Portfolio Six Updated January 2022

Portfolio Six is nine years old.  The beneficiary contributed $5000 and the trustee $10,000 for a total of $15,000.  The current value is $28,020 which is a gain of $13,020 or 87%, which is 11.1% / year adjusted for the timing of cash flows.  Go here for a summary or to the link.

This year we sold three stocks (Facebook, Sumo Logic and Baozun) and bought three stocks (Intel, Paypal and L’Oreal).  Nvidia (NVDA) also split shares.

The portfolio is overall doing well.  The largest gains have been tied to NVDA, OKTA, Taiwan Semiconductor (TSM), Union Pacific (UNP) and Procter & Gamble).

Portfolio One Updated November 2020

Portfolio One is our longest lived portfolio.  It is 19 years old.  The beneficiary contributed $5000 and the trustee $19,000 for a total of $24,000.  The current value is $72,519 for a gain of $48,519 or 202%, which is 8.6% / year adjusted for the timing of cash flows.  You can see details here or at the link on the right.

Portfolio one has 20 stocks.  The major gains have come from Taiwan Semiconductor Manufacturing (TSM), PayPal (PYPL), Nvidia (NVDA), and Procter & Gamble (PG).  Other winners include Alibaba (BABA), Accenture (ACN), Infosys (INFY), Toyota (TM), and American Electric Power (AEP).  Stocks hitting recent bumps include EA (earnings), CME (ZIRP), SAP (earnings), and BABA (delay of ANT IPO).

Portfolio Five Updated November 2020

Portfolio Five is 11 years old.  The beneficiary contributed $6000 and the trustee $12,000 for a total of $18,000.  The current value is $31,765 for a gain of $13,865 or 77% which is 8.5% / year adjusted for the timing of cash flows.  Go here or to the link on the right for more detail.

Gains in the portfolio have been driven by Appian (APPN) which has had a huge run up lately, Cloudflare (NET), Nvidia (NVDA), OKTA (OKTA), Paypal (PYPL), Alibaba (BABA), Union Pacific (UNP) and Procter and Gamble (PG). There are 17 stocks in total in the portfolio, the others are doing OK or are too new to rate. SAP (SAP) was hit recently with their earnings report but is still up overall, and Alibaba (BABA) is still up significantly but fell with the deferral of the ANT IPO.

Portfolio Seven Updated November 2020

Portfolio seven is five years old.  The trustee contributed $6000 and the beneficiary contributed $3000 for a total of $9000.  The current value is $13,919 for a gain of $4,919 or 57%, which is 13% / year adjusted for the timing of cash flows.  Go to the link on the right or here to see the details.

Portfolio gains have been driven by Mastercard (MA), Alibaba (BABA), Taiwan Semiconductor Manufacturing (TSM) and PayPal (PYPL).  There are 10 stocks in the portfolio.  The other stocks are doing OK or it is too early to tell.

Portfolio Eight Updated November 2020

Portfolio Eight is 5 years old.  The beneficiary contributed $3000 and the trustee $6000 for a total of $9000.  The current value is $14,361 for a gain of $5,361 or 60%, which is 13.5% / year when adjusted for the timing of cash flows.  Go here or the link on the right to see details.

Performance has been driven by gains in Mastercard (MA), Nvidia (NVDA), Paypal (PYPL) and OKTA (OKTA).  There are a total of 10 stocks in the portfolio.  Generally the other stocks are performing adequately or it is too early to tell.

Portfolio Performance As of May 2020 and Replacement Stock Selections

The stock market has recovered almost all of the losses incurred with the pandemic.  From peak to trough (Feb 2020 to March 2020) we lost about 23% of our value.  Today, we are down about 7% from peak.  Our percentages do not completely align with the market because some portfolios hold up to 20% cash and some bond investments (BND ETF from Vanguard) and Gold (IAU ETF ticker).  This performance generally aligns with riding the market down and then back up again.Portfolio Performance May 10 2020

Whether by luck or design, our portfolios did not hold most of the industries that bore the brunt of the Covid impact, like airlines, hotels, and commodities. We did have some stocks that we recently sold in some of these hard hit areas.

I reviewed the rest of the portfolio and we are continually “pruning down” the list of stocks that we hold. There are about 30 stocks held across the portfolio right now, down from about 40 or so in the relatively recent past. This does not include ETF’s.

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:

  • Electronic Arts (EA) – videogames
  • Mastercard (MA) – electronic payments & credit cards
  • CME Group (CME) – financial services
  • Alibaba (BABA) – Chinese e-commerce giant
  • Nvida (NVDA) – semiconductors
  • OKTA (OKTA) – SAAS provider of security services
  • Paypal (PYPL) – electronic payments
  • Procter & Gamble (PG) – iconic brand company
  • Taiwan Semi-conductor (TSM) – semiconductors
  • Union Pacific (UNP) – Railways
  • Gold ETF (IAU) – tracks price of gold

If the portfolios that are selecting new stocks don’t currently own one of the stocks listed above, they may want to consider buying them.

New stocks for May 2020:

  • Carrier (CARR) – manufacture and sale of Heating and cooling systems (HVAC).  Recently spun out from a conglomerate
  • Facebook (FB) – owner of Facebook, Instagram, and WhatsApp seems to have recovered from past controversies
  • Cloudflare (NET) – security and edge networking has been growing with the crisis

Stocks To Pick:

Portfolio Four – select three stocks

Portfolio Five – select two stocks

Portfolio Six – select one stock

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


  • 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.

Calculating Basis on a Stock Split

One of the more interesting side benefits of writing this blog and running the trust funds is that I take apart my brokerage statements in detail.  Recently, eBay split into two stocks as they spun out PayPal into a separate company.  Portfolio One owns 50 shares of eBay, which became 50 shares of eBay and 50 shares of PayPal.

50 eBay shares were purchased in December 2007 at a price of $33.50 a share or a total of $1675.  This is the “cost basis” or “tax basis” of the stock.  Regardless of how many times eBay and PayPal subsequently split or spin off, the total of the basis is $1675 and can’t go higher or lower.

Today, unlike when I started this blog, you can find pretty much anything out on the internet.  So I just typed in “eBay Paypal spin off stock price basis” and found this link.  In the link they said that the split percentage was calculated based on the market price of PayPal and eBay after the stock was launched… which was .5682 as PayPal and .4138 as eBay.  .5682 + .4138 = 1 as it must since the basis must be split between the two stocks.

As a result of this, eBay’s 50 shares must be worth .4138 * $1675 = $693.12 or ($693.12 / 50) $13.86 a share.

PayPal’s 50 shares must be worth .5682 * $1675 = $951.73 or ($951.73 / 50) $19.03 a share.

For fun, I went to my site’s brokerage account where they calculate the cost basis for taxes and they had different numbers.. eBay was $761.86 and PayPal was $927.14.  This totals $1689.

The difference between the $1689 – $1675 = $14.  That’s probably the commission we paid back in 2007 (when we weren’t getting free trades).  That makes sense, then.  Thus my “total” basis is $1689 to split between the two stocks.

I’m not certain what the difference is between the calculation I found on the internet and the brokerage calculation.  They are close enough, though.  This shows the complexity of the process – it would be much worse if I had bought eBay at many other price points over the years, and / or if it had split a bunch of times.

Well… I dug around a bit more and went to eBay’s investor relations site.  They had a document there from their head of tax describing one way to split the basis between the two stocks.  Here is a link to that document.

In that document eBay said the following:

Based on that approach and the assumptions and calculations set forth in Item 16 below, 39.2706% of an eBay stockholder’s aggregate tax basis in his or her shares of eBay common stock immediately prior to the Distribution would be allocated to such stockholder’s shares of eBay common stock and 60.7294% would be allocated to such stockholder’s shares of PayPal common stock received in the Distribution.

So if I plug in the $1689 ($1675 + $14) basis times .392706 I get $663.28 for eBay and $1025.71 for PayPal.  Aargh that doesn’t tie out either.  I think I might send an email to the support section of the brokerage account to ask.  Probably I am spending far more time on this than it is worth but since I am down the rabbit hole…