The 11 stocks for 10 years portfolio continues to do very well. It consists of stocks I would be comfortable putting away for 10 years. I look for companies with a history of large positive cash flow, that seemed likely to continue that trend.
In fact it is doing so well I am a bit worried about the valuation of some of the stocks. Or, in the case of Apple, I was heavily weighted in it and it has risen so much that, combining those two factors, it is now 20% of the portfolio. That seems excessive, so while I still like Apple – at these prices, I will sell a bit of that position.
Since April of 2005 the portfolio Marketocracy calculated annualized rate or return is 8.75% (the S&P 500 annualized return for the period is 8.55%). Marketocracy subtracts the equivalent of 2% of assets annually to simulate management fees – as though the portfolio were a mutual fund. Without that fee the return beats the S&P 500 annual return by about 220 basis points annually (10.75% to 7.55%). I also often have a bit held in cash, 5% now, for example which lowers the return.
Since the last update I have added to the Abbvie position (part of the former Abbot which was split into two companies in 2013) and sold off Tesco. I will sell TDF from the fund (I include it in the table below, since I haven’t sold it all yet, I am waiting to get a bit better price).
The current stocks, in order of return:
|Stock||Current Return||% of sleep well portfolio now||% of the portfolio if I were buying today|
|Amazon – AMZN||556%||8%||8%|
|Google – GOOG||*||18%||15%|
|Apple – AAPL||131%||20%||16%|
|Danaher – DHR||126%||9%||9%|
|Templeton Dragon Fund – TDF||120%||2%||0%|
|PetroChina – PTR||88%||4%||4%|
|Intel – INTC||78%||8%||8%|
|Toyota – TM||65%||8%||12%|
|Abbvie – ABBV||43%||5%||7%|
|Cisco – CSCO||31%||4%||4%|
|Templeton Emerging Market Fund – EMF||29%***||5%||7%|
|Pfizer – PFE||25%||5%||5%|
The current marketocracy results can be seen on the Sleep Well marketocracy portfolio page.
I make some adjustments to the stock holdings over time (selling of buying a bit of the stocks depending on large price movements – this rebalances and also lets me sell a bit if I think things are getting highly priced. So I have sold some Amazon and Google as they have increased greatly. These purchases and sales are fairly small (resulting in a annual turnover rate under 2%).
While I am very positive on the companies that I have set the largest holdings for I am less strongly positive on the rest of the stocks (compared the the top stocks now, and compared to the rest of the stocks 5 years ago). This is the reason for a much more unbalanced position size than at the beginning.
I still really like Apple, though it is not as much of a “screaming buy” as it was a year or two ago. In many ways Toyota is the best looking stock at the current price and given current earnings. Their long term potential though seems more limited than several of the others.
As has been the case for years, if I had better candidates in the 2nd tier I would likely reduce the Amazon position size (and maybe eliminate PetroChina). I will consider adding to Rayonier (RYN) if I sell enough other assets.
I will also move GOOG to GOOGL (it will mess up the individual returns from GOOGL, but they are already messed up so it doesn’t matter in that way). GOOG is the 3rd class stock that Google has issued. GOOGL is the 2nd class stock (that was what GOOG was until they changed things in 2014). GOOG no longer has any voting rights. While GOOGL has 1/10 the voting rights the shares Larry Page and Sergey Brin have. Even though Google has over $60 billion in cash they wanted to keep issuing lots of stock (Google has been doing so and diluting shareholders for years). That dilution threatened to dilute things so much that Larry and Sergey didn’t control over 50% of the votes. Instead of stopping the dilution they chose to create a 3rd class of stock. This is lame, but in other ways Google remains a good investment (including that so few good investments are left given the huge pumping of financial assets by central banks).
I own fairly small amounts of several other stocks in the portfolio (that are included in the marketocracy return). I only have: RYN (will move over 1% will purchase today) and USG (less than of portfolio 1%).
As to investing in this climate in general I also believe in moving to some high yielding (and dividend growth) stocks (stocks like: ABBV, IRT, OKS, RYN, MHLD, SFTY, COP, PFE). Other than ABBV and PFE they are not part of this portfolio, however. Intel would be included but its yield has fallen so far due to stock price gains.
* Marketocracy seems to have messed up the returns for Google (probably due to the split); this is sad as their purpose for me is to calculate returns, but my guess is between 350-400%
** The Marketocracy platform didn’t include Tesco, the return would be a bit lower if Tesco was included, I am not sure what it would be but maybe 20 basis points lower.
*** I am very skeptical that EMF returns reported by Marketocracy are accurate. I think they are failing to account for some or all dividend returns.