It’s the time of the year again when I need to explain to myself what am I doing.
There are lots of worries around the world: Ukraine (it’s a real war in Europe, make no mistake), Greece, ISIS. Ebola just subsided (don’t know why that one scared investors). And yes, the collapse of oil prices (only really rich people think it’s bad). But let’s not forget, worries are good for investors. They allow us to get good entry points. And bull markets climb a wall of worry. It’s scary when everybody’s happy (remember March 2000?)
Portfolio goal. Growth. This is a high beta, unapologetic growth portfolio with some safeguards and some boring investments. The goal remains unchanged.
Basic Principles. Most of the stocks in this portfolio were chosen for long term investment, which, for me, is about 18 months. Every stock is under review all the time, with a major review of the portfolio twice a year. I can trade around any position if I feel like it. The portfolio is not diversified by sectors. Diversification reduces risk, but it also reduces potential gain. No change in basic principles either.
Strategy. Most money is invested in the US. But I increased my European exposure lately. Europe is coming back. Domestically, with the GOP controlling Congress, we might get into some ugly fights, with possible veto and government (or parts of government) shutdowns. I think every such fight is a buying opportunity.
Paradigm Changers. These are stocks of companies that are changing business in sectors or even in the whole world.
Google (NASDAQ:GOOGL, GOOG) Ultimate disruptor. Google is changing the advertising world. The company is also aggressively moving to mobile internet advertising.
- Risk: All great empires were destroyed by internal problems. There is also a risk of search ad market saturation.
- No changes since last review.
- Plan: Hold, trade around.
ARM Holding (NASDAQ:ARMH) Pure brain company. Company designs ARM CPUs for a wide range of mobile devices and licenses them to different companies. Most smartphones and all tablet computers I know run on ARM CPUs. Additional plus in current environment: it’s a European company, based in UK.
