Portfolio Updates March 2020

It has been a difficult period for markets in March 2020 with the economic impacts of Coronavirus.  The markets are generally down about 30% which is reflected in our portfolios, below.  Activity is also changing quickly and there isn’t a clear pattern or floor on stock prices.  Our total value of $164k is about what it was 2 years ago in mid-2018.

Portfolio Performance March 2020

I am now in the process of reviewing stocks that have either performed significantly better than the market or significantly worse.  A quick review of the portfolio has some stock categories that are facing major headwinds:

• Oil and gas stocks have not only been hit by the market reductions, they’ve been battered by the decrease in oil prices down near $20 / barrel, an unprecedented number we haven’t seen in almost 20 years.
• Auto stocks are sensitive to demand and have a heavy capital intensity.  They have been hit very hard by this situation
• Fortunately we did not have any airlines or aircraft manufacturers in the portfolio, or any hotel or cruise ship operators.  These industries may be facing something near extinction in their current forms
• Only a few stocks have bucked a near-30% decline – grocery retailers like Wal-Mart and some drug stocks (within our portfolio).  Some of the tech stocks are also holding up reasonably well and may in fact be bargains
• European and Asian stocks are getting a double-whammy in that the US dollar is increasing in value.  This compounds their losses
• We did not have a lot of exposure to banks, but did have some Canadian and Australian banks for currency diversification.  The governments may intervene but most banks are likely insolvent when you look at the likely level of defaults and decreasing value of their loans and underlying assets

It is important to remember that we started these portfolios literally on September 12, 2001 – the day after 9/11.  In the long term, equities and investing have been good to us and the method of the trustee making a deposit and then matching the beneficiary means that in almost all conceivable cases the beneficiary would lose “net” on their contributions.

However, it is time to revisit investment assumptions and refresh approaches to sectors and countries.  A 30% reduction in values and an economic reset is an excellent time to re-think for a go-forward plan.

Portfolio Eight Updated February 2020

Portfolio Eight is 4 1/2 years old.  The beneficiary contributed $2500 and the trustee $5000 for a total of $7500.  The current value is $10,347 for a gain of $2906 which is 38%, or 11.1% / year when adjusted for the timing of cash flows.  See the detail here or at the link on the page.

In 2019 there were no sales for tax purposes and we had $91 in dividends.

Right now the portfolio is doing well.  There are 2 stocks to keep an eye on:

• Baozun (BZUN) – Chinese e-commerce company seems well run but has been hit by Chinese events
• General Motors (GM) – world wide iconic car maker has a good dividend but has been hit by recent events in China.  They have also been making pre-emptive efforts to cut costs

 

Portfolio Seven Updated February 2020

Portfolio seven is 4 1/2 years old.  The beneficiary contributed $2500 and the trustee $5000 for a total of $7500.  The current value is $10,955 for a gain of $3455 or 46% which is 12.9% / year when adjusted for the timing of cash flows.  You can see the detail here or at the link on the page.

During 2019 we did not have any sales for tax purposes, but we did have about $107 in dividends.

Right now the portfolio is doing well.  There are 2 stocks to keep an eye on:

• Baozun (BZUN) – Chinese e-commerce company seems well run but has been hit by Chinese events
• General Motors (GM) – world wide iconic car maker has a good dividend but has been hit by recent events in China.  They have also been making pre-emptive efforts to cut costs

 

Portfolio Six Updated February 2020

Portfolio 6 is 7 1/2 years old.  The beneficiary contributed $4000 and the trustee $8000 for a total of $12,000.  The current value is $14,858 for a gain of $2,858 or 24%, which is 4.7% / year when adjusted for timing of cash flows.  See details here or at the link.

During 2019 we had 2 sales for a long term capital loss of ($307) and dividends of $221 for tax purposes (see 1099 for exact values these are estimates).

The stocks on watch for this portfolio are

• Exxon Mobil (XOM) – while this oil and gas company is well managed and has a high dividend, the stock price has not improved in many years and the large oil companies were hit recently with the reduction in commodity prices.  Will be painful to give up on this stock but am considering it
• Royal Dutch Shell (RDS.B) – like Exxon Mobil, this integrated oil and gas company pays a very high dividend but has not improved in many years.  It also was hit by recent commodity price drops
• Baozun (BZUN) – Chinese e commerce company is well run but has been hit by recent geopolitical events

Portfolio Five Updated February 2020

Portfolio 5 is 10 1/2 years old.  The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500.  The current value is $22,877 for a gain of $6377 or 39% which is 5.3% / year adjusted for the timing of cash flows.  Go here for details or to the links on the page.

In 2019 we had 3 sales for a long term loss of -$430 and $367 in dividends.

Right now we have a few stocks we are looking at:

• Baozun (BZUN) – Chinese e-commerce enabling firm keeps getting hit by headwinds.  Well run but may sell
• General Motors (GM) – hit by labor unrest and now Chinese issues.  Holding up OK.

Portfolio Four Updated February 2020

Portfolio 4 is 10 1/2 years old.  The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500.  The current value is $23,284 for a gain of $6784 or 41%, which is 5.6% / year adjusted for the timing of cash flows.  See a summary here or at the links section.

We had 2 sales in 2019 for a long-term loss of ($320) and $361 of dividends.

The current portfolio is doing well.  The stocks on watch are:

• Box (BOX), a well run software / storage company which has been in the doldrums for a while.  I thought that they could be a takeover candidate which would cause the stock price to rise.  May sell not much happening
• Royal Dutch Shell (RDS.B) – this oil major has a high dividend but the stock has not done much for years.   Hit with recent oil price declines like the other oil majors.  May sell
• Nucor (NUE) – we’ve had this US metals company for many years.  While well run, it hasn’t done a lot.  May sell

Portfolio Three Updated February 2020

Portfolio three is 12 1/2 years old.  The beneficiary contributed $6500 and the trustee $13,200 for a total of $19,700.  The current value is $26,940 for a gain of $7240 or 37% which is 4.4% / year adjusted for the timing of cash flows.  See details here or at the links section.

This portfolio sold off individual stocks in late 2019 and moved into ETF’s for career reasons.  The ETF’s have been doing well since their purchase in late 2019.

There will be taxes for this portfolio tied to the sales of the individual stocks sold as well as the usual dividends earned.  These will be pulled off the 1099 for year end.