October Update - A Small Experiment

 



Background:

Dividend Portfolio - Dividend Growth Stocks.

Speculative Portfolio - Good companies that are richly valued high growth companies.

Both portfolios were started with 10% of my liquid assets each on Jan 1st 2021.

October Update:

Well, the stock market seems to be able to stay irrational much longer than we can stay solvent.  In normal times, i would have sold out and waited this out.  However, in my portfolios, I have a commitment to stay fully invested all the time.  It did help.  The Speculative portfolio, which had gone underwater over the last couple of months, came back to something like even, while the dividend portfolio stayed stable.  Both underperformed S&P 500.

The relentless march of the indexing continues.  The experiment was supposed to pick the winner between the dividend portfolio and the speculative portfolio.  I wonder if Indexing will end up being the real winner!  Saves a lot of time for sure, but will it also make you a lot of money?

Stock of the month:

Z - Zillow is a company that has always seemed undervalued relative to other internet darlings like PINS or ETSY.  I had never purchased it since I could not figure out how they might make money.  Then the stock had a sharp fall recently when there was news that they had stopped purchasing homes.  It was the first time I heard that they were even purchasing homes.  Purchasing homes based on data in your massive database does not seem like a bad idea.  The reason for the stop in purchasing homes also seemed reasonable (they dont have enough people to handle homes that have been offered for sale).  So I took the plunge and took a small position, thinking I would add to it when it plunges more (I have learnt from bitter experience that knives often plunge a lot before they bounce).  However, this bounced straight back up.  

Numbers since Jan 2021:

S&P 500: 24.45% (UP from 17.8% end of Sept)

Nasdaq Composite: 22.05% (UP from 13.78% end of Sept)

Dividend Portfolio: 12.2% (DOWN from 15.13% end of Sept)

Speculative Portfolio: -7.6% (UP from -14.84% end of June)


Long Reads for the month

Afghanistan - The Big Picture (ritholtz.com) one of the most heartfelt blog posts on the hypocrisies surrounding our modern life that I have read.  Surprising to find this in a financial blog, but I guess we do learn a lot from our relationship with finance, just like we do with sports and religion. 

"Now, it was all about aggression. Which isn’t hard to believe if you listened to the music. The sixties were about peace and love, FM was unformatted, for hipsters, for explorers. But by time we hit the end of the seventies, we had years of formatted aggressive and meat and potatoes rock on FM in every hamlet and burg and this was the music that fed the yahooism of those who never had to face the draft, the bullies who hadn’t been anywhere and thought the U.S. was the indomitable greatest country in the world without flaws.
And then it got worse."

Relentless! 

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