From time to time I‘m posting my evolving portfolio here for ridicule and suggestions.
As these are incremental, I’ll start posting them with their antecedents:
[https://discussion.fool.com/last-november-when-i-stumbled-across...](https://discussion.fool.com/last-november-when-i-stumbled-across-this-board-33081826.aspx?sort=postdate)
[https://discussion.fool.com/jeff39s-current-portfolio-for-heckli...](https://discussion.fool.com/jeff39s-current-portfolio-for-heckling-34113577.aspx)
I’m not a financial professional, so none of this is to be construed as financial advice –
just the rantings of a deranged stock picker.
I’d like to express my thanks to Saul as well as the members of this discussion group for
their continual flow of advice and discussions. The primary objective of my investing is
not necessarily to swing at the fences at the risk of painful massive reverses on a periodical
basis, but rather to maintain a reasonable growth path, with enough financial inertia to
buffer shifts in both the equity and the currency markets.
I’ve rearranged the listing in an order which may make more sense to those picking through it.
In order to achieve these, sometimes conflicting, multiple goals I break the golden rule of
keeping equity count low, but instead consider my overall strategy to be holding a
“portfolio of portfolios” – each with a different perspective. And a buck is a buck,
regardless of its source.
I’ve explained the large presence of specific groups of foreign stocks in the previous
posts referenced above, so I won’t belabor them again.
The following major changes come to mind since the last posting:
1) Half of the Twilo was sold and then, due to the generous feedback from the group,
reacquired, so I’ve kept the two positions separate to allow better tracking.
2) A number of additional Chinese stocks were added in an expectation (hope?) that the
trade difficulties we are going through will evaporate in the foreseeable future.
3) I added two chip makers today (INTC and XLNX), but more importantly from a risk
profile standpoint, tossed a couple of chips on Kraft to see if I can capture a bit from
a dead cat bounce – win, lose or draw, it’s like betting on red at roulette as they have
a lousy set of books and a worse story, but also seem cheap – we’ll see.
4) I picked up more Familymart (a Japanese stock), but it’s very illiquid in the US, so
the value rarely changes on the Nasdaq (maybe I should have bought them in Japan –
live and learn.
It’s obvious that the “High Growth” portion of the portfolio (the stocks discussed on this
board) have had a dramatic positive effect on profitability. That said, some of the less sexy
shares have also done rather well. While I’ve listed the date most of the equities were
acquired as well as the percentage of gain (or loss) each has had, I’m wondering if there is
some simple way to find the magnitude of the slope over time in order to better understand
what is working and for how long.
While I’m fortunate enough to be able to exist without the assistance of dividends,
I have always lived by the premise that if I couldn’t explain an investment to my wife, it was
probably too complicated anyway and probably not a good idea in any case.
Many years ago I convinced her that buying stock did not constitute buying a
disposable product which became worthless over time, but it still makes her
happy to see the portfolio actually “earning money”. Unrealized capital gains
are a much harder sell without showing income as well. Happy wife, happy life ?.
The other issue which rests on my mind is the unavoidable law of “what goes up,
goes down”. We have enjoyed nearly a decade of equity price growth since the
2008/9 mess. There are no popular economic projections that our economy is
likely to grow at more than 2.5-3%. In the context that “this time it is different”
never really working out, expecting stocks to increase in value by 10-15% per year
is not likely. While high growth stocks, if they are financially equipped to survive a
bad year or two, will outperform pulling out of a downturn, stocks like we talk about
here are likely to drop faster going into a drop in the market. Not necessarily singling
these out, I am beginning to think of what my defensive strategy will look like.
I’ve recently picked up Unilever to join the Nestle and, if Kraft actually gets its act
in gear enough to keep – well who knows. Interestingly, when I look over my portfolio,
I notice that the only financial stock I seem to own is Berkshire Hathaway.
Well, anyway, all comments or heckling are appreciated.
Jeff
Symbol Company Last Buy Date Div Yield % P/L Domicile % of Portfolio
NESN.VX Nestle N 6/7/2018 2.58% 29.38% Switzerland 10.07%
ABBN.VX Abb Ltd N 3.86% -7.54% Switzerland 0.67%
ADEN.VX Adecco N 4.70% -6.35% Switzerland 0.02%
RIO.AX Rio Tinto Fpo 5.45% 34.42% Australia 6.83%
BHP.AX Bhp Group Fpo 3.77% 34.64% Australia 4.59%
APT.AX Afterpay T Fpo 1/17/2019 0.29% Australia 0.39%
NCM.AX Newcrest Fpo 0.71% 154.35% Australia 0.14%
RDS-A Royal Dutch Shell Plc Royal Dut 6.00% 14.12% England 5.20%
TOT Total S.A. 2/11/2019 5.21% 3.26% France 3.60%
SLB Schlumberger N.V. 2/13/2019 4.51% 0.15% 1.40%
GOOG Alphabet Inc. 18.54% 8.78%
BRKA Berkshire Hathaway Inc. 1/15/2019 1.54% 4.78%
IBM International Business Machines 7/30/2018 4.51% 7.40% 4.46%
MSFT Microsoft Corporation 1.74% 5.67% 4.39%
AAPL Apple Inc. 1/25/2019 1.69% 11.04% 2.74%
BA Boeing Company (The) 2/1/2019 1.94% 8.63% 2.68%
AMZN Amazon.Com, Inc. 12/31/2018 7.53% 2.58%
KHC The Kraft Heinz Company 2/22/2019 1.14% -0.16% 2.38%
DHR Danaher Corporation 0.56% 70.16% 1.06%
XLNX Xilinx, Inc. 2/22/2019 1.17% 0.88% 0.97%
RCL Royal Caribbean Cruises Ltd. 1/17/2019 2.32% 14.05% 0.96%
CCL Carnival Corporation 1/17/2019 3.40% 11.53% 0.93%
INTC Intel Corporation 2/22/2019 2.44% -0.40% 0.83%
FTV Fortive Corporation 0.34% 31.75% 0.77%
BHC Bausch Health Companies Inc. 1/17/2019 6.17% 0.38%
ENPH Enphase Energy, Inc. 2/1/2019 13.14% 0.37%
SJM J.M. Smucker Company (The) New 3.08% 373.48% 0.04%
MDB Mongodb, Inc. 1/17/2019 45.47% 1.34%
OKTA Okta, Inc. 12/14/2018 0.71% 25.93% 1.07%
TTD The Trade Desk, Inc. 12/14/2018 43.28% 1.25%
NTNX Nutanix, Inc. 1/17/2019 7.67% 0.84%
DOCU Docusign, Inc. 1/23/2019 20.24% 0.85%
AYX Alteryx, Inc. 4/13/2018 122.68% 0.87%
TWLO Twilio Inc. 4/13/2018 134.49% 0.92%
TWLO Twilio Inc. 4/13/2018 3.31% 0.92%
TEAM Atlassian Corporation Plc 1.24% 0.83%
ZS Zscaler, Inc. 35.71% 0.79%
SQ Square, Inc. 1/31/2019 5.13% 0.72%
ABMD Abiomed, Inc. 2/5/2019 4.32% 0.56%
TDOC Teladoc Health, Inc. 12.44% 0.55%
SAFRY Safran 2.71% 34.14% France 1.07%
UL Unilever Plc 1/25/2019 3.28% 5.28% France 1.30%
SBGSY Schneider Electric Se 3.13% 25.01% France 0.27%
SNY Sanofi 4.52% -1.13% France 1.30%
VB Vanguard Small-Cap Etf 1/2/2019 1.85% 18.50% Emerging Mkt 2.46%
FANUY Fanuc Corporation 0.84% Japan 0.60%
FYRTY Familymart Uny Holdings Co Ltd 2/11/2019 1.01% 11.92% Japan 1.57%
OMRNY Omron Corp 2.41% 67.87% Japan 1.41%
SFTBY Softbank Group Corp 33.90% Japan 1.11%
SVNDY Seven & I Holdings Co Ltd 2.86% 23.71% Japan 0.60%
JMHLY Jardine Matheson Hldgs 3.34% 32.44% Hong Kong 1.14%
BABA Alibaba Group Holding Limited -10.79% China 0.56%
IQ Iqiyi, Inc. 1/8/2019 50.46% China 0.66%
TAL Tal Education Group 1/31/2019 11.18% China 0.27%
BZUN Baozun Inc. 1/31/2019 4.37% China 0.29%
BIDU Baidu, Inc. 1/31/2019 -2.68% China 0.26%
VIPS Vipshop Holdings Limited 1/31/2019 -13.39% China 0.21%
TCEHY Tencent Holdings Limited 0.72% 5.64% China 1.40%
100.00%
EQUITY GROUPING % of Portfolio Profits in USD
SWISS STOCKS 10.76% 26.16%
AUSTRALIAN STOCKS: 11.96% 33.78%
OIL STOCKS: 10.20% 8.04%
MISC. US STOCKS 41.54% 10.57%
HIGH GROWTH 11.52% 29.11%
MISC. EUROPEAN STOCKS 3.95% 10.58%
JAPANESE STOCKS 5.29% 27.47%
CHINESE STOCKS 4.79% 11.80%
In US Dollars:
P/L AUD 25.25%
P/L CHF 20.73%
P/L USD 12.10%
Total Blended P/L: 14.60%
Blended % Dividend Yield: 2.15%
9 Likes
Hey Jeff,
That is an interesting mix, how do you manage to track and keep up with all of those or do you mostly have it on cruise control? Let us know next time you are passing through SG…
Jeff, thanks for sharing. Please don’t take this as an attack, that’s not what it is intended to be.
in your post you mentioned: “We have enjoyed nearly a decade of equity price growth since the
2008/9 mess. There are no popular economic projections that our economy is
likely to grow at more than 2.5-3%. In the context that “this time it is different”
never really working out, expecting stocks to increase in value by 10-15% per year
is not likely.”
So many people have said something very similar to this statement for several years on this board. Every time our stocks see a little volatility some perma-bears poke their heads in and say “I TOLD YOU SO”, but they don’t seem to share their monthly returns or post much when our stocks are doing well.
I’m not saying that’s you. It isn’t. However, you make the point that “stocks” won’t increase in value by 10-15% per year and you’re right when talking about indexes. We know the S&P 500 averages around 9% a year.
However, Saul and others have proven that by having a concentrated portfolio of fast-growing, innovative companies, it is certainly possible to sustain 20% annual returns of the long-term. Not easy or guaranteed, but possible.
The point is, you are apparently diversifying your portfolio into more stocks and adding “defensive” stocks to prepare for the tough times. In my mind what you are doing is creating something that will track relatively closely to an S&P 500 index. It will also be harder for you to really know and pay attention to each stock which will make you slower to make decisions if a thesis with one of the stocks changes.
All of this is totally fine. Our own comfort level is the most important part of investing (or one of the most important parts), but I wanted to share some food for thought.
26 Likes
Fully agree w your thoughts Austin.
I feel in no matter what market exists (bear, bull, whatever), there will always be a bank of equities that do well. Why? Because they are doing something different than the rest of market. They are building products the world needs in any market. They are winning business. Taking customers and share.
So, bottom line, while the stock market does historically go from the lower left to the upper right ---- with some noise/variation in between… the stocks we feel currently work should go even higher to the upper right…
Jeff, also, your portfolio has far too many stocks that are under 1% in value. Reminds me of my old portfolio. While your 14.6% is nothing to sneeze at, and frankly, most outside our board would go crazy for returns like that, you can do far better w less risk (risky not to own significant share in game changers in my mind) and also can spend less time in evaluating all those equities (especially the ones outside of US…that must take a ton of time). And yes, it does feel almost like an index fund.
Okay, you asked for some heckling. 
Jay
1 Like
All are valuable insights, so I’ll explain the “logic” (madness?) which helps create this mess (not to say that it won’t change - it does on an ongoing basis (just compare to the previous links).
First to Jon - it’s not on the calendar (Europe/Africa are taking planning time right now), but I seem to end up in SG every year or two and I’ll make sure to let you guys know
As far as a tool, I use a cobbled together Excel spreadsheet which reaches out into Google when I hit a button and updates prices and some other info so that I can track the whole in real-time. It used to use Yahoo Finance and gather more data, but that got shut down a while back and I had to redo the thing. Maarketwatch.com used to have a pretty good more or less anonymous tool, but when they started “getting personal” I dropped them. Since I use three different brokers who don’t play well together, using any of them to track the other’s data is out. While I don’t currently subscribe to the service, Morningstar has some pretty good tools to evaluate combined portfolios (especially for those who own a bunch of mutual funds - as the tool will consolidate contents).
Any who are interested in the Excel tool, send me a private message and I’ll work up a generic version to send back (while I don’t think distribution is limited as I found its original bones on the internet, there may be parts which are copyrighted, so please don’t incorporate it into a commercial product or resell it).
I realize that even a broken clock tells the correct time twice a day. I am not predicting the specific timing of a pullback (as the great Yogi said, “It’s tough to make predictions, especially about the future.”), but I don’t think it’s a stretch to say “sometime in the future, stocks will go down”:-). Anyway, on a general basis, the further prices get from the mean, either the mean has to rise or they will tend to revert to the mean. I absolutely agree with your statement that Saul and others have proven that by having a concentrated portfolio of fast-growing, innovative companies, it is certainly possible to sustain 20% annual returns of the long-term. Not easy or guaranteed, but possible.
That said, part of the structure is “my security blankie” through experience I know my pain threshold and tend to over-react if things move too quickly. Part of the structure is to address my wife’s fear of “throwing money away in stocks that are losing money” (yeah - I understand the logic, but it’s rough to explain). The largest part of the structure, which I tried highlighting with blank lines is that each grouping ios a separate portfolio with a seperate rational. Part of my long-term investing philosophy has been based on currency fluctuations. Currency valuation frequently is the inverse of equity market valuation. In the context of hedging the USD, as well as using its strength to be opportunistic, investing abroad allows hedging while stabilizing with natural resources, taking advantage of the separate economic environment in other countries and so on. I am currently mulling over ways to invest in Africa, with the expectation that, over the next decade or two, the growth of the middle class in that continent may provide faster growth compared to the States.
In any case, each of these sub-portfolios contains a selection of stocks - add them all up and the list is pretty long. It ends up with a portfolio which beats the S&P with what I perceive is less risk. So far, so good:-)
In that context, the stocks discussed on this board of grown to exceed 10% of the total portfolio and I suspect they will continue to increase in proportion.
As to Jay’s observations: You are absolutely right - on a long term basis these stocks (properly vetted on a continual basis) will outperform “value” stocks significantly. That said, they also tend to drop more quickly when “it” hits the fan. I enjoy making money as much as the next guy, but I HATE losing it. OK, that’s a character flaw, but it is what it is and I’ve leaned to sub-optimize to save myself from angst. As far as the 1% positions. I guess that tends to be more likely when your bets are spread across so many stocks. Why bother? Part of the reason is one of scale. Even the 1% positions are non-trivial from the standpoint of the nominal size of the “chip” and are simply based on how many bucks I’m willing to bet on some hare-brained idea that I had.
That said, I am probably going to double my exposure to the stocks discussed here (which would have the effect of dropping the percentages of all the rest of the positions) - it’s just a numbers game.
None of this is meant as a recommendation, just trying to explain what the cockroaches running around in my head created
Jeff
11 Likes
There are no popular economic projections that our economy is
likely to grow at more than 2.5-3%. In the context that “this time it is different” never really working out, expecting stocks to increase in value by 10-15% per year is not likely.
Well, not if you treat stocks as a group. On the other hand, it should be possible to find a handful of individual stocks with returns far better than 2.3-3%. But still, if you only have minimal allocations of winning stocks, these wins will never have a significant impact on your total portfolio return.
How does your portfolio hold up against the S&P 500?
There will always be outliers who perform well even if the market is crashing, but identifying them is probably not going to be easy. Regardless, high growth shares have no special protection when it hits the fan. That said, I’m not predicting catastrophe, but I always try to do a sanity check to try to minimize the damage if/when the unexpected happens.
As shown by comparing the three versions of “the portfolio”, it is a constantly changing mixture. It has tended to outperform the S&P over the years, but on average, the gains don’t come close to a portfolio solely built out of the stocks discussed on this board.
I applaud Saul’s ability to focus on a single theme, but psychologically I’m trying to wrestle myself to gravitate in that direction (old dog, new trick sort of thing)
Jeff
but psychologically I’m trying to wrestle myself to gravitate in that direction
Why?
You’re one of the few who have some appreciation for randomness and bias and your own wiring.
Make a Ulysses pact. It’s too easy to be seduced by small sample size.
2 Likes
I applaud Saul’s ability to focus on a single theme, but psychologically I’m trying to wrestle myself to gravitate in that direction (old dog, new trick sort of thing)
Jeff,
I stumbled upon this board back in October, and have almost completed my portfolio transition from similar companies that you own, to those companies discussed on this board. There are few referenced posts on the right side of this board under the “Announcements” heading that should definitely be read many times over.
Why My Investing Criteria Have Changed
https://discussion.fool.com/why-my-investing-criteria-have-chang…
Saul’s Knowledgebase (Parts 1 - 3)
https://discussion.fool.com/knowledgebase-newly-revised-part-1-3…
Sometimes when you read, or hear, something, the internal light bulb goes off and any sort of doubt or hesitancy just falls away. Like you, I was invested in big companies like Google, Berkshire, Boeing, IBM, etc, and used them as my “security blankie.” I figured they were so big and insulated in people’s everyday lives that the downside protection would always be there. Through those posts referenced above, I instantly realized that I wasn’t giving enough thought to the UPSIDE limitations of those 800 pound gorilla stocks.
Think for a moment about Apple, and the company’s flagship product (the iPhone). While Apple doesn’t give total unit sales anymore, they were selling about 60-70 million phones per quarter last year. Thats absolutely incredible, but to even grow by 10% going forward they’d have to sell another 6-7 million additional phones every quarter into an already saturated market. How realistic is that? And that is to only grow 10% mind you. Can you even imagine the stock price doubling in a few years? Compare that to some of the smaller, SaaS companies discussed here. Many of them are growing revenue at upwards of 40%, 50% and 60%. When you are growing that fast, doubles (and triples) happen much, much faster.
You mentioned fear, hesitancy, secure, defensive and comfort a few times in your post. There is nothing wrong with those words, nor is there anything wrong with a no-stress index fund for those aiming to keep pace with the market. That used to be me, but it isn’t anymore. The light bulb went off in my head. I’ll leave you with a final question. In terms of fear, what is more frightening - investing in a company that is already at the peak of market saturation, has to selling their product all over again to the same people, and then some, merely to grow 10%…or investing in a company with an infinite horizon of potential new customers, with revenue growing at 50%+ and that automatically recurs every single month?
Brandon
26 Likes
Think for a moment about Apple, and the company’s flagship product (the iPhone). While Apple doesn’t give total unit sales anymore, they were selling about 60-70 million phones per quarter last year. Thats absolutely incredible, but to even grow by 10% going forward they’d have to sell another 6-7 million additional phones every quarter into an already saturated market. How realistic is that? And that is to only grow 10% mind you. Can you even imagine the stock price doubling in a few years?
I recall that AAPL’s iPhone sales have not increased since 2016. ASP’s have and therefore earnings have grown partially because of massive financial engineering (buybacks). Services have grown but they are tied to the hardware’s installed base. Furthermore in China there are many alternatives to AAPL’s ecosystem that likely imo takeaway from service growth there. AAPL mispriced their iPhones there and have had to lower them. Makes in my mind a double in a few years dubious unless they start innovating again which is not Tim Cook’s strength.
Rob
Sorry, that’s for Zscaler.