Portfolio Review - July 2021: Sticking With Long-Term Capital Accumulation
Summary
- This is an update to my last portfolio review, which was published in September 2018.
- My portfolio is largely for capital accumulation, with more risk in my taxable accounts than in my tax-sheltered accounts.
- An overview of my holdings, my allocations, and the equities I hold and why.
It's been a while since I wrote my last portfolio review, back in September 2018. Since then, I started a Seeking Alpha Marketplace service focused on cannabis stocks, ran it for nearly three years, and then transitioned that service to the very capable hands of Julian Lin, who now operates it as the Cannabis Growth Portfolio. I also started a new legal job and then finished that new job, able to add a few extra dollars to my portfolio in the process.
During this time, my portfolio has changed quite a bit, although many of my investment goals remain similar. So, let's dive in as I take a look at my own portfolio with an eye to how I might shape it in the future.
1. About Me/Portfolio Goals
I'm a 37-year-old lawyer living in Vancouver, British Columbia. I'm currently enjoying a break between jobs, which gives me a bit of time to look at my portfolio and to determine whether the holdings still fit with my investment goals. This also gives me a bit of time to write on Seeking Alpha, a platform which I haven't had time to write for in quite a while.
I worked in the United States for about seven years before returning back home to Canada. During my time in the United States, I contributed to a 401k, a Roth 401k, a Roth individual retirement account ("IRA"), a Health Savings Account ("HSA"), and also to a taxable investment account. Since returning to Canada, I have contributed to my Registered Retirement Savings Plan ("RRSP"), a Tax-Free Savings Account ("TFSA"), and to a taxable investment account. After transferring my taxable U.S. investments to Canada and moving my 401k accounts into IRAs, I currently maintain six different investment accounts.
Generally speaking, my retirement accounts and HSA account are intended for the long-term relatively stable growth of capital with an eye toward retiring in 15 to 25 years. My taxable accounts are just for fun investing, and I may transition a significant portion of those funds into real estate (helping family members buy properties and/or buying properties myself) over the next year or two.
Generally, all accounts here are sorted in descending order by market value, with the exception of my taxable account, which I've placed at the end, segregated from the tax-sheltered accounts.
2. Tax-Sheltered/Retirement Accounts
a. Traditional IRA: Pinwheel Portfolio with U.S. Assets
My largest retirement account is a Traditional IRA account, which is held at TD Ameritrade (SCHW). This account uses an allocation which is based on the Pinwheel Portfolio:
- 15% Total Stock Market (VTI)
- 10% Small Cap Value (SLYV)
- 15% International Stocks (SPDW)
- 10% Emerging Markets (SPEM)
- 15% Intermediate Bonds (BIV)
- 10% Cash (ICSH)
- 15% REITs (VNQ)
- 10% Gold (SGOL)
In general, I use relatively conservative portfolios in my retirement accounts. This portfolio works out to be 50% equities, 25% bonds and "cash" (here, ultra-short bonds), 15% REITs, and 10% gold. This portfolio was selected based on its past returns, which are well-summarized at Portfolio Charts. Among other factors, it has reasonably strong growth (average of 6.7%) with a relatively low standard deviation (10.7%). Past performance isn't everything, but the longest downturn for this portfolio is five years, in their tracking and its deepest downturn is only 26% (on an annual basis).
I'm somewhat skeptical about owning bonds at current interest rates. That said, there are equally valid reasons to suspect that equity prices are inflated right now. No investment will ever be completely safe, and I'm satisfied with the risk/reward profile offered by this particular allocation. It's also easy to maintain this allocation on TD Ameritrade, using their Portfolio Planner. Thus, this portfolio has been rebalanced relatively recently, which is why its percentages are so close to my ideal allocation.
For each asset class, I'm using ETFs for each of these positions, with each ETF selected based on a combination of (1) low fees and (2) good liquidity. This tends to include a significant amount of exchange-traded funds from Vanguard and from SPDR (SPGI), although I'll generally select any fund that meets my criteria of low fees and good liquidity.
b. Canadian Tax-Sheltered Accounts: Canadian Pinwheel Portfolio
My Canadian tax-sheltered accounts (TFSA and RRSP) both also contain a pinwheel-based allocation. They're two separate accounts, but they contain the same portfolio so I've combined them for this analysis.
- 25% Total Stock Market (VCN.TO)
- 15% International Stocks (VIU.TO)
- 10% Emerging Markets (VEE.TO)
- 15% Intermediate Bonds (VAB.TO)
- 10% Cash/Short-Term Bonds (VSB.TO)
- 15% REITs (VRE.TO)
- 10% Gold (SGOL)
The general portfolio is the same as above, but containing Canadian funds aside from gold (SGOL). I'm also not aware of a Canadian small-cap value ETF, at least one with a low cost, and small-cap investing doesn't really make a lot of sense in Canada. As such, I've combined that allocation with the general equity allocation in the Canadian portion of my Pinwheel portfolio.
In Canada, as shown above, all my ETFs are in Vanguard funds with the exception of gold. This is somewhat trivial, as there also are good Canadian options from the Bank of Montreal (BMO) and from iShares (BLK). That said, the logic for this portfolio otherwise tracks everything I said above, so there's not much reason to repeat the analysis here.
c. Roth IRA: Whimsical ten equity allocation
Next up is my Roth IRA, which also is held at TD Ameritrade. Unlike my traditional IRA account, my Roth IRA is in a whimsical all-equity portfolio that I picked out on May 13, 2020, when I was bored.
The basic idea of this portfolio is simply this: Pick out 10 companies whose products I, personally, selectively use and/or purchase over their competitors. Then, without looking at any fundamentals at all, purchase shares in those companies in equal weight and hold them until I no longer selectively, preferentially use their products.
Now, some might question the wisdom of this portfolio. Frankly, I don't really care, since it seemed like a good idea at the time and that's a good enough reason for me. I wouldn't, and don't, invest my entire portfolio into such a whimsical allocation, but for a portion of my total portfolio - why not?
Notably, I have not meaningfully rebalanced this portfolio since I purchased it last May. I don't particularly intend to keep this portfolio balanced, since it's whimsical anyhow.
| Product | Stock | Price | Purchase Price | Return % |
| Costco stores | Costco (COST) | $412 | $303 | 36% |
| Bauer hockey gear | Fairfax Financial (OTCPK:FRFHF) | $427 | $234 | 82% |
| Google products | Alphabet (GOOGL) | $2,538 | $1,341 | 89% |
| Intel CPUs | Intel (INTC) | $56 | $56 | -1% |
| Windex | Johnson & Johnson (JNJ) | $168 | $147 | 14% |
| Egg McMuffins | McDonald's (MCD) | $237 | $173 | 37% |
| Triscuit crackers | Mondelēz (MDLZ) | $64 | $50 | 29% |
| Nvidia GPUs | Nvidia (NVDA) | $760 | $309 | 146% |
| Volkswagen cars | Volkswagen (OTCPK:VWAGY) | $33 | $14 | 137% |
| Wendy's burgers | Wendy's (WEN) | $22 | $20 | 12% |
(1) Costco: I'm a Costco member and I regularly shop at Costco. They have a great business model, and their products are consistently cheaper than peers.
As a company, they also have seen strong consistent growth even during the pandemic. Shares aren't cheap, but again, I bought this portfolio without thinking about any of that. I continue to regularly shop at Costco and have no plans of stopping. Costco shares are up 36% since I purchased them last May.
(2) Fairfax Financial: I play ice hockey and, when given multiple options for hockey equipment, I tend to choose Bauer hockey equipment over other companies such as Mission and CCM. Bauer has switched hands many times over the year, and Fairfax Financial currently owns 50% of Bauer after a 2016 bankruptcy.
Because of the nature of this portfolio, I have no idea what else Fairfax Financial owns. It doesn't really matter - I own them for Bauer, so until they sell Bauer or until I stop using Bauer products, I will own Fairfax Financial shares. My Fairfax shares are up 82% since I purchased them last May.
(3) Alphabet: My primary email address is a Gmail account and I use Gmail to check my other email accounts as well. I purchased an unlocked Android phone just a month ago when I needed a new phone. I'm currently typing out this post in a Google Chrome window. I've also previously owned Google shares unrelated to this portfolio. Suffice to say, owning Google was a no-brainer for this portfolio.
In this portfolio, I opted for the marginally more costly GOOGL shares over the voting GOOG shares. Given the size of the company, voting rights don't matter anyhow, so I forget why I even chose the voting shares. In any case, it doesn't really matter. Shares are up 89% since I purchased them last May.
(4) Intel: I tend to preferentially purchase Intel CPUs over AMD (AMD) CPUs, all else being equal. I have built my own computers for over 25 years, and I have previously encountered reliability issues with both AMD CPUs and with ATI GPUs, both before and after AMD's acquisition of that business in 2006.
That said, I recognize that AMD has many vocal fans. I also recognize that AMD's CPU lineup is currently a bit better than Intel at most price ranges. I'm currently happy with my Intel i7 chipset in both my laptop and my desktop computer, but if I was going to purchase a new motherboard right now, I'd probably get an AMD Threadripper. If that happens, I'll have to re-evaluate this holding. Until then, Intel is down 1% since I bought it last May.
(5) Johnson & Johnson: All window cleaners are the same product, and I realize this. That said, I preferentially buy Windex products anyhow. Johnson & Johnson shares are up 14% since I purchased them last May.
(6) McDonald's: If I'm driving and it's time to eat breakfast, I'm going to a McDonald's over any other roadside option. Egg McMuffins are great, specifically Bacon & Egg McMuffins. I also appreciate some of their other breakfast and regular sandwiches, but they're primarily here for Egg McMuffins. McDonald's shares are up 37% since I bought them last May.
(7) Mondelēz: I enjoy Triscuit crackers from time to time. They pair well with cheese. Mondelēz shares are up 29% since I bought them last May.
(8) Nvidia: I selectively purchase Nvidia GPUs over those from AMD due to past reliability issues with AMD GPUs. I currently use a Nvidia GeForce RTX 2070 SUPER, for those who are curious. If I was to purchase a new GPU, I would purchase another Nvidia GPU. Nvidia shares are up 146% since I purchased them last May.
(9) Volkswagen: I drive a Volkswagen. If I was to purchase a new car, I'd purchase another Volkswagen, or perhaps a Porsche, which is a Volkswagen product anyhow. Volkswagen shares are up 137% since I purchased them.
(10) Wendy's: I prefer Wendy's burgers over any of the other widely-available fast food options. I wish there was a Wendy's closer to my home, McDonald's and A&W are both much more convenient, but I'll travel to Wendy's when I'm near one and not near a better local burger chain. Wendy's shares are up 12% since I purchased them.
d. Health Savings Account: Pure VTI
I have a relatively small Health Savings Account (about 1/5th of my Roth IRA, for comparison), so I don't bother with building some principled or whimsical portfolio with it. Instead, I just own pure Vanguard Total Stock Market (VTI) in this account and call it a day. Moving along...
3. Taxable Account
My taxable account is a mix of individual investments into stocks and a large stake in a broad Canadian ETF that I largely use as a placeholder.
The majority of this account is a stake in Vanguard Canadian ETF (VCN.TO). This stake used to be significantly larger, but I withdrew a couple years' living expenses recently and transferred those to savings and certain real estate investments. That said, this holding doesn't reflect any particular confidence or position in the Canadian stock market. I just use this as a placeholder equity holding until I figure out something better to do with my money. I suppose I could let it sit in cash, but that's boring and I'm not that old yet.
Other, actual investments include, in descending order of value.
(Note: All charts are dated back to my first purchase.)
Roku (ROKU): I purchased shares in Roku on Feb. 23, 2018, for $40.40/share. This was my second purchase of Roku shares, previously buying at about $40 and selling at $56. At the time, I published a series of articles on Seeking Alpha where some commenters agreed with me and other commenters poignantly wondered what Roku's moat was, and why they wouldn't get crushed by Google's Chrome TV, Apple's (AAPL) Apple TV, and Amazon's (AMZN) Fire TV:
However, I have trouble investing in Roku because I don't see any significant differentiator between Roku and Amazon's Fire TV and Google's Chromecast. Currently I believe the lower price is what attracts people to Roku (I may be wrong here). But if one day Amazon or Google lowers their price for their respective streaming sticks wouldn't consumers favor Amazon if they are prime subscribers and have Alexa or Google as it leverages the huge amounts of data they have on consumers to offer a more personal experience?
- Commenter on August 5, 2018
As then, these concerns remain true. Roku is fighting against giants, and they're not guaranteed to win this fight.
That said, my $40.40 shares are now worth about $406 each. I sold half my shares at $168/share on Sept. 4, 2019, while I continue to hold the other half, playing entirely with house money. I purchased a Roku device for my parents two weeks ago and still use my Roku as well, although I also have a Chromecast with Google TV, and it's a good device as well. In any case, I plan to continue to let this investment ride.
My stake in Roku is up 905% since I purchased it.
Green Thumb (OTCQX:GTBIF): Technically, I own the Canadian-traded version of Green Thumb Industries (GTII.CN), but it's the same as the U.S. stocks. I own Canadian versions of each of the cannabis stocks listed here, in fact.
I have previously covered Green Thumb Industries in great depth on my previous cannabis Marketplace platform. That said, I don't seem to have ever written an article on the company for Seeking Alpha's main platform. I would be open to writing about the company if there's interest, but for this purpose: I hold "full positions" in both Green Thumb and Trulieve (OTCQX:TCNNF). I like both cannabis companies for similar reasons, largely related to organic growth and strong margins.
My stake in Green Thumb is up 345% since I purchased it. That said, I have numerous entries and exits from this stake and I am playing entirely with house money at this point, having already cashed out profits equal to about 1.5x the current value of my stake.
Trulieve: Unlike Green Thumb, I have previously covered Trulieve numerous times on the public Seeking Alpha platform, most recently penning a "very bullish" thesis on March 24, 2020. Trulieve shares are up 351% since that article as the company continues to do well with organic growth and strong margins, now also aided by small acquisitions in Pennsylvania and West Virginia and the pending large acquisition of Harvest Health (OTCQX:HRVSF).
As with Green Thumb, I'd be open to writing more on Trulieve if there's interest - let me know in the comments.
Also as with Green Thumb, I'm playing entirely with house money here. I have cashed out profits equal to about 1.7x the value of my current Trulieve stake, and my current shares are up 284% right now. Being a cannabis investor has been profitable, suffice to say!
Corby Spirit & Wine (OTCPK:CBYDF) (OTC:CRBBF): From the good to the bad. I wrote about this alcohol maker back in Sept. 5, 2018. Since then, shares have done a whole lot of nothing: They are said to be up 2% with a total return of 23% while the S&P 500 (SPY) (VOO) is up 51%.
Suffice to say, my investment thesis has not panned out. I could really sell these shares at any time and have no particular commitment to keeping them. That said, if I did sell them, I would just buy more VCN.TO, and I don't really need more of that either, so I'll hold them until there's a reason not to hold them.
Ayr Wellness (OTCQX:AYRWF): I was previously a shareholder of Liberty Health Sciences, a Florida-based cannabis company. They were acquired by Ayr Wellness back in February 2021, so my Liberty Health stake converted into Ayr Wellness shares. I wrote positively about that deal in January 2021 on Seeking Alpha, which also is my most recent coverage of the company on the public site.
I continued to hold my converted shares of Ayr Wellness. They're up 85% since my purchase back on Jan. 29, 2020. That's before Ayr Wellness was even publicly-traded, so I haven't included a graph for Ayr Wellness since it wouldn't properly reflect the performance of my stake. This is a half-sized position, relative to my stakes in Trulieve and in Green Thumb.
Cresco Labs (OTCQX:CRLBF): I purchased a quarter-sized stake in Cresco Labs back in November 2020. I wrote about this purchase on my then-Marketplace service, but have not covered the company publicly since that time. I'm less enthusiastic about Cresco Labs than some of my other cannabis holdings, and than some cannabis companies I don't even own, which is why this is only a quarter-sized position.
Since its purchase, this stock has done modestly: I'm up 12% on my Cresco Labs holding.
4. Other Holdings
In addition to the above, I also hold a meaningful quantity of cash (~7% of my portfolio) and a small real estate investment (~6% of my portfolio).
Thus, overall, my portfolio is about two-thirds equities with one-third in a mix of other asset classes. In my view, this is a reasonably aggressive portfolio allocation which makes sense given my relatively long timelines for retirement and for needing any of these funds. If I wanted to be more conservative, I would likely add some additional cash and bonds (particularly short-term bonds) and remove some equities (particularly volatile equities like cannabis stocks and Roku). That said, this sounds boring and likely to yield lower long-term returns, so I don't plan to do this.
Geographically, my portfolio is more heavily weighted to the United States than to Canada. I have relatively little exposure to equities outside the United States and Canada, which may be something I want to increase moving forward, such as by switching my Health Savings Account to be international equities. I also could potentially add international equity into my taxable accounts, but there can be tax reasons to avoid doing this so I'm not eager to put such assets into a taxable account.
5. Conclusion
My portfolio is a mixture of different stocks and portfolios, largely aimed at long-term capital accumulation. I'm not reliant on any of this portfolio for living costs, and any dividends received from any holdings are simply reinvested back into the portfolio, often using a dividend reinvestment plan ("DRIP").
That said, I find it useful to periodically look at my portfolio and to determine what I could do to align it with my goals. Most of my portfolio at the moment appears to be aligned with my goals, although I may wish to sell my stake in Corby and I may sell a significant portion of my taxable VCN.TO holding for certain real estate purchases in the near-term future. With that in mind, I may wish to sell that stake now, since there isn't necessarily a reward to taking the potential risk of a short-term decline.
Looking forward, I suspect that I will stick with my current allocation in my retirement accounts. I originally chose the pinwheel portfolio based on its strong back-testing results, and it has performed well during my first year and a half of ownership. Generally, it has lagged the performance of the broader market (e.g., simply owning VOO or SPY), but it has not had nearly the same down-turns as the S&P 500 either during the past year or especially during past times of economic turmoil. As such, I think it reflects a good compromise between risk and performance for my investment objectives.
I will likely also continue to adjust the holdings in my taxable accounts. For example, I plan to take a new look at Roku to determine whether I am still comfortable holding it at this price, and to evaluate the possible additions of additional cannabis stocks including Verano Holdings (OTCQX:VRNOF). I may also consider investing in psychedelic stocks, if any of those have promising financials rather than just pure hype.
Please let me know if you have any questions, comments, or advice about my portfolio in the comments below. Thanks for reading!
Happy investing!
This article was written by
Disclosure: I/we have a beneficial long position in the shares of ALL STOCKS MENTIONED either through stock ownership, options, or other derivatives. 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.
Additional disclosure: I own everything mentioned, since it's my portfolio. Note also that my opinions may vary from those of Julian on his Marketplace service directed to cannabis stocks.