Portfolio review (july 15th, 2024)

THE GREAT PENETRATOR IS BACK!

I'm back with a portfolio review because I'm now fucking rich and I want you to know it, you poor people looking for a guru. 

Getting an extra 100K$ is now a child's play and I can achieve that within a few months, as long as the market is in a manic phase. When it will be on a depressive phase, I guess I'll be able to get as easily a negative 100K or 200K. But a good peddler doesn't talk about the negative side of things. So, let's assume that my portfolio will only go up forever. 

Over the last 8 months, I made as much money as I made money between february 2013 and april 2017. That's how crazy it goes with time with your portfolio if you don't gamble too much on ridiculous stocks. Getting the equivalent of a year of income on the stock market in less than a year? Yes, it's possible, but only when you'll be older and afflicted with diabetes or cataracts or something else. 

Anyway, the S&P500 is at an all-time high. It's probably not the right time to buy stocks. My favorite time to buy stocks is when they're all down because I feel like I can't go wrong. Even if some great stocks of the recent years are at their lowest level of the last year (Five Below, Lululemon, Ulta Beauty, Estée Lauder), I'd prefer to wait for a better entry point because even stocks that lost 50% of their value can go lower. So, my advice would be to get some money ready for a drop of the market (which may still take some time but will eventually come). 

Anyway, here's my portfolio:

Number of stocks: 18

Top 3 positions:

Constellation Software: 15.8%

Google: 12.1%

Microsoft: 9.1%

Cash position: 12,3%

Performance in 2024: 16%

Performance of S&P500: 19%

Metastasis

I recently saw my oldest friend. We first met when he was a baby because we were neighbours back then. 

Over the last 20 years, I haven't seen him a lot. Maybe 5 times. He lives only a few kilometers away from where I live but he had other priorites: he wanted to make money. So he worked a lot. And he bought a big house which he sold, making enough profit to buy a bigger house. And he bought a nice car. And he dated a beautiful blonde girl and had two beautiful daughters. And he traveled in luxurious places. 

He never invited me at his place because I suppose that he didn't want to spend some money on a dinner. 

Last weekend I saw him for the first time in 8 years. He looked good. But he told me that he just had a big cancer. He had a big surgery and a big chemotherapy treatment. The kind of treatment that could kill someone over 50 years old. Also, he was single. 

Was it funny? Was it sad? Was it a tragedy? Was it a comedy? Even though he probably enjoyed life over the last 20 years, I thought about his search for continual profit. He let me down but I don't think that he let down his pleasure. But I know that he didn't have any real friend. Is it so important to have real friends? I don't know. But anyway, I wondered what was the use for money when you have metastasis? Get a comfortable death? His life represented the "ideal life" for many people. But it was artificial. Too clean and beautiful to be true. And now, the house of cards has fallen down. 

I'm a bit shocked by the last lines. I shouldn't write that. But that's what I thought for the last 20 years. Whatever. Even if I wasn't probably very important for him over the last 20 years, I'll try to be more present for his last few years.  

Discipline

It's my birthday. Today, I'm 45 years old. 

Until last year, every year, on my birthday, I used to write a post titled "Discipline" which was about the growth of my portfolio, year after year, to show how discipline and good investments can make a difference over time. 

Last year, many things changed and some unfortunate events made me much less interested in this blog. That's why I didn't write my "Discipline" post. I decided to focus on my problems and let them make me feel miserable.

But, once you condition yourself to be a bit superficial, you realize that not everything is dark and gloomy. At least, I own a very nice portfolio. 

As seen below, here's my porfolio from may 2009 to may 2024 (I started to invest on the stock market during the fall of 2008). Year after year, I saved a big part of my earnings and I bought stocks as much as I could with these savings. 

It helped my porfolio a lot. Because the numbers below show the absolute increase of my portfolio, year after year. In other words, it represents an hybrid growth: increase of the price of my shares and savings added to the portfolio. Usually, people talk only about their portfolio performance but I like to show how things can turn with a mix of discipline (savings) and investing without doing too much big mistakes.

In my case, from may 2009 to may 2024, I managed to get an annual increase of 30%, which is huge. Of course, this performance will surely tend to drop as my savings count for less and less of the total value of my portfolio.

I often wonder how long I will last as a worker or an active citizen. I don't know clearly how things would turn financially if I retired now. But I know that my portfolio is my biggest support in this life. 

I wish much more people would start to invest much earlier and don't feel prisoner of their job for most of their life. 

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 unhappy 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)