My conglomerate

To be a not-boring (or interesting) person, you need balance.

You need to listen to nothing at all in the Grand Canyon but you also need to put some Def Leppard really loud in your car to impress people around. You need to fuck. You need to be fucked in the ass. You need to eat carrots, you need to take LSD and write songs. You need the yin you need the yang. 

But balance is also important for a portfolio.  

First of all, I really like to see my portfolio as a conglomerate. Like "one super stock", or my own Berkshire Hathaway.

I often try to raise some numbers as much as possible (ROE, predictability, EPS growth over the last 5 years… and while I don't put that much emphasis on it, I prefer to buy some stock at 100$/share than some stock at 8$/share) and reduce some numbers as much as possible (PE ratio and beta). It's a question of balance. If I own a high PE stock, it has to have at least a low beta and a high predictability. In other words, a stock has to bring something to the balance of my portfolio, otherwise, I don't buy it.

With that angle, we see things differently. We focus on 5 or 6 very important variables and, mostly, the balance between things. It's not perfect but way better than a reflex like: Oh my god, Shopify is down 20% today, I should buy it because everybody talks about it!

That delicate balance is now very important to me. Such as maximum/minimum percentage for stocks. For instance, I really like Enghouse Systems, but at about 30-35 times next year's earnings, I don't see how it could be more than a 3-4% position. And while Mohawk Industries is selling for a lower PE ratio than ever, I don't see it being more than a 4-5% position because of it's cyclical nature. And while I really love Constellation Software, I never let it go above a 7-8% stake of my global portfolio.

I'm not in love with any of my stocks (those who are should buy a dog: the only real love) but I really like how my portfolio is balanced. It's the fruit of many years of practice and it has all the characteristics I'm looking for. I invite you to do the same exercie as me and share the results in the comment section:

So, on the 25th of july 2018:

Average price of shares: 178$

Average ROE: 33

Average forward PE ratio: 19,5

Average Beta: 0,65

Average predictability of the portfolio (you need an access to Value Line for that one): 85%

Average EPS growth over the last 5 years: 35%

Average performance of my portfolio  since the beginning of the year: 9%

Performance of the TSX/S&P500 since the beginning of the year: 0%

If I'd saw a stock selling for 178$, that has a ROE of 33, a FWD PE of 19,5, a Beta of 0,65, a predictability of 85% and an EPS growth of 35% over the last 5 years, I'd surely buy it. If I wouldn't buy it, I'd make some adjustement to get some metrics with which I'm more comfortable.