Portfolio One Updated April, 2022

Portfolio one is 20 1/2 years old. The beneficiary contributed $10,000 (net of withdrawals) and the trustee $20,000 for a total of $30,000. The current value is $82,037 for a gain of $52,037 or 173%, which is 8.3% / year when adjusted for the timing of cash flows. Go to the link or here to see details.

This portfolio is down with the others and we can look at a few stocks:

  • Block (SQ) – this is an interesting stock but was hit hard in recent SAAS / payment stock re-valuations
  • Pinduoduo (PDD) – the Chinese tech stocks have been devalued by Chinese government actions, tensions with the USA, and a general re-evaluation of tech stocks
  •  Meta (FB) – Meta’s challenges are well documented as they pivot to Augmented reality – but they still make a lot of profits and have great assets worldwide
  • Rocket (RKT) – we sold half our rocket when they hit a “meme stock” high which is good in hindsight.  The stock pays a strong dividend but is hit hard by the impending raise in interest rates which chokes mortgage growth and refinancing
  • Alibaba (BABA) – like PDD this stock suffered from a triple whammy
  • Paypal (PYPL) – one of the most perplexing on the list, PayPal fell instantly out of favor with analysts after stopping guidance the shares cratered without a significant negative event in the business
  • OKTA (OKTA) – this software company had an acquisition the market didn’t like and then was hit with the overall re-evaluation of software companies valued by growth not profits

Portfolio One Updated October 2021

Portfolio One is our longest lived portfolio.  It is 20 years old.  The trustee contributed $20,000 and the beneficiary $10,000 for a total of $30,000.  The current value is $98,262 for a gain of $68,262 which is 227% or 9.7% / year when adjusted for the timing of cash flows.  Go here for a summary or to the link on the right.

There was a stock split since the last update – Nvidia (NVDA) split 4/1. When that occurs you need to adjust the purchase price accordingly. We purchased 5 new stocks for the account so it is almost entirely invested (less than 2% is in cash). The portfolio is generally doing well, with large positions in Taiwan Semiconductor (TSM) and Paypal (PYPL) along with 23 other stocks. There are a couple stocks on watch, notably Alibaba (BABA) tied to the Chinese crackdown and Rocket Mortgage (RKT) which was briefly part of the Meme stock frenzy.

While many recent stock purchases don’t pay much in the way of dividends, over the 20 years of this portfolio, almost $10,000 of the total return is in dividends. This is a big reason why I create these offline tracking sheets, so that you can see the impact of dividends on the portfolio.

Portfolio One Updated July 2021

Portfolio One is our longest lived portfolio, at almost 20 years.  We started this portfolio the day after 9/11/01 (a significant day in hindsight).

The value is $91,424 and the beneficiary invested $5000 and the trustee $19,000 for a total of $24,000.  Gains are $67,424 or 280%, which averages out to 10.4% / year adjusted for the timing of cash flows.  Go here for a summary or to the link on the right.

In March we sold half our position in Rocket Mortgage (RKT) when it was part of the “meme” stock frenzy.  The stock has returned to what we paid for it originally plus paid a dividend.  We also had a reverse split for IAU gold shares (rare, it actually makes the price higher) and received a small amount of cash for our fractional half share (not a dividend, a return of capital, but very small).

The stocks in the portfolio are generally doing well, along with the market overall.

Portfolio One Updated Feb 2021

Portfolio One is our longest lived portfolio at 19 1/2 years. The beneficiary contributed $5000 (net of withdrawals) and the trustee $19,000 for a total of $24,000. The current value is $86,099 for a gain of $62,099 or 259%, which is 10% / year when adjusted for the timing of cash flows. Go here or to the link on the right for more detail.

During 2020 we had $650 in dividends and two sales for a net long term loss of ($802). We sold Toronto-Dominion Bank (TD) and Exxon Mobil (XOM).

The portfolio is doing well overall. A couple stocks to watch are AEP (utilities have been down for years) and Alibaba (BABA) due to political turmoil in China.

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 One Updated August, 2020

Portfolio One is 19 years old. The beneficiary and trustee invested $21,000 and the total value is $66,245 for a gain of $45,245 or 215%, which is 8.9% / year adjusted for timing of cash flows. Go here for the detail or see the link on the right.

The portfolio has 15 stocks, of which 2/3 are in Infotech & payments. 31% of the stocks are foreign and 69% domestic. 17% of the portfolio is in cash, with no gold. The effective dividend rate is approximately 1%. Note that cash now has a return of 0.1% or basically zero, with the return of zero interest rate policy (ZIRP).

There is one stock ALC which we will either grow or sell; it is a fractional share from a spin off that has done OK but the position is very small.

We may want to consider moving cash into BND (the Bond ETF from Vanguard). This returns about 2%. There is some volatility compared to money market (if interest rates went up, the principle value would go down) but there doesn’t seem to be much on the short term horizon at least.

Hovering over all these portfolios are the unprecedented short term gains that have occurred in a small subset of stocks, mainly Info Tech / Payments. Participating in these stocks has driven up the value of this portfolio from around $40k a bit more than 2 years ago to over $66k today, a gain of over 65% in that period of time. Note also that almost 20% of the portfolio has been in cash, which makes that gain even larger because the stock portion drove all of it and cash contributed only around 4%.

There is no right answer as to what to do next; many pundits proclaim a “new normal” in that these digital stocks have wiped out their physical world competition and will continue to rule the future economy, vs. others that compare this to the year 2000 dot.com Nasdaq bubble that took almost 20 years to recover from.

Portfolio One Updated June 2020

Portfolio one is almost 19 years old. The beneficiary contributed $3000 (net of withdrawals) and the trustee $18,000 for a total of $21,000. The current value is $55,782 for a gain of $34,782 which is 165% or 7.5% / year when adjusted for the timing of cash flows. See the details here or on the link on the right.

The portfolio currently is almost 20% in cash.  Of the stocks, almost 80% are from the Information Technology / Payments sector.

Portfolio One Updated February, 2020

Portfolio One is our oldest portfolio at 18 1/2 years.  The current value is $55,208 vs. investment (net of withdrawals) of $21,000, for a gain of $34,208 or 163% which is 7.7% / year adjusted for the timing of cash flows.

In 2019 we only had one sale for a loss of ($364) and dividends of $679 (use the exact amounts on the 1099 tax form).

The stocks are currently doing well.  Exxon Mobil (XOM) is the laggard of the lot, as traditional energy stocks have been hit by declining crude and natural gas prices and an aversion to this sector by investors.  It is difficult for me to recommend selling this stock because it is well run and has a strong history of management discipline but we may consider it.

Portfolio 1 Price Momentum

 

Portfolio One Updated December 2019

Portfolio One is over 18 years old.  The current value is $53,357.  The beneficiary contributed $3000 (net of withdrawals) and the trustee contributed $18,000 for a total of $21,000 and a gain of $32,357.  This is a return of 154%, or 7.2% / year adjusted for the timing of cash flows.  A summary is on the links to the right or here.

There are 17 stocks in the portfolio and generally doing well given that the markets have been going up in 2019.  Right now the portfolio is holding $10,179 in cash which currently yields about 1.7% in investment income, as well.

Portfolio One Updated October, 2019

Portfolio One is our longest lived fund, at 18 years.  The beneficiary contributed $3000 (net of withdrawals) and the trustee $18,000 for a total of $21,000.  The current value is $50,749 for a gain of $29,749 or 146%, which is 6.8% / year adjusted for the timing of cash flows.  You can see a summary at the link on the right or here.

Right now the portfolio has 20% cash and 18 individual stocks, which are doing well.  To date, dividends have contributed $8,171 to our returns which is 27% of our total returns.  Often dividends are ignored when you just look at price trends but they are significant in the longer term.

Portfolio One Updated May, 2019

Portfolio One is 17 years old.  The current balance is $45,725 (of which $11,087 is cash).  The beneficiary contributed $2500 (net of withdrawals) and the trustee $17,000 for a total of $19,500.  Thus gains are $26,048 or 134% on original investment, which is about 6.7% / year when adjusted for the timing of cash flows.  Go here for details or at the link.

One item to note (it applies to all portfolios, but particularly to this one, because of its age) is the impact of dividends on long term performance.  Most “simple” stock return calculations do not include dividends (they just show the rise or decrease in price over the period selected) which significantly understates the gains from stocks which pay significant dividends (especially when the dividends grow over time).

Electronic Arts (EA) and Nvidia (NVDA) are on watch for this portfolio.

Portfolio One Updated December, 2018

Portfolio One is a little more than 17 years old.  The current balance is $42,691 (of which $10,775 is cash).  The beneficiary contributed $2500 (net of withdrawals) and the trustee $17,000 for a total of $19,500.  Thus gains are $23,191 or 118% on original investment, which is about 6.2% / year when adjusted for the timing of cash flows.  Go here for details or at the link.

Although the market has not performed well lately, most of the stocks are in decent shape and the cash holdings (over 20% of portfolio, now yielding over 2%) limit downside risk (and upside opportunities later, assuming that the market goes back up at some point).

Some stocks on watch:

  • Alibaba (BABA) – at about 70% of its 52 week peak, has been hit by slow down in China and also a possible previous over-valuation in software stocks
  • Electronic Arts (EA) – this stock is at about 53% of its 52 week high, as the whole games market has been hit hard lately even though the fundamentals (revenue) aren’t that much different, possibly due to Fortnight and the potential impact of streaming.  Will watch, may sell
  • Nvidia (NVDA) – another former high flyer, this chip maker was buoyed by crypto mining and is down about 50% off its 52 week high, although it still has strong cash flow.  Will watch, may sell

Portfolio One Updated July, 2018

Portfolio One is almost 17 years old.  The beneficiary contributed $2000 net (of withdrawals) and the trustee $16,000 for a total of $18,000.  The current portfolio value is $42,930 for a gain of $24,930 of 138%, which is approximately 7% / year when adjusted for the timing of cash flows.  You can see the detail here or on a link on the right.

This portfolio has moved over to the beneficiary and the former trustee now has agency so that we can take advantage of free trades on the former trustee’s account.  We are now at a phase where it makes sense to consider making some sales to take “risk off” on the account.  In addition, cash yields about 1.85% “risk free” in a money market account, so the impact of leaving money in cash is less impactful (it used to be earning effectively zero).

Here are the stocks that we are considering selling:

  1. Tesla (TSLA) – Tesla is a highly risky and volatile stock.  There is enough information out there about this stock to fill 10+ blogs like this.  As a result it is under consideration for selling
  2. Anheuser Busch Inbev (BUD) – This giant multi-national beer company is well run by the G3 group out of Brazil.  But growth has been hard to come by because they are gigantic and they are battling the high end craft beer in the USA and cheaper alternatives abroad
  3. WIPRO (WIT) – This Indian outsourcer has a low dividend and hasn’t been making much of a return.  A candidate for selling
  4. Wal-Mart (WMT) – Massive retailer in battle for its life with Amazon.  Starting to acquire other companies and expand e-commerce footprint to compete.  May want to take earnings and move on
  5. Illinois Tool Works (ITW) – ITW has been a great stock for many years.  They acquire companies and integrate them and have earned above average returns.  They recently have had some worse earnings results and maybe it is time to take gains off the table and move on
  6. Comcast (CMCSA) – While Comcast has a hellish reputation, they have been a good stock.  Down a bit and under pressure, maybe it is time to take our gains and move on
  7. Ebay (EBAY) – Ebay was an amazing pioneer.  After the spin off of PayPal (PYPL) which is doing great, they’ve not done super well, and seem far removed from most top-of-mind Internet conversations.  Perhaps it is time to sell off remaining eBay

There are 19 stocks in the portfolio (we bought Exxon Mobil XOM twice at two different purchase prices so we show them separately and it looks like 20 stocks if you count the lines).  They are not all of equal weight – they range from about $1300 to about $4300, but the average ($43k / 19) is a bit over $2000.

If all the above stocks were sold, that would be about 33% of the portfolio.  At that point we could determine how much to keep in cash (perhaps all, or maybe just $10k of it) and how much to re-invest.  These sales would result in gains but they would not be too significant; they are all long term sales and the maximum rate is 15% for long term capital gains (and this only applies to the “gain” portion, which would be relatively small for these stocks).  Would calculate a more exact amount if we were specific on what was being sold.

We executed this plan in August and will determine what to do with the proceeds.

 

Portfolio One Updated February 2018 – And It’s Tax Time

Portfolio One is our longest lived portfolio, at over 16 1/2 years.  The Portfolio began right after 9/11.

The beneficiary has contributed $2000 (net of withdrawals) and the trustee has contributed $16,000 for a total of $18,000.  The current value of the portfolio is $43,441 for a gain of $25,441 or 141%, which is 7.2% / year adjusted for the time value of cash flows.

Portfolio One is the most advanced in that 1) I’ve transferred the account over to the beneficiary 2) I have switched to an “agent” mode where I can still make transactions like buys or sells (and this still benefits from my free commissions) 3) the beneficiary is starting to “draw down” some of the assets from the portfolio in order to fund purchases (capital assets and the like).

Go here for a summary of Portfolio One or click on the link on the right.

There were three sales last year (BOX, KO, TATA) and one purchase (NVDA).  Generally the portfolio has done well, although we (obviously) sold far too earlier on AMZN and MSFT.  The three sales had a net long term gain of $948, which will be subject to capital gain taxes.

It is important to recognize the positive impact of dividends on a portfolio like this – to date it has earned $6894 in dividends and $805 in 2017.  When you just look at stock prices against original purchase cost you miss the significant impact (over time) of dividends.  One of the major purposes of going through all this work on the portfolio is to align dividends with the stocks that drove the dividends, to see total returns.

The portfolio is generally doing OK; like everyone else we had a scare when the stocks went down in early 2018 but they’ve (mostly) come back since then.  In an earlier post we discussed moving some of the funds into cash / gold to reduce overall portfolio risk.  This is still being considered.