The Millennial Portfolio: Longer Than Long Term?

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Includes: ABBV, ADRNY, AES, AIA, BAC, FB, FDP, GIS, GOOGL, HEINY, HRL, IEXXF, INTL, LMNR, MSFT, NEE, NVDA, PFE, TAN, TOT, TSN, VTR, VWDRY, WELL
by: The Millennial Investor

Summary

I have been working on my Millennial Portfolio for almost two years and have picked out 22 stocks so far.

The portfolio is growth-oriented but also contains safer, low-growth stocks because I fear a bear market.

Tech companies make up for 30% of the portfolio because they provide high growth rates.

My first article came out on the 26th of March. Since then, I have published a total of 11 articles, covering 8 different stocks. As I have stated in my profile, my goal is to inform millennial investors. It would take a long time to cover every stock I hold in my long-term investment portfolio. Therefore, I decided to do a review of my millennial portfolio. The goal of this article is to quickly add new stocks to the watchlists of investors with a long-term investment horizon.

Why am I writing on Seeking Alpha?

Even though I only started writing in late March, I have been reading Seeking Alpha for almost two years. I found out that there are a lot of writers who focus on retirement portfolios. I have been looking for articles that target younger investors, but I did not find a lot of them. I decided to fill this gap myself, having the following teacher's saying in mind:

Please ask your questions because your students probably have the same problems, but are afraid to ask about them.

Who am I?

I am a Dutch student at the Erasmus University Rotterdam. I am doing a bachelor in Economics, Fiscal Economics and Law. Because I am Dutch, I invest in euros. In my articles, I will try to mention numbers as much in USD as possible, because most readers live in the United States. Even though I always double check my articles, I still make grammatical mistakes. I would kindly ask you to point those mistakes out. I will learn a lot from them.

My portfolio

My profile name probably gives away my portfolio theme, which is long-term investments. I try to only buy stocks which are growth-oriented, but because we have had a bull market for the last couple of years, I am starting to shift more to safe investments. Since I have a long time horizon, I try to keep as little cash as possible. I use the money I earn from tutoring high school students to fuel my portfolio. You can see my portfolio below.

Company/ETF Amount of stocks Price Local value Value in EUR Section
CASH & CASH FUND (EUR) EUR 43.61 43.61
ABBVIE (ABBV) 2. 95.61 USD 191.22 163.86 Pharma
AHOLD DELHAIZE (OTCQX:ADRNY) 10. 21.01 EUR 210.05 210.05 Retail
ALPHABET (GOOGL) 1. 1,201.26 USD 1,201.26 1,029.36 Tech
BANK OF AMERICA (BAC) 9. 28.77 USD 258.93 221.88 Financial
FRESH DEL MONTE (FDP) 5. 44.35 USD 221.75 190.02 Food/Farmland
GENERAL MILLS (GIS) 4. 44.58 USD 178.32 152.80 Consumer
HEINEKEN (OTCQX:HEINY) 1. 89.56 EUR 89.56 89.56 Alcohol
HORMEL (HRL) 6. 37.56 USD 225.36 193.11 Consumer
INTEL CORPORATION (INTC) 7. 52.35 USD 366.45 314.01 Tech
INVESCO SOLAR (TAN) 8. 23.49 USD 187.92 161.03 Renewable
ISHARES ASIA 50 (AIA) 6. 62.28 USD 373.68 320.21 Emerging
ISHARES EURO STOXX BANKS (OTC:IEXXF) 21. 11.08 EUR 232.68 232.68 Financial
LIMONEIRA CO (LMNR) 9. 25.28 USD 227.52 194.96 Food/Farmland
MICROSOFT CORPORATION (MSFT) 4. 104.19 USD 416.76 357.12 Tech
NEXTERA ENERGY (NEE) 2. 168.49 USD 336.98 288.76 Utility
PFIZER (PFE) 6. 37.52 USD 225.12 192.91 Pharma
SUNPOWER (SPWR) 41. 7.97 USD 326.77 280.01 Renewable
THE AES CORPORATION (AES) 12. 13.10 USD 157.20 134.70 Utility
TYSON Food/Farmland (TSN) 3. 65.96 USD 197.88 169.56 Food/Farmland
VENTAS (VTR) 3. 58.40 USD 175.20 150.13 REIT
VESTAS WIND (OTCPK:VWDRY) 7. 390.50 DKK 2,733.50 366.56 Renewable
WELLTOWER (WELL) 3. 63.16 USD 189.48 162.37 REIT
Total amount of stocks: 22 5,575.64

Source: Author's created table.

As you can see, I hold stocks in both the United States and Europe. However, most of my money is allocated to U.S.-located companies. In the following paragraphs, I will give a brief explanation why I hold particular companies.

Alphabet

Alphabet is by far my biggest holding, simply because one stock costs over $1.2k. I am so heavily invested in Alphabet because of Waymo, a self-driving car project. Waymo is ahead in the race to develop the first fully self-driving car. Alphabet also has an almost monopoly in the search market. I would like to prove how dominant the company is in this market with the quote ''just google it.'. Alphabet also has a strong arm in the streaming industry with its subsidiary YouTube. However, there is a new competitor entering the industry, namely Facebook (FB) with its Instagram subsidiary. Click here to learn more about this event.

SunPower, Vestas and the Solar ETF

As a millennial Investor, I always try to predict what the world would look like in 10+ years. If I am sure about one thing, it is that there will be a lot of solar panels. There will be large fields with over ten thousands of panels. However, those fields will not be available in the cities, simply because there is not enough room. Therefore, there have to be highly efficient panels, this is where SunPower shines. Even though the company is currently losing money, I am not worried.

SunPower can count on financial help from Total (TOT), a so-called oil giant. The solar panel industry is a tough industry with relatively low margins. Multiple solar companies went bankrupt in recent times, for example Suniva. There is also the risk of the solar tariffs, although I think SunPower is maneuvering effectively around them. I hold the solar ETF Invesco simply because I do not want to put all my eggs in the SunPower basket.

My last holding in the renewable energy market is Vestas, the industry leader in wind turbines. The company is located in Denmark, a country that in favorable days runs fully on wind energy. The wind turbine industry is currently facing pressure in its margins, just like the solar panel industry. However, I expect demand to increase when climate goals have to be met. One of the big deadlines is in 2030, when the EU needs to have emission reduced by 40%. Vestas has had a tough last couple of months, but I will continue to add on dips.

Portfolio by category

Category Percentage Target Difference Positions
Pharma 6% 10% -4% 2
Retail 4% 5% -1% 1
Tech 30% 25% 5% 3
Financial 8% 5% 3% 2
Food/Farmland 10% 10% 0% 3
Consumer 6% 5% 1% 2
Alcohol 2% 5% -3% 1
Renewable 14% 10% 4% 3
Emerging 6% 15% -9% 1
Utility 8% 5% 3% 2
REIT 6% 5% 1% 2
100% 22

Source: Author's created table.

As you can see in the table above, my target allocation goal for tech companies is 25%. This is by far the largest category however, I think this is not a bad thing. Tech companies may have the highest valuations right now, but they do justify them with the highest growth rates. Keep in mind that my portfolio, instead of most other portfolios, is focused on growth, instead of dividends or value. Even though I think the industry justifies a high allocation, I still avoid companies who are valued for perfection, like Nvidia (NVDA). When the bear market breaks out, these type of companies will take the biggest hits.

I allocate a higher percentage of my portfolio to industries with higher growth rates, like emerging markets, renewable energy, pharmaceutical and food/farmland companies. The last category may seem a little odd. But keeping in mind that the world population keeps increasing, while farmland is getting more scarce, I think the valuation of food production companies who own their own farmland will keep increasing in the future. Food/farmland stocks also provide a higher margin of safety than my other more volatile categories.

REITs are not the fastest growing companies in the market. However, I like to keep Welltower (WELL) and Ventas (VTR). They both own healthcare-related properties, like senior houses and hospitals. When buying both stocks, I thought it would be a no-brainer however, I recently discovered that there may be a serious oversupply in senior houses. This may be one of the key reasons why both stocks have had a rough couple of months. I am currently not planning on adding to both stocks, because I can get more growth in my other categories. There is also the risk of increasing interest rates, putting pressure on REITs.

Conclusion

I plan on making a series of reviews of the millennial portfolio. I will give an update whenever I make a new purchase and a monthly review of the performance of the portfolio. I do not know if the portfolio will be able to beat the S&P 500 in the long run, but I think it is a nice experiment. You can click the orange follow button on the top of this article if you would like to follow the performance of my portfolio or if you are interested in investment ideas for investors with a long time horizon. I would like to thank Gino Aalbrecht for his advice in constructing the portfolio. Click here to check out more of his work.

Feedback

I know I can always improve my articles. Not only my investment skills, but also my writing style. Feedback is therefore really valuable to me. I would kindly ask you to comment things in this article that you would have done differently. Positive comments are of course always welcome as well!

Disclosure: I am/we are long ALL STOCKS IN THE MILLENNIAL PORTFOLIO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.