Portfolio Updates for 2021

During 2021 the markets had a lot of ups and downs, but overall it was a great year for stocks.

Portfolios_1-4-22

Our portfolios in aggregate returned about 18% (adjusted for contributions in the fall of 2021 and amounts that were essentially un-invested in cash) during 2021. This compares roughly equivalent to the US markets that returned about 25% in aggregate and foreign markets that returned about 8% (by comparing against Vanguards VEU ETF which is large-cap stocks not including the USA), since our portfolios are a mix of them.

These portfolios are tracked in Google Sheets in two ways:

  1. a single consolidated portfolio tracker in google sheets, which has the shares by stock for each portfolio and the cash associated with each portfolio, to get the total value. I take “snapshots” of value at different types of the year, as you can see in the graph above. This google sheets doc is pretty easy to keep up to date and lets me see the markets at a glance; I notice when it seems odd and often it is a stock split which needs to be reflected in the underlying data. Buys and sells only take a few minutes for me to update in the sheet. I then reconcile the portfolios against the records online from our financial records
  2. 8 unique google sheets documents, one for each portfolio. These sheets have all the details for each portfolio, including the price of each stock purchase and the sale price for those that have been sold, as well as matching dividends to each stock over time (to get total return). I also have the cash flows over the years to calculate total return (gains / losses) as well as an annual return adjusted for the timing of cash flows

I typically update the individual google sheet documents periodically when we do buys and sells, usually around the fall of each year when we have contributions, but we often sell individual stocks due to unique circumstances throughout the year. All 8 of the google sheets are aligned to the consolidated sheet and the brokerage records as of now.

Portfolio Eight Updated January 2022

Portfolio eight is 6 years old.  The beneficiary contributed $3500 and the trustee $7000 for a total of $10,500.  The current value is $18,548 for a gain of $8,048 or 76%, which is 14% / year adjusted for the timing of cash flows.  Go here for a summary or to the link.

This year we sold Baozun and Sumo Logic and bought Nike, Square / Block and Tesla.  Nvidia also split shares.

The portfolio is doing well.  There are gains in Nvidia, Mastercard and Paypal (even though Paypal is down recently with hits to the software companies and payment processors).

Remaining Stock Selections

We have some outstanding investments to consider for 2021.

Portfolio Five

There are stocks in this portfolio to strongly consider selling.

  • SUMO – while the SAAS / analytics sector has seen strong performance, SUMO has performed poorly.  This is a stock to strongly consider selling
  • Baozun (BZUN) – Baozun is a Chinese e-commerce enablement company.  Whether due to China market / regulatory challenges or company growth, it is time to sell this stock
  • Alibaba (BABA) – Alibaba has gone down significantly.  Unlike the other stocks on this sell list, I think Alibaba has a very large and important business for the long term, as a leading cloud platform / e-commerce platform.  They also own a valuable financial business.  Can keep or sell

There will be up to $10k – $11k to invest depending on the sales up above (there was $9k in the cash account due to our selling of Appian (APPN) earlier this year when it hit a brief peak).  This could be 5 or 6 stocks depending on the size, or a stock with a double purchase.

  • Tesla (TSLA) and / or Toyota (TM) – the best run / most profitable companies in the space are Tesla on the electric car space and Toyota on the gas / electric combination play.  While almost all other car makers in the world are betting almost solely on electric cars with the next generation moves, Toyota continues to believe in a future for gas powered vehicles which makes sense because it will be decades or longer before a reliable electric infrastructure girds the globe (think Africa / Asia, for instance)
  • Pinduoduo (PDD) – the Chinese stock market has been pummeled with regulatory changes and cold-war rhetoric.  This may also be an opportunity to buy a valuable and innovative e-commerce company at a discount
  • Rocket Mortgage (RKT) – Rocket was briefly a target of a meme-stock rally and then fell but this obscures that this is a “real” company with a 7% dividend and a solid position in the US mortgage market.  This may be a long term stock to buy at a decent down price
  • Kraft-Heinz (KHC) – Kraft-Heinz fell and had a significant write off.  The company is well run and has a new plan and solid dividend.  They provide essential food staples around the world
  • Taiwan Semiconductor Manufacturing (TSM) – this stock is an essential company in the middle of a global chip shortage but also tied to bellicose behavior from China.  May be an opportunity to purchase it at a discount
  • Nike (NKE) – the global footwear leader just released earnings and said that the global supply chain difficulties would hit revenues temporarily.  Seems like an opportunity to buy a solid company at a discount
  • Uber (UBER) – the ride sharing company had missteps in the past but has changed management and is well positioned to go on a big run of earnings as the economy opens up
  • Square (SQ) – a well run and very interesting company in the financial space that is also moving into deferred payments (essentially loans) and bitcoin

Portfolio Seven:

There are stocks in this portfolio to strongly consider selling.

  • SUMO – while the SAAS / analytics sector has seen strong performance, SUMO has performed poorly.  This is a stock to strongly consider selling
  • Baozun (BZUN) – Baozun is a Chinese e-commerce enablement company.  Whether due to China market / regulatory challenges or company growth, it is time to sell this stock
  • Alibaba (BABA) – Alibaba has gone down significantly.  Unlike the other stocks on this sell list, I think Alibaba has a very large and important business for the long term, as a leading cloud platform / e-commerce platform.  They also own a valuable financial business.  Can keep or sell

If these stocks were sold there would be funds available for 3 purchases.  Here are some ideas:

  • Nike (NKE) – the global footwear leader just released earnings and said that the global supply chain difficulties would hit revenues temporarily.  Seems like an opportunity to buy a solid company at a discount
  • Tesla (TSLA) and / or Toyota (TM) – the best run / most profitable companies in the space are Tesla on the electric car space and Toyota on the gas / electric combination play.  While almost all other car makers in the world are betting almost solely on electric cars with the next generation moves, Toyota continues to believe in a future for gas powered vehicles which makes sense because it will be decades or longer before a reliable electric infrastructure girds the globe (think Africa / Asia, for instance)
  • Uber (UBER) – the ride sharing company had missteps in the past but has changed management and is well positioned to go on a big run of earnings as the economy opens up
  • Square (SQ) – a well run and very interesting company in the financial space that is also moving into deferred payments (essentially loans) and bitcoin
  • Chevron (CX) – a fuels company that is well run and has taken over the lead company in this space from Exxon Mobil (XOM)
  • L’Oreal (LRLCY) – the French cosmetics firm has a global footprint and has really embraced digital and modern methods during the pandemic

Portfolio Eight:

There are stocks in this portfolio to strongly consider selling.

  • SUMO – while the SAAS / analytics sector has seen strong performance, SUMO has performed poorly.  This is a stock to strongly consider selling
  • Baozun (BZUN) – Baozun is a Chinese e-commerce enablement company.  Whether due to China market / regulatory challenges or company growth, it is time to sell this stock

If these stocks were sold there would be funds available for 2 purchases.  Here are some ideas:

  • Nike (NKE) – the global footwear leader just released earnings and said that the global supply chain difficulties would hit revenues temporarily.  Seems like an opportunity to buy a solid company at a discount
  • Square (SQ) – a well run and very interesting company in the financial space that is also moving into deferred payments (essentially loans) and bitcoin
  • Chevron (CX) – a fuels company that is well run and has taken over the lead company in this space from Exxon Mobil (XOM)
  • Pinduoduo (PDD) – the Chinese stock market has been pummeled with regulatory changes and cold-war rhetoric.  This may also be an opportunity to buy a valuable and innovative e-commerce company at a discount
  • L’Oreal (LRLCY) – the French cosmetics firm has a global footprint and has really embraced digital and modern methods during the pandemic
  • Uber (UBER) – the ride sharing company had missteps in the past but has changed management and is well positioned to go on a big run of earnings as the economy opens up

Stock Performance September 2021

Stock Performance September 2021
Stock Performance September 2021

Over about the last 6 months, net of $30,000 in contributions from the trustee and the beneficiaries (some beneficiaries are making additional contributions beyond the normal $1500 / year), the funds in total have gone up by approximately 5% annualized. Net of cash and cash-like instruments (which reduce money in equities), we have returned about 6-7% annualized.

The indexes in the US on the other hand have gone up by between 10-15% annualized, depending on what you are looking at (S&P, NASDAQ, MGK performance, etc…). One of the reasons for our different performance is that we have a decent basket of foreign stocks, including some Chinese stocks which have gone down about 40% during the last 6 months (some of which have already been sold).

Since we are looking at the long term, we’ve historically selected a mix of US and foreign stocks. Foreign economies make up a majority of the worlds’ GDP, but US stocks have turned out to be the best bet recently for a variety of reasons. Chinese stocks, for instance, were hit by changes in government policies. We will continue to monitor the mix and the options for investments.

July Stocks to Consider

The following 16 stocks (plus gold) have been solid in our portfolio and are recommended for consideration if you don’t have them or wish to add more.

  1. Accenture (ACN) – well run consulting company growing and also acquiring smaller companies in niche areas
  2. Alibaba (BABA) – Chinese Amazon equivalent has been battered by regulators but seems to be turning a corner, still enormous and critical to their economy
  3. Cloudflare (NET) – an innovative, fast growing tech company with a service for internet connectivity and security
  4. Electronic Arts (EA) – Major video game firm in a giant and growing industry
  5. Facebook (FB) – Fast moving and innovative firm seems to have minimized regulatory scrutiny and can monetize world-wide
  6. Gold EFT (IAU) – an ETF that tracks the price of gold, traditionally a hedge against uncertainty
  7. Kraft Heinz (KHC) – a global food and beverage firm that has reworked its operating model after recent underperformance
  8. Mastercard (MA) – a well run player in payments
  9. Nvidia (NVDA) – a rapidly growing player in chips and innovation
  10. OKTA (OKTA) – a well run enterprise software firm
  11. Paypal (PYPL) – a growing and innovative payments provider
  12. Procter & Gamble (PG) – iconic consumer product firm
  13. Starbucks (SBUX) – ubiquitous coffee shop pivoting post pandemic
  14.  Tesla (TSLA) – high priced but rapidly growing electric car firm led by Musk
  15. Taiwan Semiconductor (TSM) – global chip producer that continues to perform well
  16. Union Pacific (UNP) – well run US railroad

Other US companies to look at for July, 2021:

  • Fiserve (FISV) – Fiserve provides services for payments and banks and is well run and has grown for many years
  • Chevron (CVX) – While Exxon-Mobil (XOM) led the US oil and gas industry for years, Chevron has been rising and moving faster and has a very similar market cap today
  • Snap (SNAP) – the company continues to attract users and innovate with video which continues to grow in advertising impact

Other foreign companies to look at for July, 2021:

  • ABB (ABB) – ABB is a global leader in engineering and electrification, which will grow as the world seeks to move from carbon energy sources
  • Pinduoduo (PDD) – Pinduoduo has an innovative commerce model for aggregating buyers and has had incredible growth in China
  • L’Oreal (LRLCY) – L’Oreal is the French makeup firm which has responded extremely effectively to the pandemic and gone extensively digital

June Performance Summary

Stock_Performance_July_2021

Our portfolios continue to perform well, like the overall market.  We are up about 30% over the last year, net of contributions.   US markets are up around 40% during that period, but our portfolios are about 20% cash / gold along with non-US stocks so it is roughly equivalent.

There are a few stocks that haven’t performed as well as the market as of late; Alibaba (BABA) the Chinese internet giant, SUMO Logic (SUMO) the cloud analytics company, and Baozun (BZUN) the Chinese e-commerce fulfillment company.  However, the performance wasn’t terrible for these 3 companies, just not nearly as good as the overall market.

We are looking at companies to consider buying for the summer investment round.  I am performing research now on candidates.

This year we moved three of the accounts over to “limited agency” status from trust funds; this has become necessary as the beneficiaries get older.  This is a one-time effort that took some time given that the steps are not simple nor clearly laid out.  Even today I noted that many of the individual stocks were set to reinvest dividends, which I turned off because it causes challenges in tracking and is minor in the grand scheme if you reinvest cash regularly (as we do with new investments).

April Performance Review

Performance_April_2021

Since our last updated in mid-February (approximately the market “top”), the value of our positions has declined by about 5% overall, with some portfolios hardly moving and others declining over 10%. The differences were driven by:

  • What percent of the portfolio is in cash or bonds – 25+% portfolio two, 30+% portfolio three, 20%+ portfolio four, with the heavier the cash and bond weighting the lower the decline
  • Amount of high growth stocks in portfolio – certain stocks that have been great performers that are considered “growth” and generally trade as a multiple of sales (say 20-30x sales) such as Tesla (TSLA) and Cloudflare (NET) and Sumo (SUMO) fell as the market moved from growth to value in the first quarter

Given that these portfolios represent a log-term investment for each of the participants and would be a portion of their total net worth (i.e. they often hold other cash in savings or other accounts), we try to be reasonably heavily invested in the market, but each participant has their own risk tolerance.

During this rotation into value stocks, some sectors which had been battered such as energy (Exxon-Mobil and Chevron) and Financials and some general retail have come back strong. There are many of these stocks in the portfolios (such as Coca-Cola, Procter and Gamble, and many others) but they generally represent a lower portion of the total “value” because the tech stocks have risen so much that their position size is much bigger.

We also see variances by region, with Chinese stocks rising and US stocks generally rising (at least in some sectors) but European stocks stagnant. Since these portfolios seek to choose both US and overseas stocks, we also will see changes in value based on changes in currencies and country-specific dynamics. We do not intend to “predict” which ones will rise and fall, but we encourage a balanced mix of stocks by sector and region / currency where possible.

Some specific stocks have fallen and are “on watch”, including:

  • Alibaba (BABA) – a well run Chinese company with huge cloud presence (like AWS) and a giant financial arm (called ANT), this group has run afoul of regulators and Chinese politics.  It is down about 25% from its high
  • Cloudflare (NET) – Cloudflare runs an advanced online system and trades for more than 30x revenues… making it susceptible to falling when it doesn’t perform exceedingly well in revenue growth or when interest rates increase.  It is down about 20% off its high
  • Tesla (TSLA) – the grand-daddy of all stock high flyers is down about 20% from recent peaks
  • Sumo Logic (SUMO) – SUMO has lost about half its value from peak recently.  While SUMO is still growing quickly, it recently acquired a company and is not exceeding expectations
  • Baozun (BZUN) – Baozun, the Chinese e-commerce support company, is down about 30% off recent highs.  The company was part of a short squeeze and impacted by US / China relations overall, but core operations are solid
  • Gilead (GILD) – this large pharma stock has lost about 20% of its value, despite having high earnings and dividends.  It does not play significantly in the covid space and is a bet for focus on other drugs and treatments in the post-covid era.

By portfolio:

  • Portfolio one -BABA, NET
  • Portfolio two – BABA, NET
  • Portfolio four – TSLA, NET
  • Portfolio five – SUMO, NET, BABA, BZUN
  • Portfolio six – BZUN, GILD, SUMO
  • Portfolio seven – BABA, BZUN, SUMO
  • Portfolio eight – BZUN, SUMO

Additional Stock Picks April 2021

Recently there have been some sales and a few of the portfolios are looking at possible incremental investments.

Note that there are very few “bargain” stocks out there. One that I thought was a relative bargain was Rocket Mortgages (RKT) and then it was pumped up so we ended up taking some short-term profits which we normally don’t do. Some stocks we are considering:

US Companies

  1. Nike (NKE) – the global footwear and clothing retailer saw significant price increase in 2020 but has fallen about 10% off its all-time high.
  2. Etsy (ETSY) – the platform for twee e-commerce also had a recent drop after a big run-up and it is down about 17% off its all-time high.
  3. Twitter (TWTR) – Twitter recently owned up to its poor performance (like Kraft Heinz) and started a new plan to become more profitable and “win over” the market. There was a run up earlier in the year but it is down about 17% from 52 week highs
  4. Chevron (CVX) – the giant energy company is attempting to take over the lead position from Exxon Mobil (XOM) in the energy space. Their stock is trading near 52 week highs
  5. Microstrategy (MSTR) – Microstrategy is a company in the data analytics space that has been around for many years and is not growing. However, they recently decided to borrow money on the bond markets and invest it in Bitcoin and today that makes up about $5B of their $7B market cap. This is an interesting way to play the crypto markets
  6. Honeywell (HOM) – Honeywell is a US controls manufacturer that is benefiting from “edge” and “quantum” computing. As a result, their stock is near a 52 week high
  7. Berkshire Hathaway (BRK) – the holding company controlled by Warren Buffet has been under-performing the S&P 500 for over a decade but may be positioned to rise as value stocks come to the fore. The stock is at an all time high

Non-US Companies

  1. Sea Limited (SE) – is a Singapore internet, mobile and gaming platform. It has also pulled back recently and is down about 17% from highs (this is the US ADR of the foreign stock)
  2. L’Oreal (LRLCY) – the global makeup brand has embraced digital and direct sales and is doing well despite covid (the is the US ADR for the foreign stock). The stock is trading near its all-time high
  3. Kraft Heinz (KHC) – the global snack company was selected as a value stock previously and although it has increased in price may still have room to increase. The stock is trading near its recent 52 week highs

Previous Holding Candidates

The stocks that have driven the most value in the portfolio that are not bought across all the portfolio (because every beneficiary selects individually) are:

  1. Electronic Arts (EA) – videogames
  2. Mastercard (MA) – electronic payments and credit cards
  3. CME Group (CME) – financial services
  4. Alibaba (BABA) – Chinese e-commerce giant
  5. Nvidia (NVDA) – semiconductors
  6. OKTA (OTKA) – SAAS provider of security services
  7. Paypal (PYPL) – electronic payments
  8. Procter & Gamble (PG) – iconic brand company
  9. Taiwan Semi-Conductor (TSM) – Asian chip giant
  10. Union Pacific (UNP) – railways
  11. Facebook (FB) – social media platforms
  12. TESLA (TSLA) – electric cars
  13. Wal-Mart (WMT) – massive retailer
  14. Cloudflare (NET) – new cloud stock with potential
  15. Gold ETF (IAU) – tracks price of gold

Performance as of February 2021

After the nadir in Spring 2020, our portfolios have performed well.  We are up about 15% in the last three months with no incremental capital added, which annualizes to a 60% rate (ignoring compounding).

We are reviewing all the stocks as we look at performance in 2020 for tax purposes. Generally they are performing well with a couple of exceptions that we will watch (AEP, the utility stock, and GILD the pharma company).

Organizing Your Portfolio

In order to understand your investments, you need to put all of your investments on a single page. Most people have their data in various locations, such as Quicken or in other financial planning tools. However, few have them organized into a single view so that they can see the key variables at a glance. This is very important and here is how you can do it.

There are a few key elements to every investment. For the purpose of this blog post, I am massively simplifying investing and if you have a complicated portfolio you should likely see a professional. But everyone can benefit from attempting to put these elements on a single page.

The first thing you have to do is go and find all of your investments. This is often far harder than you would think. Let’s look at some of the common elements:

  1. Brokerage statement – if you have stocks and bonds and cash in a firm like Fidelity, Vanguard, eTrade, your band, etc… pull that out and get the detail
  2. IRA / 401(k) – as you switch jobs, you will accumulate IRA’s and 401(k)’s with different employers (unless you consolidate them, which I recommend). Pull all of these out, as well
  3. Bank – you will need your bank statement, for your balances in checking / savings / money market
  4. Stock apps – if you have (significant) stock in apps for trading, you need that information as well
  5. ESPP / Options – if you have employer stock or options that are in the money or restricted stock, you should include that too
  6. Deferred compensation – if you have any other form of deferred compensation, find those documents, and you also should determine what is vested
  7. Government debt – many people have treasuries or other types of government bonds that they own or were gifted
  8. Insurance / annuities – these get more complicated but if you have significant investments in these types of assets you should get them out, as well
  9. Land / Debt / Mortgage – this author is not an expert on debt / mortgages but you should include at least the net value as real estate here
  10. Crypto – if you have crypto that is significant, you should include that as well

Once you have all this information, you need to classify it a few ways. These include:

  • pre tax or post tax – it is important to classify assets as pre or post tax. Your pre tax investments are effectively “overstated” because at some point they will (likely) need to “wash” through and become taxed
  • By type of investment – you can get as detailed as you’d like but at a minimum I generally use “cash like”, “investment grade bonds”, “US equities”, “non-US equities”, “gold”, “real estate”, “other”. If you have a concentration in a particular stock, add that stock specifically (could be your employer, your ESPP, you have options with them, etc…) if it is more than 2% or so of your portfolio
  • By ticker – ideally, when you get the information together, get the specific “ticker” such as VTI for the vanguard ETF or the specific stock ticker. There also are tickers for most mutual funds. If you are in a proprietary fund, they still will have some sort of unique identifier, try to get that, because you can use it to track your # of shares, price per share, and then categorize the investment
  • For the sake of this analysis, I am assuming that you are “dollar based”. If you are based in a foreign currency, you also need to add what currency it is based in because moves in that currency vs. the dollar will be a very significant variable

When you have this information, you need to put it down into a spreadsheet (ideally a google sheet, so that you can auto-update it by price or update the ones such as proprietary investments periodically), and look at it and see if it makes sense.

When people look at the stocks that they are considering for investing, it really only makes sense in the total context of their portfolio. If you have a lot of cash or cash like investments elsewhere, then you can consider a higher portion of your stocks being “in the market” (and at risk). But you can only do this if you first put it all down on a sheet of paper (or in a spreadsheet).

Once you do this, ideally you would quarterly calculate your “net worth” (for this purpose, your debt is “net” on real estate and I’m not considering other forms of debt like student debt or credit card debt, but you can add that in as an offset) and physically look at it. Once you gather all the investments together, looking at this quarterly is not as difficult as you’d expect, but the first time is harder. Not only would you know your net worth, but you would be able to see at a glance your position in cash, investment grade debt, equities, etc… at a glance which is a critical part of the equation.

Portfolio Update November 2020

It has been a wild ride for stocks with Covid.  About 3 months ago in August the market started getting choppy.  During September the trustee and the beneficiaries contributed $18,000 to the portfolios.  Thus the increase from August to November is about 7.5% ignoring the incremental contributions, which works out to about 35% / year.

Generally the portfolio selections have been doing well, with a few exceptions.  SAP, the German software maker, was hit based on recent quarterly results and future projections.  Alibaba (BABA), the Chinese e-commerce giant, went down when the IPO of Ant was delayed right before launch.  We also had a fall in CME due to predictions of low volatility, Elbit Systems (ESLT), and Gilead (GILD).  None of these are in crisis, but since there are 40+ individual stocks in the portfolio we would expect a few to be always lagging.

Stock Selections for Fall 2020

 It is time to make selections for Fall 2020.

For our 2020 stock picks, we will provide a variety of options:

  • There were a number of companies that went public recently.  We will offer some choices in this area
  • We want to have some options for non-US companies, usually via ADR’s (which allow you to buy on US exchanges, in US dollars)
  • We also have a number of “out of favor” companies that might be worth considering
  • We have a number of stock choices of well performing US and foreign companies

With the return on cash being almost zero, we may want to consider using the BND (Vanguard bond ETF) which has some low amount of risk but has a return over 2% instead of cash for money that does not want to be in the market.

Recent IPO’s

  1. Rocket Companies (RKT) is an online mortgage provider that has grown to be the largest mortgage originator in the USA with a digital platform.  It’s market cap is $45B and I don’t believe that they will pay a dividend.
  2. Sumo Logic (SUMO) is a data and analytics company with strong growth.  The CEO has had positive history with other companies.  SUMO market cap is $2B with no dividend.

Non-US Companies

  1. Roche Holding AG (RHHBY) is a Swiss healthcare and pharmaceutical company and is the world’s largest biotech company.  Roche market cap is $300B and they have a 2.5% dividend.
  2. Spark New Zealand (SPKKY) is a New Zealand wireless company that is well run and poised to benefit with continued digital transformation.  Spark’s market cap is $5B and they have a 5-6% dividend.

Out of Favor Companies

  1. Kraft Heinz (KHC) is a world-wide food and beverage company made up of acquisitions that had some difficulties and write-offs.  They have a good looking turn around plan and have promised many improvements.  Kraft Heinz’s market cap is $38B and they have a 5% dividend
  2. Chevron (CVX) is a large oil company that is well run and has taken the mantle of leading US oil company from Exxon-Mobil.  While oil now remains at the low price of $40 / barrel and may remain there for many years, the world still is powered by oil and will be for several decades to come and this can be an opportunity to buy shares at a low price.  The market cap is $135B and the dividend is around 7%.

Core Holding Candidates

The stocks that have driven the most value in the portfolio that are not bought across all the portfolio (because every beneficiary selects individually) are:

  1. Electronic Arts (EA) – videogames
  2. Mastercard (MA) – electronic payments and credit cards
  3. CME Group (CME) – financial services
  4. Alibaba (BABA) – Chinese e-commerce giant
  5. Nvidia (NVDA) – semiconductors
  6. OKTA (OTKA) – SAAS provider of security services
  7. Paypal (PYPL) – electronic payments
  8. Procter & Gamble (PG) – iconic brand company
  9. Taiwan Semi-Conductor (TSM) – Asian chip giant
  10. Union Pacific (UNP) – railways
  11. Facebook (FB) – social media platforms
  12. TESLA (TSLA) – electric cars
  13. Wal-Mart (WMT) – massive retailer
  14. Cloudflare (NET) – new cloud stock with potential
  15. Gold ETF (IAU) – tracks price of gold

Stock Picks By Portfolio:

  • Portfolio One – DONE
  • Portfolio Two – DONE
  • Portfolio Three – DONE
  • Portfolio Four – pick one
  • Portfolio Five – pick one
  • Portfolio Six – pick one
  • Portfolio Seven – pick two
  • Portfolio Eight – pick two

Portfolio Update October 2020

All of the beneficiaries have made their contributions and they have been matched and it is about time to select new stocks for fall 2020. There were some delays because one of the portfolios was moved from the trustee to the beneficiary and then we had to set up agency and connect to other accounts. These sorts of activities generally take a long time with external financial institutions and require a few interactions with support so they demand patience and focus. We are still working through a few tweaks even now.

Performance Oct 2020

Before we select stocks for 2020, we will look back on performance so far. Our low, like most portfolios, occurred in March 2020. Since that point, ignoring new investment, we are up 46%. If you take into account the portions of the portfolio that are in cash or bonds, our portion “in the market” is up even more, at 56%, in about six months (half a year).

Given that the long term expectation of stock market performance is 6-7%, we basically received perhaps 8 or so years of returns in six months, albeit from a reduced base (measuring from the lowest point in the markets).

This performance shows the importance of remaining in the market during risky times – if we had sold off and gone into cash / bonds during the lowest point, we would have missed out on this period of exceptional gains. On the other hand, we have no expectations of the future and equities could have entered an era of low gains and poor performance such as occurred after the dot.com crash near the year 2000 or the 2007-8 financial crisis.

Stock Performance as of August, 2020

Performance as of 8/3/20

Our portfolios have continued to do well, as they are composed of many of the same stocks that are driving the NASDAQ higher. During the months of June and July, our portfolios increased between 5 and 17%, with the primary differentiator across portfolios being the percentage invested in high growth (mainly tech) stocks and the percentage in cash and more conservative investments. We also have seen a fall in the US dollar which could increase the relative appeal of foreign stocks over time (they have generally lagged far behind their US equivalents).