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Wow – did my last article really appear on Aug. 28, 2018? Time flies when you’re having fun.

The figures below are as of Dec. 31, 2021. My portfolio is now 83.13% equity, 3.02% S&P 500 index fund (which I will be adding to over time), and 80.11% my 50-stock portfolio, which I’ve provided details on below. I own 4.19% fixed income, which I’d sell during a correction and reinvest into equities. Cash is 12.68%, and ideally I’d like to go “all in” if the price is right. So, theoretically I’d be willing to go 100% equity in the event of a correction.

Why do I buy a stock?

  1. Good company for the long term at an acceptable price (investment)
  2. Good prospects/potential for the future and trading at valuations less than the market thinks (speculation and might not hold forever)

I seldom sell. Sales can be for tax loss harvesting to offset gains, or lock in gains of a speculative or non-core position. Selling is not really advised for a stock that’s “a little” overvalued, or maybe even “modestly” overvalued – especially depending on the type of account it’s in and long-term capital gains.

Mentally, I used to think of my stocks as being in two buckets – my DGI stocks as my dividend growth machine and my outstanding stocks. Think of reason No. 2 why I buy a stock and the Heisman Trophy – it’s not most valuable player, it’s most outstanding player in college football. A funny thing happens when you pick Heisman companies – eventually they can mature and start paying dividends, too. The goal is to be able to live off of dividend income.

There are some risks to my portfolio. The biggest risk anyone can take is improper asset allocation for their risk tolerance/return objectives/sanity. In terms of sectors, I’ve almost entirely avoided energy until very recently. I don’t own any industrials, utilities, or materials, and just started adding REITs. I’m OK with a few concentrated positions over 5% as these grew into tremendous winners.

2021 Changes

Some influences on me in 2021 were a couple books that I liked: 100 Baggers by Christopher Mayer and The Single Best Investment by Lowell Miller. One thing I did differently this year was made more and smaller purchases. For example, let’s say you like a stock but aren’t in love with the valuation. Rather than waiting to add, say, 100 shares at a price you like, you can dollar cost averaging in. This was especially good for some of the SaaS stocks this year.

I’m a little more comfortable paying up for quality and am not as focused on undervalued as I used to be. Let’s say we have a time machine, and Company A is going to provide 10% returns per year but it’s a great company – people know it and it’s currently estimated to be 20% “overvalued” after a recent good run. Company B is undervalued by 20%, but it’s a dud and will never go anywhere. Obviously, you are better off buying Company A for the future, especially if you have a long-term horizon. If you plan on day trading, then, sure, maybe if some catalyst happens you could make a quick 20% on Company B. Picking a winner for the long term is much more important than a snapshot in time right now. 20% overvalued can quickly turn to undervalued when the growth engine kicks in, but junk is junk.

One thing that I believe is highly underrated is the people aspect of business. People look at these earnings/sales/profitability ratios on paper until they are blue in the face. Yes, some folks will look at Glassdoor and pay structure, read up on the CEO/vision, etc. – but most don’t. Look at companies like Spotify (NYSE:SPOT) or Shopify (NYSE:SHOP) that recruit and retain top talent and are highly desired workplaces for employees. It’s worth something to have people who care about the mission, willing to go the extra mile vs. somebody just collecting a paycheck and waiting until 5 p.m.

They are also run by the founder and CEO. One thing that really stuck out to me in the Steve Jobs biography by Walter Isaacson is when Jobs said tech companies should be run by technologists, not MBAs or salespeople. Look at some of the big winners in tech and then look at, say, IBM (NYSE:IBM) over the last decade. Staring at P/E ratios and pounding the table that this or that is expensive is short-sighted. People should realize these numbers can be manipulated, too – channel stuffing, the way depreciation is counted, non-GAAP earnings, etc. Not every company is a widget manufacturer just spitting out widgets from an endless assembly line. You are going to value a young ambitious SaaS company differently than you value a mature company in an industry that doesn’t change much. My point is that people matter and you need to look beyond the numbers.

My 50 Stocks

Apple (AAPL): 17.06%. Does anybody remember Jason Schwartz pounding the table on Apple on Seeking Alpha 10 years ago? This stock has been a tremendous winner and it’s been my No. 1 holding for quite some time. I’ve kept a core position, but have sold some and added some over the last decade. Even at $3 trillion this company could still have an exciting future ahead and return a lot of capital in the form of dividends along the way.

Microsoft (MSFT): 10.3%. Bought during the Balmer days, this has been a 10-bagger and I’ve never sold a share. David Einhorn was pounding the table on this one a decade ago. The truth is that Azure has contributed to the outsized returns, but this is like a tech fund with all five cylinders firing.

Alphabet (GOOG) (NASDAQ:GOOGL): 7.54%. The growth/earnings are insane; this stock doesn’t even look expensive. YouTube is underrated and they even have very smart people working on other bets. The company is unique in that the biggest threats aren’t the competitors, it’s the internal policies – “do no evil” – and regulation. In some ways, Google has more power than the government. I’m very fortunate that my top three holdings have been tremendous winners.

Meta (FB): 4.38%. Much of this position was built in 2017 and 2018. The stock isn’t even expensive now when you factor in earnings, growth, and potential. FB has made smart decisions in the past and there is plenty of opportunity to grow. Never bet against Americans being in love with themselves and wanting to show it off to their circle.

Novo Nordisk (NVO): 3.3%. Globalization is Americanization, and in my opinion we are exporting obesity to the world. Obesity leads to diabetes – Novo Nordisk counters that with Semaglutide and other drugs. There’s a pill rather than finger prick that has a chance to be the largest blockbuster drug of all time. I’ve owned this stock since 2016 in the $40s and doubling down in the $30s, and it’s been a tremendous winner over the last year. This is the best company in Denmark and thematically I like the play on an aging developed world.

Johnson & Johnson (JNJ): 2.33%. This is basically a healthcare fund that I’ve owned for around 15 years. Earnings go up and to the right, dividends are paid and increased every year. It’s a long-time favorite of the David Fish CCC crowd.

Diageo (DEO): 2.2%. Bought during Brexit with peak media fear/hype in 2016. This is one I added to in March 2020 during the COVID sell-off for a steal of a deal around $100 per share. The timing has been impeccable and it made touring the Guinness factory in Dublin that much more fun.

Visa (V): 2.17%. My first purchase was in 2018 at $124.52 per share and it’s made it easier to add as the stock goes up and earnings go up. I’ve added a good amount to this stock in 2021, as I like this stock from a risk-adjusted perspective as the move away from cash continues. A lot of Europe, especially Central Europe, still uses cash. This ECB article says 80% of point of sales transactions are still in cash, and over 50% of transaction value. That’s in Europe; anecdotally, I’d say it’s higher in FSB countries. There are competitive risks, regulatory risks, crypto risks – but I think there’s still plenty of money to be made here. It has 79.4% gross margins as they print money. The dividend growth is also not going unnoticed.

Nestle (OTCPK:NSRGY): 1.94%. A long-term hold of this equity bond will come in handy if and when we have another downturn.

Pepsi (PEP): 1.94%. Rounding out the top 10 is another DGI dream stock. I’m glad that years ago I allocated more to Pepsi over Coke.

Starbucks (SBUX): 1.87%. This is a future DGI champion that was on sale for ~$50 per share in mid-2018. This company is the McDonald’s of the 21st century.

Roche (OTCQX:RHHBY): 1.55%. This is a world class healthcare company from Switzerland. It plays into the aging developed world theme that I like.

Oneok (OKE): 1.53%. I first started my position in the MLP about 15 years ago. If you add up all the dividends/distributions, it probably totals my initial investment. I love the more than 6% yield. For the longest time this was my only energy holding. It’s probably not a bad price right now, but it sometimes goes on extreme sale more than it should.

Walgreens Boots Alliance (WBA): 1.51%. This is a dividend champion that a lot of people don’t like. It’s cheap right now and I believe that this company has a future. It will adapt and we don’t know what it will look like, but there’s a lot of potential for change leading to success.

Walmart (WMT)1.45%. This was a January 2016 purchase as it was a Dog of the Dow as people got scared they would get “Amazon’d.” They are the largest grocery store in America and have been quietly increasing their online game. This “dog” is up ~130% in stock appreciation plus dividends.

Exxon Mobil (XOM): 1.45%. Seven years ago I penned an article on Seeking Alpha saying that we wouldn’t have $100 oil again for 10 years, maybe forever. In September 2010, when oil was almost $80 per barrel, I was calling for $20-$40. Hindsight is 20/20 and you should read the comments as people thought I was crazy. Do you remember all the arguments against?

  1. Peak oil – we’re running out, all of our wells are depleting, and we aren’t finding new ones to replace.
  2. China is adding 10,000 cars per day, demand will skyrocket.
  3. The breakeven price is X, so we can’t ever go below X (X was usually whatever guess the poster wanted to make it).

Now, when you look at a lot of the current articles you see that the pendulum has swung the other direction. Joe Public is very bearish on oil, we won’t need it anymore in X number of years, etc. because of electric cars. But the peak oil people aren’t quite dead just yet, so it makes entertaining arguments. The one thing I’ll point out is that oil is a religion as people have deeply held beliefs about it, especially the peak oil crowd.

I’ve avoided this sector for a long time, thankfully, but now Exxon’s market cap is $269 billion. Remember that at one point in time it was bigger than the large-cap tech stocks that are all valued in the trillions. In 2012, Exxon was No. 2 in the S&P 500 valued at a $405 billion market cap, larger than Microsoft’s $269 billion, Google’s $210 billion or Amazon’s $93 billion, and only trailed leader Apple by $163 billion. Boy have times changed for the peak oil zealots. Energy makes up less than 3% of the S&P 500 and tech is 35%. Exxon produces ~3% of the world’s oil and 2% of its energy, and has a market cap smaller than Disney and similar to Salesforce.com. They have cut costs, are paying down debt quickly and still pay a 5.36% dividend.

McDonald’s (MCD): 1.34%. This is the greatest restaurant of all time. I didn’t say the best food, but the greatest restaurant and an American icon. I started a position years ago at ~$90 per share when it was out of favor, but the changes have been good and dividends great.

Amazon (AMZN): 1.34%. I initiated a position in 2021, so I’m very late to the party. The earnings are explosive thanks to AWS. People say they’d pay more for a mom-and-pop shop, but that’s mostly all talk as the buying online trend will continue. Ads are huge – running a search for something is one thing, but searching right in their marketplace with a half-full cart is another thing. Amazon continues to do enter new markets and grow capital, but at some point they will probably split and pay dividends.

JPMorgan (JPM): 1.27%. If they report $2.98 next quarter that will be $15 for 2021 (for a stock trading at ~$160). Earnings growth has been impressive and consumers tend to like the brand. There are possibilities for significant cost savings in terms of back office, and additional expansion in terms of investment banking and wealth management.

ServiceNow (NOW): 1.16%. This is a stock I first purchased at the end of 2019 at $284 per share and I’ve slowly but surely been adding to it. They dominate the ITSM space and have a very sticky SaaS product with insane renewal rates. The Street likes predictable revenue, likes growth, and likes SaaS.

Coca-Cola (KO): 1.07%. This company hasn’t had good management in 20-plus years. Coke was the original energy drink, but soda has lost importance to energy drinks and coffee. If they had somebody a little bit different in charge, they could have bought Monster (MNST) – the No. 1 stock of the 21st century – Red Bull, or Starbucks in the 90s instead of Costa Coffee decades later. This stock has been an alpha detracting equity bond. I don’t buy into the narrative that they are too big to grow – look at Apple, Google, or Amazon and their size as proof. Why limit your thinking? Coke got way too political, in my opinion, and that’s often a mark of desperation. The QB didn’t get political when his stacked team led by their defense went to the Super Bowl, he got political when they lost talent, defenses adjusted to the read option, and he was about to lose his job. The parallels are similar here with a decrease in demand, sugar taxes, and political crosshairs on the sugar water company in the face of high obesity rates.

British American Tobacco (BTI): 1.02%. I sold some at the end of 2021 for tax loss harvesting, but I plan on adding to this position in early 2022. I love the dividend and still think big tobacco with their vaping/expertise/distribution might be the biggest winner of the marijuana trade long term.

Mondelez (MDLZ): 1%. This stock isn’t as popular as some other staples, but I like their consistent earnings growth and I like Milka chocolate.

Philip Morris (PM): .95%. I’ve owned this dividend stock for ~5-7 years and probably recouped about half of what I paid for it in dividends.

Gilead (GILD): .87%. I’ve owned this for about 5 years. It’s been a value trap, but I actually added to this position in 2021. The past is the past, only look to the future – I’m cautiously optimistic things could finally be turning around. If you are ever going to be “wrong” about a stock, and get bit with a value trap, at least it’s paid out ~4% a year for all of those years of underperformance.

Vanguard Real Estate Index: (VNQ) .7%. This stock offers cheap exposure to the REIT sector.

Wells Fargo (WFC): .65%. I bought this at a bad time – it’s been a rough handful of years. But the good news is the stock is not expensive right now.

McCormick & Company (MKC): .58%. I finally bought this long-time watchlist DGI stock in 2021. There’s everything to like about the business and stock.

Molson Coors Beverage (TAP): .56%. I initially bought this in mid-2020 for under $40 per share and added in December 2021. It has a $10 billion market cap, and keep in mind most companies with that kind of market cap you’ve never even heard of. This stock is cheap and this was a valuation/American brand buy. Craft beer has hit this sector hard, but I see them making it through this and adapting. You are also paid almost 3% to wait.

Tenable (TENB): .56%. I bought this at the end of 2019 and added last year. Cybersecurity is a massive initiative for CIOs right now, especially after the May 12, 2021, White House executive order. Tenable has a good product that people like and doesn’t trade at valuations some other IT companies trade at. Their earnings went positive in Q2 2020, which puts it on the radar of fund managers who can only buy companies with positive earnings.

Beckton, Dickenson (BDX): .5%. I purchased this at the end of 2021. This stock was on my watch list for a while, but I was reminded it was at an acceptable price due to an article that recommended a price at $250 or below.

Matterport (MTTR): .41%. This is a very interesting company with interesting technology that can transform many markets. I opened up a core position under $14 under the old SPAC ticker symbol. I bought a satellite position on the way up and sold it for a quick 60% gain. This stock is starting to receive a lot of hype and moves wildly; it might be a good stock to trade the swings and keep a core. Their technology has many possibilities; call me crazy, but I have a feeling about this company – the same feeling I’ve had before with Tesla, Square, and Apple. The story will end one day when they are bought out for a fat premium by Google, Facebook, or Apple and their capabilities added to their existing maps/technology.

Naspers (OTCPK:NPSNY): .4%. This is a cheaper way to buy into Tencent (OTCPK:TCEHY), which dominates the most populous country on earth. Tencent is the largest gaming company in the world and has the “do everything” WeChat app. This is like owning a tech fund, and the interesting thing is Naspers made a fantastic bet on Tencent about 20 years ago. It also appears that Tencent is cheaper than their American large-cap tech peers, but it isn’t without risk.

Porsche (OTCPK:POAHY): .38%. Porsche owns over half of Volkswagen so you are buying brands like Porsche, Volkswagen, Audi, Lamborghini, Bentley, Ducati, and others. When you add it all up, they sell more cars than anybody else in the world. The automobile industry has been going through great change and it will continue to do so. So who is going to win the race for the future? Tesla is off to a great start, but I wouldn’t discount the competition. The ID.3 is real and the ID.4 is under $35,000 when you factor in potential tax credits. You are getting decades of experience, German engineering, and let’s say a 2.5% dividend. Buyers are also happy to pay a premium for Porsche cars. This can all be had for 1/35th the price of Elon’s company. Remember, this race isn’t winner take all – there’s enough room for multiple car companies to win.

Coupa (COUP): .32%. I made two buys in 2021 for this stock and I’m underwater so far. I like their product after personally using it, and I believe this market leader with a $11 billion market cap has an opportunity to get much bigger.

Abbott Labs (ABT): .31%. I’ve owned this stock pre-spin-off for a long time with solid returns.

Abbvie (ABBV): .3%. I owned this one for 10 years and probably should have added along the way. If I had to add to one of the others, I’d probably add to Abbvie even with Humira coming up against biosimilar competition. Humira was the No. 1 drug of 2021 with ~$20 billion in sales.

Shopify: .28%. Bought a starter position under $1,250 in 2021. If it goes down I can always add more, call it FOMO. Relatively speaking, buying/selling online is still in its infancy. Shopify is also a play on small business/entrepreneurship. One thing pointed out to me from somebody in the industry is that Shopify recruits and retains the best talent. You could look at metrics until you are blue in the face, but people matter. Would you rather have Bill Belichick coaching your football team or some average coach?

Kraft Heinz (KHC): .27%. I’ve owned this stock for 10+ years. It’s been an underperformer that produces income; Mondelez has been good, but I added a little before the big drop. The people running/owning this company do business very differently, and that offers the opportunity for much larger (and smaller) returns. Cutting costs down to the bone with the belief that the customer will always be there for their brands hasn’t worked out. If COVID didn’t happen this company would have been in even more trouble with the debt anchor weighing them down.

Prosus (OTCPK:PROSY): .23%. The Naspers writeup above is the same for this position, as I consider this part of the same position.

Crowdstrike (CRWD): .2%. I almost bought this one in 2019, and finally went long at $182 in 2021. It has 73.8% gross margins and, depending on what’s reported next quarter, over 100% growth – and next year it’s projected to go up even more. If this stock sold off I’d add to my position.

The Trade Desk (TTD): .18%. I added a starter position in 2021 at a split-adjusted $64.8 per share. I’d like to grow this into a full position.

Empire State Realty Trust (ESRT): .18%. They say “buy when there is blood in the streets,” but what about “buy when the buildings are empty”? They own some of the top commercial real estate in the country and also the world. Sure, maybe that office building in Madison Wis., will be empty, but not that office building in downtown Manhattan. Manhattan is different, D.C. is different. When COVID ends there’s going to be a tourism boom and people from all around the world are going to line up as far as the eye can see to pay $44 to $77 dollars to be on the observatory deck of the Empire State Building. Not long ago this was a $20 stock. If there weren’t risks this stock wouldn’t have gone down 50%-plus – you want to buy umbrellas during sunshine, not rain.

Block (SQ): .16%. I wish I bought this stock a long time ago. I started a position in 2021 and am currently underwater. There are a lot of exciting possibilities with their technology, a tech that the users like very much. Playing the long game, they pose a threat to banks/credit card processors.

Docusign (DOCU): .15%. We aren’t going back to pen and paper and the drop was too much. I finally took this off my watch list and bought in after the December sale.

Schlumberger (SLB): .15%. They are the leader in oilfield services and they basically trade at the same price they did in 1997, ~25 years ago.

Spotify: .14%. This is a position I just started and I plan on adding too. Not sure I bought at the best price, but I plan on dollar cost averaging in as they have the opportunity to potentially increase your money by 5x.

Alibaba (BABA): .12%. I had a slightly bigger stake in this one, but did some tax loss harvesting to offset gains. I plan on buying back what I sold in early 2022. There certainly are risks, but for the money it’s worth the risk, in my opinion.

Teva Pharmaceuticals (TEVA): .06%. This has been an underperformer that’s probably undervalued now. Broke governments will probably go to generics for the masses.

MultiChoice Group ADR (OTCPK:MCHOY): .01%. This is the result of a spin-off from Naspers.

As already mentioned, I’ve been making more frequent and smaller DCA purchases than in the past. There’s nothing I plan on immediately buying, but some of the next buys could be BTI and BABA from tax loss harvesting, and then adding to existing tech stocks and oil. I also have auto buys of the S&P 500 index.

Thank you for reading – I look forward to engaging with you in the comments section.

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