- My former 45-stock portfolio gets a haircut down to 37 stocks as I de-diversify in favor of bigger and riskier bets with volatility on the rise.
- Global Ship Lease is the new major position in my portfolio with earnings in the first week of March and upside potential all year long in my opinion.
- A portfolio built for individual investors to outperform the majority of money managers in good and bad times through diversity and risk with the goal to be worth millions in retirement.
It is my firm belief that 80% of money managers can't outperform the S&P 500 index over time due primarily to the fees they charge their clients. Each and every individual person intent on having the happiest retirement possible could and should take charge of their retirement portfolios and invest in simple index/mutual funds and/or a balanced portfolio like the one I have set up to maximize returns over decades of performance. My ratios and distributions are based on my book, which can be found on Amazon, which was written with beginning investors and young people like high schoolers and college students in mind to outperform professional money managers over time. My retirement portfolio reached up over $350,000 for the first time in February before pullback's mainly in the last week of the month dropped it down to its current level.
During the month of January, my retirement portfolio had $2,100 in contributions added to it. In February, my spouse and I contributed $12,000 to our IRA portfolios for 2020 with the goal to do another $12,000 in IRA contributions for 2021 later on this year. Here is how my portfolio performed compared to the SPDR S&P 500 Trust (SPY) over January and February of 2021.
|Fund||(SPY)||Welsh||Welsh Minus Contributions|
|% Gain Jan 2021||-1.02%||2.85%||2.2%|
|% Gain Feb 2021||2.84%||2.59%||-1.1%|
Regular contributions to your retirement portfolio help your portfolio to grow even on less than ideal months where you fail to outperform the S&P 500. Not every month will be a winner, but regular contributions can help make anyone's performance look good over time.
Here's how the SPY has tracked over the beginning of 2021. It continues to have strong starts at the beginning of the month with big selloffs right at the end of the month.
My portfolio was divided up to start 2021 at around 73% stocks and around 27% mutual and index funds with the goal to increase stocks to over 80% of my portfolio over time. It is currently built with approximately 89% domestic stocks and 11% foreign stocks as I continue to diversify away from globalism in the current environment. I have about 3% of my portfolio in bond mutual funds so that I know how they work and to have at least a little exposure to this sector over time. I plan to have bonds be a very small portion of my portfolio up to right around age 65. Diversification lifts my whole portfolio's returns over time, so finding the best stocks in every sector is a goal for me each and every year. Here are some of the main changes since my last portfolio article in January of 2021.
|Welsh Portfolio||Stocks||Index/Mutual Funds||Bonds||Domestic||International|
Here are the details of my personal ~$333k portfolio then, based on values of approximately $30k, $300k, and $3 million broken down by sectors with brief descriptions of each stock in each sector. The best thing about my portfolio setup is that it is scalable so that people interested in following a similar path can set up their portfolios to follow my path no matter how small or large their holdings are. With fee-free trading and the advent of fractional shares, investors are more capable than ever in setting up amazing portfolios even when starting from scratch.
The Welsh Portfolio 2021 The Welsh Portfolio
The Information Technology Sector (Aim = 15% of my Stock holdings)
1. Apple (AAPL) should be considered as a potential cornerstone piece to any portfolio as one of the world's largest and most profitable companies that prints money almost faster than the Fed. It is currently my 6th largest holding which I am always willing to add more shares of. My holdings in the Information Technology sector are down substantially, after my latest consolidation, which means that adding additional Apple shares now is a top priority.
2. QUALCOMM (QCOM) is a major technology solutions provider for companies like Apple and will be an integral part of upcoming transformational secular revolutions like 5G. It's currently my 8th largest individual position with no plans to ever sell currently.
3. Xilinx (XLNX) is being acquired by Advanced Micro Devices (AMD) in a $35B all-stock transaction hopefully before the end of 2021. I love the built-in arbitrage of all-stock transactions like this for tremendous companies like AMD and didn't mind selling my AMD in 2020 to buy Xilinx. I hope to boost my shares in Xilinx later on in the year, after I hopefully double my current Apple position, when the AMD deal is close to finishing.
4. Dell (DELL) is a legacy holding which continues to aggressively grow through value acquisitions like the $67B EMC deal and the future potential full acquisition of the hybrid cloud giant VMware (NYSE:VMW) which it owns ~80% of. Michael Dell is a shareholder winner through and through and following in his stock footpaths I think is a good long-term decision.
5. Microsoft (MSFT) is a dominating force of nature that only government intervention seems able to slow down. It has done a phenomenal job of transitioning itself into a dominating cloud player.
6. Roblox (RBLX) is a teen gaming platform that plans to come public through a direct listing here in March. My hope is that it does not come out of the gate as hot as earlier IPOs DoorDash (DASH) and Airbnb (ABNB), which were too expensive for investing in for me personally when they premiered. I always try to have an eye on what younger generations are loving and this platform is expanding and growing phenomenally. I already have some cash set aside for a small position in Roblox when it lists with the potential to sell part of my other holdings for a bigger position if the valuation doesn't seem too egregious.
The Health Care Sector (Aim = 15% of my Stock holdings)
7. Arrowhead Pharmaceuticals (ARWR) is my 4th largest individual stock position as an RNAi juggernaut entering key Phase 3 trials in 2021. A lovely balance sheet with key partnerships with Janssen (JNJ) and Amgen (AMGN) significantly de-risk its TRiM platform as it continues to expand into additional cell types. It has had a nice consolidation around $80 for a bit now so hopefully some good news will be all it needs to reach for that $100 handle.
8. Medtronic (MDT) Health Care device maker that I think has significant upside from COVID-19 issues for years to come. Hospitals will need the best equipment companies like Medtronic provide as health issues from Covid-19 could persist for years.
9. MiMedx (MDXG) was my largest individual stock position for a good portion of 2020 as the company made momentous strides in getting its financials back in order and re-listed on the NASDAQ. I trimmed this position after re-listing as its potentially game-changing knee osteoarthritis data comes out later in 2021. I hope to slowly add back to this position in 2021.
10. Eli Lilly (LLY) is a favored legacy holding that I hope to slowly add to over time and never sell. Some amazing drugs and a pipeline of potential game changing candidates can give this company real zip when good data hits.
11. Pfizer (PFE) A healthcare behemoth with a big stake in the fight against COVID-19. It seems like a great deal at current prices after its pullback from recent highs to start the year warranting me starting a new position in the company in late February.
The Communication Services Sector (Aim = 15% of my Stock holdings)
12. Disney (DIS) will crush Netflix (NFLX) over time as its streaming platform continues to grow by leaps and bounds. Forever stock for me as my 2nd largest individual stock holding while always looking to add cheap shares. Unfortunately pullbacks have been few and far between meaning I might not be adding shares until the end of 2021.
13. AT&T (T) is my main dividend play as my 5th largest individual stock holding with current yields a little over 7.25%. Amazingly strong cash flows mean that management can continue to bumble along without much fear of bankruptcy. If management ever figures out how to add value, this stock is set to soar. Its most recent $8B deal to offload some of DirecTV's risk is a step in the right direction, but serves to highlight management's incompetence in the recent past for sure.
14. World Wrestling Entertainment (WWE) is one of the few remaining live event media stocks growing globally, while always a potential takeover target from juggernauts like Disney. Plus, late at night, when finding a good streaming movie seems virtually impossible, putting on a mindless WWE match serves as a great way to end the day for me at least.
15. Alphabet (GOOGL) One of the latest adds to my portfolio from the infamous FANG names which will most likely land in the never sell category. I prefer it currently over the likes of Facebook (FB) due to privacy issues but that might just be a transitory feeling.
The Financial Sector (Aim = 15% of my Stock holdings)
16. Bitcoin (OTC:GBTC) soared over the back part of 2020 and rallied even more to start 2021 by reaching new all-time highs. Even after the most recent significant pullback, it is still my largest individual stock position as institutions continue to take a greater interest in it. As world banks and the Fed continue to print money like it's going out of style due to COVID-19, alternate money sources like Bitcoin could easily continue to see outsized gains in my opinion. Even Elon Musk likes it. Its pullback to end the month is one of the main reasons for my underperformance to the S&P 500 this month. Still absolutely love it though as my top investment.
17. JPMorgan (JPM) is the best big bank out there. I rest my case your honor. A recent winner in the recent volatility in interest rates as my 7th largest holding.
18. BlackRock (BLK) is a leader in index funds and always seems to be completing deals that continue to bring long-term investor results, in my opinion. They do a good job of growing their annual dividend as well.
19. HSBC Bank (HSBC) is a legacy holding that might finally see some upside if the United Kingdom can ever get Brexit resolved. That of course, might be a big if.
Berkshire Hathaway (BRK.B) and Fannie Mae (OTCQB:FNMAS) were sold as smaller positions in my portfolio. Hope has seemed to dry up at this time for a release of Fannie from government control so no reason to hold on to it any longer.
The Consumer Discretionary Sector (Aim = 6% of my Stock holdings)
20. Amazon (AMZN) continues to dominate the world of online retail, cloud, and virtually anything else it expands into like no other company in history. Is on my current never-sell list with a small celebration every time I can add another share.
21. Tractor Supply Company (TSCO) quietly continues to perform as one of the best companies in retail mostly immune to Amazon's dominance. Its acquisition of Petsense makes a lot of sense now, especially with the growth of everything pet in the wake of COVID-19.
22. MercadoLibre (MELI) is Latin America's Amazon. One of the best international stocks in my portfolio that I really should add more to on pullbacks.
Tesla (TSLA) stock has been amazing giving me thousands to tens of thousands in profits over the past few years as I buy and sell trends. I sold my tiny position while it was above $800 just because exuberance for the stock has been seeming to fade with GameStop and other stocks grabbing highlights. I'm hoping Tesla pulls back into the $500 range or less again where I might once again start up a small position.
The Consumer Staples Sector (Aim = 6% of my Stock holdings)
23. Procter & Gamble (PG) is a legacy holding that sports a decent growing dividend along with many best in class brands like Olay, Head & Shoulders, Dawn, and Charmin. Always nice to have some stalwarts for the upcoming recessions and depressions.
24. PepsiCo (PEP) is a phenomenal drink company with brands like Pepsi-Cola, Gatorade, and Tropicana along with amazing growth in the snack category with Frito-Lay that, in my mind, sets it apart from competitors like Coke (KO).
25. General Mills (GIS) is a legacy holding for me with a great dividend that experienced a huge turnaround during COVID-19 with its brands, including its $8B acquisition of Blue Buffalo in 2018. Its former debt concerns have mostly evaporated as it has shored up its balance sheet and continues to benefit from the stay-at-home movement.
The Industrials Sector (Aim = 6% of my Stock holdings)
26. Jacobs Engineering (J) is a legacy holding I have loved for years. A long-time no-debt company that makes super-smart acquisitions now has low debt and has initiated a dividend which it should be able to grow nicely over the coming years. Its focus on carbon neutrality and diversity in its workforce makes it a prime target for the younger generation. It is currently my 10th largest holding in my retirement portfolio.
27. Global Ship Lease (GSL) is the reason my portfolio of stocks went from 45 stocks last month down to 37 stocks this month as I sold smaller positions to add a brand new monster position in my portfolio. GSL is now my 3rd largest holding and has benefitted from rapidly rising shipping rates in the space, particularly around Asia, as COVID-19 spurred massive scrapping of ships and containers in the industry in mid-2020. This massive turnaround in demand has resulted in GSL announcing the initiation of a dividend in Q1 of 2021, an upgrade in its credit rating from Moody's, an equity offering resulting in fleet expansion, and a refinancing of bad debt into much friendlier debt due in 2026 instead of 2022. I see its trend of good luck continuing as ships and containers take a long time to build especially as few are currently made outside of China.
28. Virgin Galactic (SPCE) is the only way to play commercial space flight at this time along with a very high short interest making it a potentially very volatile stock. This proved true when it delayed its next spaceflight all the way out to May resulting in the other main reason besides Bitcoin why my portfolio underperformed the SPY this month.
Still love the stock and the space but Virgin Galactic looks to be dead money until we close in on the May potential flight date.
Slide from Virgin Galactic's 2020 Q4 Earnings Presentation
29. Axon (AXON) is the maker of Taser as well as the bodysuits, cameras, and cloud software for officers across the United States. Phenomenal gains in this stock recently as well to start 2021. So many great stocks, so little money :).
I sold my last small position in Boeing (BA) as nothing seems to go right for this company and it had a great run from around $120 a share when I bought a bunch of it. Better to let it consolidate or fall for awhile and consider another position if it tanks again massively for whatever reason.
The Materials Sector (Aim = 6% of my Stock holdings)
30. Barrick Gold (GOLD) is a large and diversified gold miner that has exposure to multitudinous geographies across the globe. With the Fed and other monetary institutions printing money at record rates, Barrick has much further potential future upside but has slipped down to my 9th largest holding. The implementation of its "special dividend" over the rest of 2021 means I won't be selling shares anytime soon.
31. Cleveland-Cliffs (CLF) is an Iron Range stock that acquired AK Steel at the end of 2019 and, more recently, announced the acquisition of ArcelorMittal (NYSE:MT) in late 2020 in a deal valued at $3.3B. Cleveland-Cliffs is well on its way to becoming a fully integrated steelmaker with clout in the U.S. A bipartisan infrastructure bill later in the year could do wonders for the iron and steel markets, but that is all hypothetical at this point and time.
Sold my Nickel Subindex (JJN) small position for a small gain along with my First Majestic Silver Corp. (AG) holdings as I don't see the #silversqueeze narrative playing out as it once looked to do. I also would like to put more money into my Gold and Iron stocks as I see nice reasons to own both right now.
The Energy Sector (Aim = 6% of my Stock holdings)
32. Royal Dutch Shell (RDS.B) is a leader in the oil industry with a dividend that management is looking to grow quickly after it slashed it earlier in 2020 due to COVID-19 concerns.
33. Petrobras (PBR) is a Brazil-based oil play with lots of potential if it can get past its scandal-ridden past. Unfortunately, Brazil President Bolsonaro recently named General Joaquim Silva e Luna to replace current CEO Roberto Castello Branco resulting in a huge crisis of faith in the company in its latest scandal. Can only be uphill from here I keep telling myself.
34. Halliburton (HAL) is a U.S.-based oil service company that dominates services in the North American market.
The Utility Sector (Aim = 5% of my Stock holdings)
35. Duke (DUK) is a top utility play with a tremendous dividend which are the main features I look for in the Utility sector. It got slashed with the move to add further risk to my portfolio.
36. Dominion (D) is the other top utility play that I like with a very attractive dividend as a utility major. I will add to my utilities again once I feel that volatility in the market is stabilizing and outsized opportunities are once again in the rearview mirror.
The Real Estate Sector (Aim = 3% of my Stock holdings)
37. American Tower (AMT) is a premier U.S. cell phone tower company aggressively expanding globally across a few more continents. 5G evolution could be a lucrative tailwind for years to come. Can't think of a reason to add another real estate play so I just plan to keep adding to this holding over time.
Bonds (2% of my Stock holdings)
This asset class is currently satisfied by my mutual fund holdings.
My top 10 Holdings and Percentage of my Portfolio
|Global Ship Lease||Industrials||5.8%|
|Arrowhead Pharm.||Health Care||5.5%|
|Total % of Portfolio||~39.5%|
Staying diversified across all sectors of the economy while making larger bets on your favorite stocks is a great way not only to beat the market, but have fun doing it as well. Stocks are one of the best ways to build wealth for retirement, and everyone should have the opportunity to share in the success of the best companies the world has to offer. Best of luck on another productive and lucrative year in 2021.
This article was written by
Analyst’s Disclosure: I am/we are long AAPL, QCOM, XLNX, DELL, MSFT, ARWR, MDT, MDXG, LLY, PFE, DIS, T, WWE, GOOGL, GBTC, JPM, BLK, HSBC, AMZN, TSCO, MELI, PG, PEP, GIS, J, GSL, AXON, SPCE, GOLD, CLF, PBR, RDS.B, HAL, D, DUK, AMT. 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.