Portfolio Update August, 2019

As of August 2019, our combined portfolios are back to where they were in August of last year. This is mostly in line with VTI (Vanguard US market ETF) which was up about 3% and VEU (non US market ETF which was up about 1%).

Below are stocks to consider selling prior to the new purchases:

Portfolio One:

  • Nnvidia (NVDA) – the once high flying chipmaker stock is hit with slowing growth
  • Equinor (EQNR) – former Statoil is a Norwegian oil company hit by falling price of their currency and anti-oil sentiment in their own country

Portfolio Three:

  • Baidu (BIDU) – Chinese search engine less relevant in mobile era and new investments not yet paying off
  • Nnvidia (NVDA) – the once high flying chipmaker stock is hit with slowing growth
  • ConocoPhillips (COP) – US oil company hit by lower energy prices and relatively smaller footprint

Portfolio Four:

  • Equinor (EQNR) – former Statoil is a Norwegian oil company hit by falling price of their currency and anti-oil sentiment in their own country
  • Nnvidia (NVDA) – the once high flying chipmaker stock is hit with slowing growth
  • Box (BOX) – US SAAS provider not yet acquired by larger company and hit by recent earnings miss
  • Oracle (ORCL) – very well run and doing huge stock by back but trends running against this on premise software stock
  • Westpac (WBK) – Australian bank hit with tough regulatory, business, and real estate impacts

Portfolio Five:

  • Baidu (BIDU) – Chinese search engine less relevant in mobile era and new investments not yet paying off
  • Juniper (JNPR) – US networking company not yet taken over.  Reasonably well run with dividend but in a difficult space
  • ConocoPhillips (COP) – US oil company hit by lower energy prices and relatively smaller footprint
  • Westpac (WBK) – Australian bank hit with tough regulatory, business, and real estate impacts

Portfolio Six:

  • Baidu (BIDU) – Chinese search engine less relevant in mobile era and new investments not yet paying off
  • Nnvidia (NVDA) – the once high flying chipmaker stock is hit with slowing growth
  • ConocoPhillips (COP) – US oil company hit by lower energy prices and relatively smaller footprint

Portfolio Eight:

  • Nnvidia (NVDA) – the once high flying chipmaker stock is hit with slowing growth

Stocks on Watch, Summer 2019

As part of our investing round for the summer of 2019, we are looking at stocks to consider selling. The following stocks are on that list:

  • Baidu (BIDU) – they recently had their first loss and are way down
  • Baozun (BZUN) – stock performance far down, likely impacted by China / US trade disputes
  • Electronic Arts (EA) – far down with recent low performing franchise entries and hit by rise of Fortnite and mobile gaming
  • Gilead (GILD) – has not moved in years
  • General Motors (GM) – at risk with China / US trade disputes, automotive is a cyclical industry
  • Juniper (JNPR) – just kind of there, not growing, haven’t been taken over yet
  • Nvidia (NVDA) – went from huge growth to little / no growth
  • Smart Global Holdings (SGH) – missed earnings and hit hard
  • Equinor (EQNR) – formerly Statoil. Not moving much in years

In general will look to consolidate down the total # of stocks in the portfolio and will want to re-buy from the 2019 purchase list (to come) which will also include some stocks already in the one of the 8 existing portfolios.

Portfolio Overview And Recent Market Activity

Since we moved the portfolios to Google Sheets and integrated them to a single data source, it has been much easier to review overall performance (in aggregate) and performance within a single one of the 8 portfolios.  Like the rest of the overall market, we hit a peak in September at around $180k and have since declined to $168k (a loss of $12k or about 7%).  Traditionally, October has been a month where difficult events occurred, so for whatever reason it happened again in 2018.  Generally the Tech giants have been hit hard, and although we are not invested in many of the most prominent names (Amazon, Google), we do have some investment in Facebook as well as in the Chinese names like Alibaba, who also were impacted.  When this settles down a bit (likely after the elections, for good or ill) we will look through the winners and losers and see if there are any significant actions to be taken among portfolio stocks.  Note that even with recent losses, we are still up from about $137k in April 2017 to $168k in November 2018, which is approximately 20% (it is a bit less than the math would first appear because of the net effect of incremental investments and withdrawals during the period).

Stock Selections for 2018

Stocks to choose from for 2018:

US Stocks

  • CME Group (CME) – a financial firm that trades and clears futures products and has a high dividend (they have an annual dividend plus a special year end dividend of 3.5%+ in total).  They make money from trade volume which tends to increase in times of volatility or disruption in the markets, and are thus kind of a “hedge”
  • PayPal (PYPL) – PayPal spun off from eBay and makes more money as the world moves to digital payment methods from cash.  They also own Venmo which they have yet to monetize (existing stock owned by Portfolio One)
  • Union Pacific (UNP) – Union Pacific is a large and well-run railroad company (existing stock owned by Portfolios Five and Six)
  • Electronic Arts (EA) – An American video game developer that has been hit lately but could be a bet on the potential of this sector and streaming

Foreign Stocks

  • Inditex (IDEXY) – this Spanish company is known in the USA as “Zara” and is a leader in “fast fashion” and integrating e-commerce with direct retail
  • Alibaba (BABA) – the Chinese e-commerce giant has been growing and expanding into different domains (existing stock owned by Portfolios Three and Seven)
  • Taiwan Semiconductor Manufacturing Company (TSM) – this manufacturer of semiconductors counts Apple as a large customer and has been doing very well for many years (existing stock owned by Portfolio One)
  • Infosys (INFY) – Indian outsourcer and technology company has been doing well and benefits from the weaker Indian currency (existing stock owned by Portfolios One and Three).  Note – this stock just split 2/1 effective 9/12 so the price history will look strange if you see it online

Other

  • Gold ETF (IAU) – this ETF tracks the price of gold.  Gold does not provide a dividend but could be a hedge against inflation or disruption

Between the eight portfolios, there are almost 40 different stocks to follow.  Generally, we select “new” stocks rather than re-recommend existing stocks.  However, for this round, we will have some “new” stocks but also continue to recommend some existing stocks that the portfolios can choose from.  This will slow the overall growth of stocks across all the portfolios which will make it simpler to track.

We will continue to recommend a mix of US and foreign stocks to choose from, although each portfolio can select whatever they’d like (they don’t have to split their investments equally between both).  Recently the US dollar has gone up, resulting in (relatively) poorer performance for foreign stocks.  However, this can change and these are long-term portfolios so we recommend US and foreign stocks rather than taking an effective “position” on the future direction of US currency (i.e. if you thought the dollar was going up indefinitely you would buy US based assets exclusively).  Folks often fail to remember the past, when the US dollar fell for years against many different currencies.

Potential Stock Sales for August 2018

Here are the potential stock sales by portfolio:

Portfolio 8K

  • GM – consider selling
  • BZUN

Portfolio 7G

  • GM – consider selling
  • BZUN

Portfolio 6

  • ESLT
  • BZUN
  • BIDU

Portfolio 5D

  • BZUN
  • GM – consider selling 
  • BUD – recommend selling (not growing) (SOLD)
  • BIDU

Portfolio 4M

  • TSLA – recommend selling (a media circus) (SOLD)
  • ABB
  • ESLT

Portfolio 3

  • ABB
  • DWDP – recommend selling (will split into multiple companies) (SOLD)
  • BIDU
  • ESLT
  • WMT (SOLD)

Portfolio 1 and 2 – None

 

Portfolio Eight Updated August 2018

Portfolio eight is three years old.  The beneficiary contributed $1500 and the trustee $3000 for a total of $4500.  The current value of the portfolio is $6291 for a gain of $1791 or 40%, which is about 18% / year when adjusted for the timing of cash flows.  You can see the detail here or on the link to the right.

 

There are a couple of stocks on watch right now:

  • General Motors (GM) – All the car makers were hit pretty hard recently and it is down about 20% off its peak.
  • Baozun (BZUN)- the Chinese ecommerce company is down with the overall Chinese market, about 20% off its high.  Has still done well this year overall