My investment philosophy

Being an investor for about 16 years (I began during the fall of 2008, in the middle of what was then perceived as the apocalypse), I now trust my judgment more than anything else. 

Here's a bit of my investment philosophy achieved after these years made of hope and despair. 

1- Read as many things and analyze as many stocks as you can to reach as soon as possible the point where you trust your judgment more than any other source of information;

2- Don't trust other investors, don't trust fund managers, don't trust websites except if you triangulate the information by searching many other websites;

3- Invest only in companies that make money and more money year after year (look for stocks where earnings double every 5 years... for instance, between 2013 and 2018, then between 2015 and 2020, and so on...);

4- Invest only in companies where margins are high and ROE is high (if you find a company where margins and ROE are above 20 year after year, you've found a company that is among the 1% of best stocks... however, these stocks are usually pricey);

5- Don't get blinded by investing and money. It's only a tool to reach independance. You'll die and your money won't be useful anymore sooner or later. Also, there is no god, no heaven, no future. So, enjoy life while you're able to enjoy it. Once you're rich, if you're able to help poor people once in a while by buying them food at the grocery store, do it to prove to yourself that you haven't lost your humanity.

6- Look for simple people who don't care too much about money and don't put too much emphasis on investment. These people are more fun. Think about money only when you're alone with your computer and your Excel spreadsheet. Use your money to buy things that make you happy. Do it from 40 years old until the end of your life;

7- Never, ever forget that life brings many unhappy times and experiences and live your life without waiting for these times to happen. Your portfolio is a tool to be secure and have fun before getting cancer or seeing everyone around you die, one after the other. 

Three stocks I regret (having sold them or never bought them)

I made a lot of mistakes and I have a few regrets concerning my investing journey over the last 15 years.

My main mistake has been to follow others by investing in stocks that didn't seem so good to me. But the conviction of others may make you lose your critical thinking. When you begin, it's very hard to be independant and don't be influenced by other's opinion, especially, the so-called experts (by the way, I now think that there's probably no experts in the investment world)

These last years, I haven't made big mistakes if I define a mistake as investing on a bad company or losing a lot of money with a bad decision. But there are a few stocks that were very good occasions that I missed because I thought the risk was too high while it wasn't. 

These three stocks were blue chips: super solid stocks with high margins and high ROE. They were all available at a very good price (between 10 and 15 times their earnings) in the last few years. Since, they all came back to a "normal" price for such high quality stocks (PE of 25-30).

These three stocks were Apple (AAPL), Netflix (NFLX) and Meta (META). 

Lesson learned: when a stock with margins over 20% and ROE over 20% is sold for under 15 times it's earnings, the chances that it would be a good investment are high. 

I don't think that betting 50% of your portfolio on one of these stocks would be a good idea (like Buffett who invested 50% of Berkshire Hathaway's money on Apple) but 2-3% on one of them should be a no-brainer if they ever go back to such ridiculous price. 

Penetrator's portfolio performance in 2023

Yes indeed, 2023 is already over: A year full of fun, sadness, despair, hope, shit, travels and many more. A year full of mixed emotions and my lowest contribution to this site since I don't know when. Maybe I should just take a look at the right bar of the menu of my blog to know since when. 

For my portfolio, it's been the best year ever. The portfolio is up 45%.  

The S&P did exaclty half of that: 22,4%. 

When you own a considerable portfolio, that kind of performance makes a huge difference. 

However, during the last days, I reduced some positions because the stock market is at an all-time high and experience has told me that it's always wise to have a lot of cash left when the market is high. 

It may take 2, 6 or 9 months, but the stock market will go down by at least 10% sooner or later and many stocks wil go down even more than that during that period because the same news don't have the same effect on every stock.

And it's always during these periods that it's time to buy stocks. You can go wrong when you buy a specific stock that goes down but you can't go wrong when your favorite stock goes down along with the market. 

So, I'll start 2024 with a cash position of 8.8% of my total portfolio. That's not super high but that's gonna be enough to benefit from what god will offer me. Yes, god, the non-existent creature that lives nowhere. 

Penetrator: Absent but performing. 

Picks for 2024

Of course, this blog has been let down in 2023. But, I'm still there even if many people are probably gone. It's OK, I didn't know them anyway. 

What are your picks for 2024?

Limit of 5 picks per person, please! 

I'll go with 5 stocks I own because I don't see why I should recommend stocks that are not good enough for me:

1- Parker Hannifin (PH)

2- Microsoft (MSFT)

3- Google (GOOG)

4- Constellation Software (CSU.TO)

5- Stella Jones (SJ.TO)

Glamour and anxiety

As a blogger, this year has probably been my laziest year. I feel that inspiration will be back one day or another but, so far, I feel like I don't have anything to say. 

2023 has been a very good year on the investment level. My portfolio's performance has been so far almost 150% superior to the performance of S&P500. But the year isn't over yet and anything could happen. 

This year, I've diversified my portfolio. I used to own a lot of big positions in big tech names (Amazon, Alphabet, Meta, Microsoft..) but I felt that it became too concentrated on a single sector so I bought some other kind of companies like Grainger and Parker Hannifin, both great companies in the industrial sector. And I feel like it's been a good idea because these new stocks did well and made my portfolio more balanced. 

I've reached a very important milestone in november with my portfolio. That level was for me the official "anything could happen now, I'd be safe financially".  And now, I feel like all my earnings related to my job can be spent because saving them doesn't make a big difference. 

To manage to get there, I have to declare that I drive the same car since 2010. Very little glamour but very little financial anxiety too. 

Dollar General (DG)

I've recently become interested by Dollar General. The stock has dropped a lot after mixed results. As it looks, Dollar General shouldn't grow that much this year and investors don't like that. 

The stock went from about 250$ one year ago to about 125$ these days. And the PE ratio is currently about 15 which is low for such a defensive industry (immuned to recessions). 

All the dollar stores are usually sold for a PE of 20-25 and even above (Five Below is much more expensive). That's mostly why I chosed to buy some shares of Dollar General. Of course, buying a lot of shares for a significant portion of a portfolio is rarely a good idea with a new stock, but with 2-3% of my portfolio, I think that it's a rational stake for a very strong and defensive stock.

However, the debt level is a little high. But who cares. We'll all die someday and that kind of information won't matter anymore at this fatal moment. 

  

Tatoos

I've always hated tatoos. They are usually disgusting and they represent the fall of our western civilization. It's a tragedy to me to see so many people with tatoos everywhere I go. How could all these people think that tatoos make them more attractive? Just like how would a fucking ketchup stain on your clothes would make them more beautiful?  

What's more disgusting than someone with tatoos on their hands or on their face? Even small tatoos on the arms or the legs are ugly. It has absolutely no purpose. 

But we've been so exposed to tatoos that we're desensitized. Just like a lot of other things in life: a long exposition to something, as immoral or ugly as it is becomes normality.

It's like all these nonsense stocks with PE ratio over 100. It seems that every decade has it's nonsense stocks that are the new normal. It's been Microsoft or Cisco in the late 1990's. Then, it's been Marijuana stocks about 6-7 years ago. Then, it's been some tech stocks again in the last couple of years (Shopify, The Trade Desk, Sea limited...). 

When something looks strange or ugly, even if we're exposed a lot to it, it still remains strange and ugly. Sadly, our human condition makes us very weak and easy to influence. 

So, I bet that the next "new normal stocks" will convince a lot of us (maybe me included) that their valuation shouldn't be compared to all the other stocks on the stock market.