, I have done a lot of research and am in the process of finetuning our investment strategy. I will discuss this in more detail later but this adjustment would probably make JNJ an inappropriate choice for our portfolio.

Finally, my circle of competence is somewhat limited in Big Pharma. I have to say that the whole industry looks cheap, from JNJ to Pfizer (PFE) to Amgen (AMGN). I like the European pharmas just as much, if not more: Glaxo (GSK), Novartis, Roche, Sanofi-Aventis. I'm not sure if I know enough about this field to make a competent decision as to which of these companies will outperform the field. I picked JNJ because it was a fairly safe pick in my view and Berkshire owned it which is a pretty good double-check.

If I wanted to stay in this play, I'd probably shift into a Big Pharma ETF, especially one that included the European companies.