My portfolio

[Lemij]

Here is my small contribution to this forum and the stocks I have recently purchased. I currently have 10 stocks that each represent 10% of my invested capital but I plan to increase the number of stocks to 15 or 20 so that each one only represents 5% of my capital.

NYSE:TGT, Variety Stores
NYSE:CAH, Drug wholesales
NYSE:ADM, Farm products
NYSE:EMR, Electrical equipment
NYSE:DOV, Machinery
VTX:NESN, Power, Water
VTX:ATLN, Pharma
VTX:SREN, Reinsurance
SWX:VONN, Finance
VTX:GEBN, Sanitary installations

ATLN being a bit of the black sheep of the group with a yield of 0.89% only increased over the last 5 years but it is also a company that reinvests 70% of its profit. I bet on good potential. We will see what it gives. 🙂

[Jerome]

Hi Lemij
Congratulations, that's a nice portfolio you've built up there.
Great values, with good sector diversification and a Swiss-American mix. These are also my favorite markets.

I see with amusement that you have ATLN. This brings back memories because I started investing in the stock market with this stock about fifteen years ago. At the time it was a highly speculative stock, it was not yet at the SMI. I was not yet following a dividend strategy at that time, I was only "dabbling" and I had suffered a big loss with ATLN and so I sold it. If I had done buy&hold I would have made a nice capital gain, since the stock has risen well during all this time 🙂

In short, ATLN now becomes a stock that pays increasing dividends and the circle is complete!

[Lemij]

Hi Jerome,

Thanks for your reply!

Indeed, I had seen that ATLN had had quite astonishing growth over the last 10+ years.

I still have a bit of trouble with these big progressions because I have the impression that by moving too far away from the evolution of the GNI, SMI or other indices, the title will eventually only be able to plunge again. But I have no experience or knowledge on this subject.

This makes it very difficult for me to determine whether a stock is too expensive or not and whether it is the right time to buy it.

For now, I am assuming that if the stock detaches itself from the index for a long period (5 years and more) then it will not be forced to fall back to the level of the index and therefore it has "beaten the market".

What do you think about it?

[Jerome]

There is no rule on this subject. There are stocks that beat the market for several decades and that actually do not seem to want to come back down to its height. There are others on the contrary that beat the market for a long time and that have fallen from very high, or even gone bankrupt.

History is full of examples of companies that were thought to be above the fray and that collapsed. Think for example of Eastman Kodak which missed the technological turn of digital devices.

Generally speaking, all technologies are subject to this problem. They ridicule the market for several years, then they collapse. This was once the case for Apple, which recovered when Steve Jobs returned and the iPods and iPhones were launched. And now we can perhaps imagine that this company will collapse again in the future. For now, it still has enormous resources, but it only needs to miss a technological turn, and boom.

This could even be the case for Google, which we believe today to be unbeatable with its quasi-monopolistic position among search engines. All it takes is for a new way of surfing the net to come along and for Google to miss this turn and boom... Ok it seems impossible today, but it also seemed impossible at the time for Kodak (which was on the Dow Jones, let me remind you!).

There is an incredible company on this subject, it is IBM:

IBM (NYSE:IBM)

It has already had to reinvent itself three times during its long history, and it is still here!

In general, I generally avoid technos today because of this. Even if they are very tempting, it can backfire very quickly and it can hurt a lot.

Pharmas are a bit of a "techno" apart. Of course, they can also miss a technological turn, but they are also in health goods, basic necessities and this is therefore an advantage in the long term because it is a defensive sector.

In the end, a stock is not expensive or not because it beats the market or not, but in relation to its fundamentals. It can thus be very cheap even though it has been outperforming the market for ages.

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