EOY Portfolio and thoughts

One of my favorite features of this board is the portfolio recaps. Here is mine for 2017, along with some miscellaneous thoughts. Spoiler: I’m more conservative than alot of you.

What is my portfolio?
“Portfolio” means different things to different people. For some it is an investment account, which may be separate from a 401(k), rainy day fund, college savings, etc… Some folks have a growth portfolio separate from other portfolios with different strategies. Very few people include their home equity. My wife and I retired a couple of years ago, sold the house and cars, and moved to South America. For us our portfolio includes everything we own. Liquidated home equity, all retirement accounts, even spending money. In other words, it is our net worth.

What’s in it?
At the beginning of the year we owned 36 stocks and 2 mutual funds. Closing out the year we have 34 stocks and one mutual fund. I know that is very different from many people who have much more concentrated holdings, but it works best for us.

The Motley Fool’s space-themed service Supernova places companies into one of three categories based on what type of investment they consider them to be. This sort of relates to market cap, but not necessarily.

  • The largest and most stable is called “Galaxy” (think Apple and Google).
  • In middle is “Intrepid” (Activision).
  • The smallest and riskiest, with also the one with the greatest potential return is “Defiant”. These would be your KITEs and LGIHs.
    It is thought that all companies can beat the market but the larger ones lower the risk and volatility.

That is how I view our holdings as well.

Our first tier of companies, the Galaxies if you will, contain 9 names: NFLX, FCNTX, GOOG, APPL, DIS, FB, AMZN, BRKB, and MA. This is 43% of the total with Netflix being the largest holding at 8.6% and Disney the smallest at .8%

In the middle layer we have 8 issues. IPGP, MELI, MKL, CGNX, SQ, ATVI, TTWO, and Z. These total 27% of the whole. The largest holding is MercadoLibre at 6.7% and the smallest is Zillow at 1.7%.

The category with the most holdings is the one with the (generally) smaller companies. It contains: SHOP, TSLA, BLUE, LGIH, NTNX, TTD, VEEV, ANET, PAYC, EXEL, TLND, HUBS, MASI, KNSL, KNDI, and YTRA. The total for all 16 companies is 15%. Tesla and Shopify are 2.6% each. Kandi Technologies is a Chinese Microcap (yuck!) and a .18% holding.

We have 15% cash.

Here are the changes this year.

Sold: BIDU, GILD, INFN, KMI, LGF.A, P, PRLB, SWKS, TDG, UA, UAA, SBX, CMI, IMAX, WPRT, WFM, BOFI, VGHCX, TWTR, AYX. Portions of: DIS, Z

New purchases: SQ, ATVI, TTWO, SHOP, BLUE, LGIH, NTNX, TTD, VEEV, AYX, ANET, PAYC, TLND, HUBS, MASI, KNSL, TTD, YTRA Additions: MELI, MKL, AMZN, CGNX, GOOG

What is our return?
It might be that I’m a big picture guy, or maybe I’m just lazy, but I don’t follow the prices of individual companies that closely. I can’t tell you that what their prices were week-to-week, month-to-month, or on January 1 versus December 30. And I don’t run an internal rate of return.

I have a Morningstar spreadsheet that keeps up with everything including the cash. On December 30 I look at the cell that says “total” to see how much we’re worth and compare it to twelve months previous. Each year I would like it to be more than it was the year before, but I realize that won’t always happen.

That being said, this year, after living expenses, vacations, etc… we’re up about 30%.

The most important aspects of investing?

  1. Control my emotions and biases. There is no reason to rush into or out of a position. The recent info isn’t necessarily the best or most accurate. Seek out and read things I may disagree with and be willing to change my mind.
  2. Portfolio management is more important than the actual stock picking because, realistically, only 50% of my picks MAX are going to work out. How I buy and sell can minimize the losses and magnify the gains.
  3. Water the flowers, not the weeds.
  4. Ease into positions over time. Buy smaller amounts of smaller, riskier companies.
  5. Don’t put more than 10% into one issue, but then let it grow where it will.
  6. Tine is an investor’s most powerful tool.Give compounding a chance to work.
  7. In stock selection company management is the most important thing, but not the only thing.
  8. Sometimes a good story is just that, only a good story.
  9. Finally, realize the odds are that the market knows more than I do.

Anyway, that’s our stuff. I would like to extend my thanks to all those who provide so much to this board and who also put a great deal of time into doing portfolio reviews. This is a wonderful community and I’m glad to be a part of it.

Happy holidays everyone!

Jeb
Explorer Supernaut
You can see all my holdings here: http://my.fool.com/profile/TMFJebbo/info.aspx

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30% return while holding 15% in cash and deducting annual living expenses is excellent! Congrats!

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Thanks Jeb! That was very informative. And wow do we think a lot alike so far as holdings and allocations go. My goal in retirement (which started this week) is the same as yours, which is to have more in my accounts at the end of every year than I started with. Hopefully a combination of being frugal and investing wisely will help me accomplish this.

Peace,
Dana

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PS. Boy that seems like a lot of selling and buying. I did that myself this year to prepare for retirement. I kept everything I couldn’t bear to part with, sold the rest and then used the proceeds to add to what I had and buy a couple of things. Now I’m down to 30 holdings.

Peace,
Dana

PS. Boy that seems like a lot of selling and buying.

I was helped that my adds of Amazon, Google, and Cognex were in January, and they all performed very well this year.

Then most of the stock I got rid of and the new names I bought were in the third quarter. I plan to watch those closely for increasing allocation…watering the flowers.

I guess that could be considered alot of buying and selling, but since that is still less than 15% of the portfolio it probably depends on perspective.

Take care.

Jeb

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Jeb, excellent post, I have a couple questions as I am coming up on retirement in 5 years or so.

First, do you adhere to the standard that if you only take 4-4.5% out of a diversified stock portfolio in retirement, it will last at least 30 years, and will likely end the 30 year period with more value?

Second, within that, do you spend more or less than that range on living?

I suspect South America allowed you to choose a place with a low cost of living, and probably some surfing. We bought some beautiful mountain property in Mal Pais, Costa Rica, where the cost of living is very cheap, but also the services are scarce.

Thanks,
Pete

First, do you adhere to the standard that if you only take 4-4.5% out of a diversified stock portfolio in retirement, it will last at least 30 years, and will likely end the 30 year period with more value?

Yes, sort of. We retired when we had enough money to be in that 4% range.

Second, within that, do you spend more or less than that range on living?

We have been fortunate to have both lower living expenses and higher portfolio returns than we planned on. We currently live on around 2%.

We bought some beautiful mountain property in Mal Pais, Costa Rica, where the cost of living is very cheap, but also the services are scarce.

We have decided NOT to buy property. I don’t know anything about Ecuadorian real estate, but I do know they love to rip off the gringos. I’ll loving the light living model.

Take care.

Jeb

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