A Review of My Holdings Pt. 1, Also Diversification
I think now is about the right time to review my holdings, where I bought, how much I’m up, and how long I plan to hold. I have seven positions in my portfolio, so I’ll spend the first part going over my three holdings that are up the most. The first position up is Microsoft.
Microsoft is my best purchase by a significant amount. I bought Microsoft at about $170, and through DRIP, (Dividend reinvestment plan) my price paid is about $177. I am up 135% on the position and have no plans to sell. Microsoft is 15% of my portfolio, and I would be fine if it were 100%. Satya Nadella is, in my opinion, the best CEO in tech. Microsoft is ramping up its AI capabilities faster than any other big tech company, and its cloud service system continues to grow. On top of that, I am an Xbox man, so I love Microsoft, but seriously, Microsoft is integrating its products seamlessly, and I see nothing but money in the future for Microsoft. I believe Microsoft is the best company in the world.
My second company is Costco. I am up 67% on Costco. Costco is about 29% of my portfolio. I bought Costco once at $300 and then saw a buying opportunity at $492 and circled back, so my average price paid (once again including DRIP) is $435. Costco can be a scary company because it is so boring. Costco is not a glitzy tech company. Costco is not a super high dividend company with a yield of 1/3 of the S&P 500’s average yield. And Costco’s sector is pretty boring as well. On top of all the boringness, Costco is such an expensive company with a P/E of 58 and a share price of $725. However, Costco is one of the best-run companies on the planet. Costco has one of the lowest turnover rates in the industry, a unique business model that rakes in cash, and unparalleled brand loyalty. Everything with Costco starts and stops with the membership. Costco’s membership-only model is something that no other competitor has been bold enough to match, and that membership model weirdly allows them to provide profits to themselves and consumers. Also, everyone loves Costco. It’s weird because I live in such a small town, the closest Costco is about two hours away, but I still love them and plan to hold their stock forever.
The third-placed position I hold is TQQQ. I am up 15% on TQQQ. You may be thinking, “Well, that’s sort of low. You’ve been talking about TQQQ for a while,” and you would be right. I bought TQQQ for the first time in August of last year, sold out in late November, and bought back a few weeks later. You may also be thinking, “Henry, only up 15% on your third-placed position is sort of low, don’t you think.” And again, dear reader, you would be correct. When I started this website last May, I practically reset my portfolio. I do not remember what I held, but I switched out everything except for Microsoft, Disney, and Costco. Those are the only three positions that have been given time to accrue, which is why all my positions are a smidgen lower than you would think in all-time gains, but I’m still beating the major indices over the past year.
Anyways, as I said, TQQQ is an interesting pick. TQQQ makes up 10% of my portfolio and is basically a bet that tech continues to accrue value. I believe in tech, and I believe in the fact that tech companies are going to continue to innovate. My thought process is basically, “If I think tech, over a long enough period of time, is going to always go up, I should get as much bang for my buck as possible.” TQQQ is a bet on the future of tech and a bet that tech is the best industry for growth. I am all in, or as much as I can handle, on TQQQ. Now, before you go deep into TQQQ, I want to warn you about the risk. It can be terrifying watching your position tick down 5% each day for a week. I remember at one point, I was down 40% on Disney and 40% on TQQQ. You have to stick to your guns. If you flee during battle, you will not escape with your life, merely a sword in the back. “Come back with your shield or on it.”
Those are my top three. Next, we will do my next four. And as a last item, there is nothing wrong with being highly concentrated. Some people believe being as concentrated as I am to be foolish. I’m mostly in tech, no position I hold is under 9% of my portfolio, and one position I hold is almost 30% of my portfolio (Costco). Being highly concentrated is a great thing if you are investing correctly. In my opinion, diversification is for those who cannot dedicate much time to their portfolios. And that is totally fine if that is you. If you are too busy to trust yourself to pick 5-10 positions, then yes, you are correct to buy VOO, SPY, etc. However, I can dedicate time to this, and I would rather have 45% of my portfolio be Costco and Microsoft than half of my portfolio be junk companies I’m buying to hedge my bets. No risk it, no biscuit.
