Author Topic: DIY growth stocks picking  (Read 10235 times)

cloud72

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DIY growth stocks picking
« on: January 12, 2020, 11:56:20 AM »

***Renamed thread title to: DIY growth stocks picking so people don't confuse this with index fund. ***


I start this thread to document the DIY mini growth portfolio  I just built this year in January, 2020. I will not disclose its detailed holdings rather than its performance and value. It's 90% US and 10% Canadian growth stocks plus 3 European stocks and 1 Chinese stock.

The year to date (YTD) return % assumes all current holdings in the portfolio were purchased at the beginning of year. It's calculated as dividing the total value at current date  by total value on Jan 1 of the year. The YTD shows here is NON-leveraged return and without considering the cash balance/effect of cash in/out.

 I am buy and hold long term investor and have low turnover rate. The majority of holdings will remain as it as. The big change will happen at year end where I will decide which stock and how many shares to sell to generate $30k CAD.

I am still in the process of building it.  It's 90% done. Just need a few touch up on Monday.

Note: This is very aggressive strategy. DO NOT follow blindly.


Basic idea:   To obtain max possible return as buy and hold investor, the best way is to buy a large numbers of small/mid size companies in early stage of growth or companies that will grow at high rate for decades.. i focus on the quality of the underlying business. I do not get into too much details about each company. Portfolio is set to equal weight initially. If some positions grow very large, I may trim it down a bit but mostly do not touch the weighting to avoid pulling flowers and watering weeds. So no re-balancing.

Initial weight is set to be $2500 CAD per  stock. 

Portfolio Inception date: Jan 1, 2020.

Expected  return: 20% per year.

Annual withdrawal: sell $30k CAD stocks per year.  Living expense: $23k CAD per year.  i have a roommate to share expense which will cut down true expense to $18k. Let's assume my expense is $23k and sell $30k per year. The dividend is 1% so total cash generated at year end is about $33k CAD.

Date: Jan 12, 2020:
Total stock Value: $362,000 CAD
Number of stocks: 141
Portfolio YTD(Year To Date) return excluding dividend: 3.53%.   

TSX YTD excluding dividend: 1%
SP500 YTD excluding dividend:1.07%



 



« Last Edit: January 24, 2020, 11:06:28 AM by cloud72 »

reeshau

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Re: DIY mini growth fund
« Reply #1 on: January 13, 2020, 02:00:59 AM »
So...why aren't you disclosing holdings?  This would be much more believable if you did; otherwise, it's just made-up numbers.  Are these securities so thinly traded that exposure on the MMM forum could arbitrage the value away?

Seriously, there are a number of very sophisticated investors here.  They could help you hone your strategy--or point out risks or problems, and what possibly to do with them.

AdrianC

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Re: DIY mini growth fund
« Reply #2 on: January 13, 2020, 06:17:12 AM »
Note: This is very aggressive strategy. DO NOT follow blindly.
No one can follow you because you don't disclose the stocks or even your method of selecting them.
Quote
Expected  return: 20% per year.
And an expected 9% withdrawal rate. That's, erm, quite aggressive...

YttriumNitrate

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Re: DIY mini growth fund
« Reply #3 on: January 13, 2020, 10:45:15 AM »
Basic idea:   To obtain max possible return as buy and hold investor, the best way is to buy a large numbers of small/mid size companies in early stage of growth or companies that will grow at high rate for decades.. i focus on the quality of the underlying business. I do not get into too much details about each company.

***
Number of stocks: 141

It looks like you're setting up a small/mid cap portfolio in a few sectors. It seems like it would be easier to just buy a few sector based ETFs than 141 stocks. For example:

Small cap healthcare:PSCH
Small cap energy : IOIL

cloud72

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Re: DIY mini growth fund
« Reply #4 on: January 13, 2020, 11:13:50 AM »
Alright!  After spending 2 weeks  sifting through thousands of stocks. The construction of the mini growth portfolio is finally completed! I can't give away the hard work right away. Maybe I'll share the  holdings after couple years.. Majority of them, 60% of the stocks, I just picked from the holding of a Vanguard Growth ETF, I think I found 100 out of 1000. For the remaining stocks,I found them myself.   Today I added the last 17 stocks to the portfolio and the total number of stocks is: : 157.   

What I meant by not following blindly is not just go out there and buy 150 stocks.  I am VERY PICKY about what to buy for the growth fund. I am taking about picking 1 stock out of 10000 with a target long term return of at least 15%+. 

 To give you an example of bad stock picker, check out Dividend girl's holding, (Myfirst50000). Just google: Dividend girl.  what a mess! Most of her holdings  are mediocre stocks! The portfolio is very UN-organized with no effective strategy. I guess she picked stocks by feeling alone..

If fund managers pick stocks the way I do, what are they going to do at their jobs for the rest of year?   As charlie Munger said something like: if university professors teach investing like Charlie does, the class will be over very soon and what are they going to do for the rest of the semester?

I was thinking about starting  a blog to share my investing journey but realized majority of people should stick with indexing and not bother with picking stocks.. and my portfolio will grow to a point where blog income won't matter in a few years. and blogging will consume lots of my time and energy.  So I gave up blogging and decided to share something to a small group of unconventional people. I believe MMM group is a group of very educated and intelligent people and unconventional.  Still, most people are against my idea.

I've decided to share the last 17 stocks I added. I've created a tracking spreadsheet for these 17 stocks for anyone to view with the link and my comments in Column A. This 17 stocks combo will be a small part of my portfolio.(11%).  It tells something about my selection style and won't match my portfolio performance 100% but should reflect the quality of the whole portfolio.It contains only 17 stocks and performance will be volatile.

It's fine to hold just 20 stocks in a blue chip portfolio. But 20 stocks is still too few to me. The risk of even one stock doesn't go as planned will severely lower the return. For me, it's far easier to use a sound selection method find a group of quality growth stocks that will turn out okay on average than say picking 10 to 20 successful growth stocks...  The fewer the numbers of stock, the more it's like gambling. Right/wrong consequence is huge.  Having large number of growth stocks is fine as long as they are the similar quality and have equal potential to grow at 15%+ per year in the future because not all businesses grow at the same rate. Even in a group of growth stocks, some will grow faster. Some will grow slower. Occasionally, we are wrong about some stocks.

The idea of having 157 stocks is to capture as many potential multi-baggers as possible. My picking method asks for at least 15% per year return in the long term. With that mental filter, I was able to find only 157 stocks. It's not exact science, maybe there more out there and that's okay. I avoid so many unwholesome industries: weapons, alcoholic, tobacco, cemetery. Generally, I don't buy any stocks that I don't enjoy using their product/service myself. There are many ways to make money.

To tell you a secret, I've read many investing books and I don't think books or people mentioned this. The stock price behaviour reflects the quality of the underlying business. If a business is low quality, the stock price will be very volatile and lots of big up and downs. High quality business's stock price go up surely and steadily over long term. Stock price is forward looking, if the revenue/profit doesn't increase steadily and surely, the stock price will go flat line. Then you have rate of growth to look into. I can find plenty of stocks to get 10% to 15% return but that's not the best return possible for buy and hold. Then you need to look at if there's a market demand for the stock. It's rare but sometimes, I encountered stocks with nice growing revenue and profit but no body buys it! The stock price went nowhere for years. Maybe the market knows something I don't and I avoid this kind of stock. I don't spend too much time on each individual stock. I apply the law of least amount of effort to get maximum result in life. (Pareto principle).

I used a little bit of leverage to boost the numbers of stock to 157 but all return numbers here doesn't include the leverage so the YTD return is NON-leveraged performance!. The calculation for the 157 stocks is the same as the 17 stocks tracker.

With back testing, the average return of the 157 stocks is 25% per year over the past 5 years.  For back testing, it CAN and CAN NOT predict future returns depending on what moves the stock price.
If past performance is based on underlying business performance, back testing CAN predict future returns. If the past performance is based on speculation without relation to business performance, then back testing CAN NOT predict future return.

On a daily basis, the 157 stocks portfolio go down less than the index and go up more than index,so in the long term, there's a big gap in performance between a group of quality growth stocks and index. Watching my portfolio to pull away from the index return is what give me the confidence not to worry about individual stock performance and focus on the whole thing and think long term.  Today: 1 stock went down 13% and 1 stock went up 20% because of earning release: 1 missing estimate and 1 beating estimate.  Most of the stock are pretty calm. and the whole portfolio is up 1% as I am writing this post 12:40PM ET. Meanwhile, TSX is up 0.1% and SP 500 is up 0.5% today.  Whole portfolio is up 4.42% YTD.

Here's the link to the 17 stocks: https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing
There are two tabs. 1st tab is the stat. 2nd tab is the holdings.

If you like this tracker, I think you can download it and upload to your google drive and modify to track your own portfolio. I just love google service: google keep, google drive. It makes my life and investing much easier.  If you are in US, and don't need to CAD conversion, just delete the conversion formula.

I'll share more in the future.


17 growth stocks:

Note:   Ticker
Revenue growth is not fast. Market is pricing in the extremely long term view.    MLAB
New kid on the block. Lots room to grow.   XPEL
Similation SW.  High growth rate and profit.    SLP
small cap fast grower.    PAYS
Mid cap steady grower.    NOW
Bring reputation back to mortgage. More growth to come.    NMIH
plane engine leasing..    WLFC
FinTech.   SSNC
Fast growing community bank.    CARO
It provides service to connect lender and borrow.    TREE
Fast growing community bank.    NCBS
US housing is just slighly above 2007 peak. More room to grow.    LGIH
US housing is just slighly above 2007 peak. More room to grow.    IBP
Rare to find EU growth stock. Why not give it a try?   MIME
Monopoly in Chip Lithography equipment. Mid cap. Just buy as admiration.    ASML
Mid cap steady grower.     AVGO
Rare to find Chinese growth stock in US exchange. Lots room to grow.    TAL

« Last Edit: January 13, 2020, 02:59:48 PM by cloud72 »

YttriumNitrate

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Re: DIY mini growth fund
« Reply #5 on: January 13, 2020, 12:51:37 PM »
I do not get into too much details about each company.

I am VERY PICKY about what to buy for the growth fund.

I wish you the best of luck in your endevour.

reeshau

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Re: DIY mini growth fund
« Reply #6 on: January 13, 2020, 01:47:34 PM »
Well, of the 17 you shared, I have info on 14 of them.  I do show a 5 year potential return of 16% for those--not far off your overall goal.  But that leads me to ask, why 157?  Yes there is portfolio risk, but that is largely mitigated at a portfolio size of 10.  Why invest in your 157th best idea, rather than put everything in, say, your top 20 ideas?  Large funds have to do this because they need liquidity--They will move the market, particularly in small stocks.  You don't have that problem.

I do see 2 stocks with a projected appreciation <10%:  BIO and ASML.  Three others are just over:  MLAB, TREE, and NCBS.  And Willis is higher than average P/E already; I would project a price decline.  You might want to look at AL instead, if you want to get into airplane assets.

You also have a number of these with shockingly high P/E's.  This is very difficult to maintain for a long time:  NOW, TAL, MLAB, SLP, PAYS, MIME.  A number of these are also at a PEG over 2--MLAB is over 4!!

utaca

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Re: DIY mini growth fund
« Reply #7 on: January 13, 2020, 02:08:42 PM »
Alright!  After spending 2 weeks  sifting through thousands of stocks. The construction of the mini growth portfolio is finally completed! I can't give away the hard work right away. Maybe I'll share the  holdings after couple years..

So your whole endeavor is unverifiable? Sounds legit.

Scandium

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Re: DIY mini growth fund
« Reply #8 on: January 13, 2020, 02:13:58 PM »
well this is pretty useless when you won't disclose your (massive) portfolio. I think you would be safe that nobody here would steal your genius idea and get filthy rich.. And even if they did it would not impact you and you'd get filthy rich too, so not sharing seems petty to me.. But hey, do what you want.

cloud72

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Re: DIY mini growth fund
« Reply #9 on: January 13, 2020, 02:14:45 PM »
Alright!  After spending 2 weeks  sifting through thousands of stocks. The construction of the mini growth portfolio is finally completed! I can't give away the hard work right away. Maybe I'll share the  holdings after couple years..

So your whole endeavor is unverifiable? Sounds legit.

Did you not see I shared 17 out of 157 stocks above?  According to conventional wisdom, 20 stocks is enough for a portfolio.

« Last Edit: January 13, 2020, 02:16:18 PM by cloud72 »

cloud72

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Re: DIY mini growth fund
« Reply #10 on: January 13, 2020, 02:27:12 PM »
Well, of the 17 you shared, I have info on 14 of them.  I do show a 5 year potential return of 16% for those--not far off your overall goal.  But that leads me to ask, why 157?  Yes there is portfolio risk, but that is largely mitigated at a portfolio size of 10.  Why invest in your 157th best idea, rather than put everything in, say, your top 20 ideas?  Large funds have to do this because they need liquidity--They will move the market, particularly in small stocks.  You don't have that problem.

I do see 2 stocks with a projected appreciation <10%:  BIO and ASML.  Three others are just over:  MLAB, TREE, and NCBS.  And Willis is higher than average P/E already; I would project a price decline.  You might want to look at AL instead, if you want to get into airplane assets.

You also have a number of these with shockingly high P/E's.  This is very difficult to maintain for a long time:  NOW, TAL, MLAB, SLP, PAYS, MIME.  A number of these are also at a PEG over 2--MLAB is over 4!!

Thank you! Finally someone who can discuss in a friendly manner instead of attacking.


Yes, the PEs are super high for growth stocks. The PE will remain high for extended period of time as long as the company is still growing. We can't predict the future. Investing is not an exact science. It's hard to tell how long a particular company will continue growing.  E.g. A big company such as Appple grew substantially over the past 5 years but I won't touch Apple myself simplely because it's too big and it's business model is not that strong.

The reason I picked 157 is not because I set a number of 157. it just happened that I ended up finding 157 of them.  At this number, it's less about diversification and more about capturing potential multi-baggers. I have substantional portion allocated to new companies that grow aggressively either by market expansion or acquisition.

AL : I will pass on this one.  I don't like stocks with volatile share price. The market is super efficient. Volatile share price tells the business is unstable. yes, looking at the numbers, AL  looks like a good business. However, it seems there are speculations driving the share price all over the place.  Or it's a cyclical nature of this business.  Time is money. If a stock doesn't go anywhere for couple years, it's an opportunity cost.



« Last Edit: January 13, 2020, 02:53:39 PM by cloud72 »

cloud72

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Re: DIY mini growth fund
« Reply #11 on: January 13, 2020, 02:35:04 PM »
well this is pretty useless when you won't disclose your (massive) portfolio. I think you would be safe that nobody here would steal your genius idea and get filthy rich.. And even if they did it would not impact you and you'd get filthy rich too, so not sharing seems petty to me.. But hey, do what you want.

no it's not useless to share 17 stocks only.  You see I used the same method to pick all 157 stocks including the last 17. The 17 will have similar result to the whole portfolio.  It's a sample of the whole thing.   I studied probability long time ago and forgot about it.    Anyone know if it's possible to calculate the probability of 17 stocks matching the return of 157 stocks with a confidence say 90% ? Assume the returns are randomly distributed among holdings.

I'll see later as I can post the result for both.
« Last Edit: January 13, 2020, 02:37:29 PM by cloud72 »

cloud72

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Re: DIY mini growth fund
« Reply #12 on: January 13, 2020, 02:44:52 PM »
First stat after portfolio construction.  I'll report once per quarter.  So far the 17 stocks combo is under performing the whole portfolio slightly but both are beating the TSX and SP 500 index.

The key to out performance is 1. Finding quality growth stocks and 2. Mr. Market agrees with you.   If you have 1 but not 2, it's a bad investment.

Date: Jan 13, 2020

Total stock Value: $408,144.56 CAD
Number of stocks: 157
YTD % return excluding dividend: 4.72%. 
YTD $ change: $18,373.04 CAD

TSX YTD excluding dividend: 1.35%
SP500 YTD excluding dividend:1.78%


17 stocks sub portfolio(Performance in USD): YTD:2.83%

Link to the 17 stocks: https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing
« Last Edit: January 13, 2020, 03:04:50 PM by cloud72 »

utaca

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Re: DIY mini growth fund
« Reply #13 on: January 13, 2020, 03:08:09 PM »
Alright!  After spending 2 weeks  sifting through thousands of stocks. The construction of the mini growth portfolio is finally completed! I can't give away the hard work right away. Maybe I'll share the  holdings after couple years..

So your whole endeavor is unverifiable? Sounds legit.

Did you not see I shared 17 out of 157 stocks above?  According to conventional wisdom, 20 stocks is enough for a portfolio.

I did see the 17 stocks. That leaves 140 stocks that you supposedly own but have not disclosed. It remains impossible to verify your returns.

jeroly

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Re: DIY mini growth fund
« Reply #14 on: January 13, 2020, 04:36:28 PM »
Alright!  After spending 2 weeks  sifting through thousands of stocks. The construction of the mini growth portfolio is finally completed! I can't give away the hard work right away. Maybe I'll share the  holdings after couple years.. Majority of them, 60% of the stocks, I just picked from the holding of a Vanguard Growth ETF, I think I found 100 out of 1000. For the remaining stocks,I found them myself.   Today I added the last 17 stocks to the portfolio and the total number of stocks is: : 157.   

What I meant by not following blindly is not just go out there and buy 150 stocks.  I am VERY PICKY about what to buy for the growth fund. I am taking about picking 1 stock out of 10000 with a target long term return of at least 15%+. 

 To give you an example of bad stock picker, check out Dividend girl's holding, (Myfirst50000). Just google: Dividend girl.  what a mess! Most of her holdings  are mediocre stocks! The portfolio is very UN-organized with no effective strategy. I guess she picked stocks by feeling alone..

If fund managers pick stocks the way I do, what are they going to do at their jobs for the rest of year?   As charlie Munger said something like: if university professors teach investing like Charlie does, the class will be over very soon and what are they going to do for the rest of the semester?

I was thinking about starting  a blog to share my investing journey but realized majority of people should stick with indexing and not bother with picking stocks.. and my portfolio will grow to a point where blog income won't matter in a few years. and blogging will consume lots of my time and energy.  So I gave up blogging and decided to share something to a small group of unconventional people. I believe MMM group is a group of very educated and intelligent people and unconventional.  Still, most people are against my idea.

I've decided to share the last 17 stocks I added. I've created a tracking spreadsheet for these 17 stocks for anyone to view with the link and my comments in Column A. This 17 stocks combo will be a small part of my portfolio.(11%).  It tells something about my selection style and won't match my portfolio performance 100% but should reflect the quality of the whole portfolio.It contains only 17 stocks and performance will be volatile.

It's fine to hold just 20 stocks in a blue chip portfolio. But 20 stocks is still too few to me. The risk of even one stock doesn't go as planned will severely lower the return. For me, it's far easier to use a sound selection method find a group of quality growth stocks that will turn out okay on average than say picking 10 to 20 successful growth stocks...  The fewer the numbers of stock, the more it's like gambling. Right/wrong consequence is huge.  Having large number of growth stocks is fine as long as they are the similar quality and have equal potential to grow at 15%+ per year in the future because not all businesses grow at the same rate. Even in a group of growth stocks, some will grow faster. Some will grow slower. Occasionally, we are wrong about some stocks.

The idea of having 157 stocks is to capture as many potential multi-baggers as possible. My picking method asks for at least 15% per year return in the long term. With that mental filter, I was able to find only 157 stocks. It's not exact science, maybe there more out there and that's okay. I avoid so many unwholesome industries: weapons, alcoholic, tobacco, cemetery. Generally, I don't buy any stocks that I don't enjoy using their product/service myself. There are many ways to make money.

To tell you a secret, I've read many investing books and I don't think books or people mentioned this. The stock price behaviour reflects the quality of the underlying business. If a business is low quality, the stock price will be very volatile and lots of big up and downs. High quality business's stock price go up surely and steadily over long term. Stock price is forward looking, if the revenue/profit doesn't increase steadily and surely, the stock price will go flat line. Then you have rate of growth to look into. I can find plenty of stocks to get 10% to 15% return but that's not the best return possible for buy and hold. Then you need to look at if there's a market demand for the stock. It's rare but sometimes, I encountered stocks with nice growing revenue and profit but no body buys it! The stock price went nowhere for years. Maybe the market knows something I don't and I avoid this kind of stock. I don't spend too much time on each individual stock. I apply the law of least amount of effort to get maximum result in life. (Pareto principle).

I used a little bit of leverage to boost the numbers of stock to 157 but all return numbers here doesn't include the leverage so the YTD return is NON-leveraged performance!. The calculation for the 157 stocks is the same as the 17 stocks tracker.

With back testing, the average return of the 157 stocks is 25% per year over the past 5 years.  For back testing, it CAN and CAN NOT predict future returns depending on what moves the stock price.
If past performance is based on underlying business performance, back testing CAN predict future returns. If the past performance is based on speculation without relation to business performance, then back testing CAN NOT predict future return.

On a daily basis, the 157 stocks portfolio go down less than the index and go up more than index,so in the long term, there's a big gap in performance between a group of quality growth stocks and index. Watching my portfolio to pull away from the index return is what give me the confidence not to worry about individual stock performance and focus on the whole thing and think long term.  Today: 1 stock went down 13% and 1 stock went up 20% because of earning release: 1 missing estimate and 1 beating estimate.  Most of the stock are pretty calm. and the whole portfolio is up 1% as I am writing this post 12:40PM ET. Meanwhile, TSX is up 0.1% and SP 500 is up 0.5% today.  Whole portfolio is up 4.42% YTD.

Here's the link to the 17 stocks: https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing
There are two tabs. 1st tab is the stat. 2nd tab is the holdings.

If you like this tracker, I think you can download it and upload to your google drive and modify to track your own portfolio. I just love google service: google keep, google drive. It makes my life and investing much easier.  If you are in US, and don't need to CAD conversion, just delete the conversion formula.

I'll share more in the future.


17 growth stocks:

Note:   Ticker
Revenue growth is not fast. Market is pricing in the extremely long term view.    MLAB
New kid on the block. Lots room to grow.   XPEL
Similation SW.  High growth rate and profit.    SLP
small cap fast grower.    PAYS
Mid cap steady grower.    NOW
Bring reputation back to mortgage. More growth to come.    NMIH
plane engine leasing..    WLFC
FinTech.   SSNC
Fast growing community bank.    CARO
It provides service to connect lender and borrow.    TREE
Fast growing community bank.    NCBS
US housing is just slighly above 2007 peak. More room to grow.    LGIH
US housing is just slighly above 2007 peak. More room to grow.    IBP
Rare to find EU growth stock. Why not give it a try?   MIME
Monopoly in Chip Lithography equipment. Mid cap. Just buy as admiration.    ASML
Mid cap steady grower.     AVGO
Rare to find Chinese growth stock in US exchange. Lots room to grow.    TAL

Congratulations on finding these miracle companies that go up more than the index on every up day and down less than their index on down days...

Quote

AL : I will pass on this one.  I don't like stocks with volatile share price. The market is super efficient. Volatile share price tells the business is unstable. yes, looking at the numbers, AL  looks like a good business. However, it seems there are speculations driving the share price all over the place.  Or it's a cyclical nature of this business.  Time is money. If a stock doesn't go anywhere for couple years, it's an opportunity cost.

 and who have less price volatility than other stocks.

By the way, you should realize that if your picks were public and generated excitement for your stocks, there would be more demand and your stocks would go up more than if nobody knows about them?  So you are shooting yourself in the foot by not revealing your picks...unless you deep down realize that you have virtually no chance of being right and donít want the humiliation of being revealed to be a typical bad stock picker.

YttriumNitrate

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Re: DIY mini growth fund
« Reply #15 on: January 13, 2020, 06:58:57 PM »
By the way, you should realize that if your picks were public and generated excitement for your stocks, there would be more demand and your stocks would go up more than if nobody knows about them?  So you are shooting yourself in the foot by not revealing your picks...unless you deep down realize that you have virtually no chance of being right and donít want the humiliation of being revealed to be a typical bad stock picker.

It would seem the simple solution is to distribute a file with all of the 157 stocks, but use some ridiculous level of encryption on it. That way, if you are right people can verify your results when you give out the password, but you don't have to worry about other people stealing your ideas.

MustacheAndaHalf

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Re: DIY mini growth fund
« Reply #16 on: January 14, 2020, 11:01:17 PM »
I start this thread to document the DIY mini grow fund I just built this year in January, 2020. I will not disclose its detailed holdings ...
Which one - will you "document" or will you "not disclose"?  What stops you from buying 200 stocks, and then secretly leaving out the performance of 50 stocks at the end?  How would anyone verify your performance?

It may help to read about the momentum experiment I ran for ~2.5 years, over in this thread:
https://forum.mrmoneymustache.com/investor-alley/playing-with-momentum/

Before making a purchase, I explained how I determined the next purchase, and listed what it was.  After making each purchase, I posted the percentage of assets in each holding.  That way, there's no revising history or leaving out bad performers.

cloud72

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Re: DIY mini growth fund
« Reply #17 on: January 15, 2020, 11:14:46 AM »
It seems most people just want to have fish but don't want to learn how to fish. I already explained here a lot of details on what a high-quality growth stock is.  Nobody explained to me what a high-quality stock is.  Charlie Munger said: It's a good idea to pay a fair price to buy high-quality businesses and sit on our ass than to buy mediocre businesses at a good price.  Just that one sentence, one day it dawned on me: Ah ha! I Got it.   And stopped doing the value investing thing. In my early investing years, I've read Benjamin graham's book. He got such a good reputation so I followed the value idea and searched for low price stocks.  The problem is stock prices went down for a bad reason because the business has problems.  The market is not stupid and very efficient in the medium to long term. So what happened most of the time is I bought some stocks after they went down a lot and wait, wait..and  wait for a random time.    Some never came back up. Some went up and I made some quick money. But in the end, it's lots of work and waiting. I don't know what my performance was during that period, probably underperformed the index. Look at Fairfax financial, they got some hype.  I believe they employ value investing. Look at its stock price, it's just a mediocre business. Its 10 years return is just 7.4% including dividend matching index return. Not great!

It's not constructive to just give a list of stocks for people to buy if they don't want to spend the time and effort to understand why those stocks are good. and why buying a group of high quality small/mid growth stocks will outperform the index. There's a saying: it's better to teach someone how to fish than give them the fish.  I just want to share a bit real investing strategy that works here. For the right person, one sentence is enough to inspire someone. Just like how Charlie Munger inspired me. 

If anyone is interested, keeping track of the 17 stocks. Just a small subset of my portfolio will likely outperform the index in the next few years. I think a randomly selected group of 30 stocks out of 157 stocks will outperform the index. Nothing good lasts forever, if a business gone bad, adjustment is needed. But just assume those 17 stocks stay the way as they are and see how they perform over the next few years. I think most people don't have the patience to keep track of 17 stocks and learn why they are good for growth.  I am still disappointed at the responses from MMM  forum so far. The replies so far sound so conventional except 1 or 2 good replies. I expected MMM group to be an unconventional and smart group of people. One of my intentions was to find out if there are other people understand what I am doing here. Most replies are from indexers, jealous people, closed-minded people or people who don't want to learn. I understand if this is a regular forum. I had bad experiences on the regular forum.  Come on! This is MMM forum. Where's the badassity? That's the word I had to enter to register this account.

Yes, It makes perfect sense to disclose all my holdings. It's not only that people just want to take the fruit and don't want to plant trees. It's also because there's a tiny tiny risk of a bubble. If everyone is buying, then the bubble gets too big and bursts like in 2000!  if I disclose them 5 years from now, they will still outperform the index for another 5 years because they are the highest quality among the index. It's also a good time frame to validate my picks worked. Now I changed my mind and no longer wish to disclose my 158 stocks in the future.( just added 1 more).  So far, by backtesting and daily price movement, They outperforms the index by a big margin. Why do I know it will work ahead of time? Because I've been using the same strategy for years! Except I was only buying dividend increasing stocks regardless of CAP size, missing out lots of growth stocks! So I gave up a dividend-focused approach. 2% yield reduction. Instead of focused on a large group of small/mid CAP growth stock regardless if it pays a dividend. The result is getting 20% return instead of 12%.   Quality! Quality! Screen out small/mid-size high-quality high growth companies and buy a large basket of them. (at least 30) You'll beat the index by buying and hold! The index contains 80% garbages.  To me, if the stock price went nowhere for a couple of years, it's mediocre. If a stock's expected growth rate is below my target return, it will be in the basket of Do Not Buy.  The reason why the stock price of high-quality company outperforms the index even daily is that the speculators(day traders) avoid high-quality stocks because they are boring to them. So on average, fewer speculators on high-quality stocks and more serious investors supporting the long term price appreciation.

I must shocked many people I don't dig too deep into each company. I don't read their annual reports. I just looked at the most important things.
This is similar to computer programming. We have low-level programmers and high-level programmers.  Low-level programmers must know assembly language, how the computer components are organized etc. High-level programmers such as web developers don't have to! The high-level programming language is also easier! In investing, I am a kind of high level investing. High level investing is very easy and doesn't consume a lot of time. All I care is if I give some input(money) then there's an output(return %).  For high level investing, we just need to understand why the stock price goes up in the long term and how to increase its certainty.   High level investing vs low level investing is also similar to people who build cars vs people who drive cars. People who drive cars don't necessarily need to know all the internal components of the car.  An investor can be successful by either high level or low level but for the low-level investor, it's too easier to get bogged down by the details and ignore what the obvious.

As to Price momentum Trading(speculating)... Sorry, I am a buy and hold investor. Yes, we need to check the track record and estimate if the record is likely to repeat in the future. I don't do technical trading/speculating.  I think I got a quick peek into a momentum ETF. It contains a lot of big caps like MSFT, Amazon, FaceBook..   This kind of price momentum Trading only works in the short term. It will underperform in the long term.   It depends on what's underlying factor causes the price increase. SP500 increased a lot during the past 5 years. I won't "momentum" invest in the SP500 index.   It's an average of lots of mediocre businesses and a small portion of great businesses.   So for a high level of investing, I can spend just 2 weeks picked out the best companies in the index. Most of them from the Growth ETF holding list. It's not hard. If you look at what stocks Charlie Munger owns, one example is Costco.  I don't need to look into the details of Costco's business to know it's a high-quality business. To be specific, their advantage is the scale and rediculous low cost.  Study their characteristics. It's not difficult. I don't have a business degree. I have an engineering degree, completely unrelated to investing. Even I can self-taught and learned to pick stocks. Not everyone can be stock pickers. It depends on each's strength. It's like a short person can't be a good basketball player.

I know some speculation ways to make massive money in a short time but also massive loss if wrong. E.g. Make 90% per year by shorting VIX ETF but the risk?  Unlimited loss if VIX spikes during a market panic. I also saw on Youtube a Chinese guy(Chinese like to gamble!) turned thousands to millions by shorting/day trading penny stock. But successful gambler is just that: a gambler.  Speculation is NOT investing.







« Last Edit: January 15, 2020, 11:36:16 AM by cloud72 »

cloud72

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Re: DIY mini growth fund
« Reply #18 on: January 15, 2020, 11:20:30 AM »
Note the last row 159. 159 -1   = 158 holdings. All equal weight start of year.  The top  holding increased 30%.. Since each stock is less than 1% of portfolio. The Year To Date return % is the average of all 158 stocks from different industries. It's not luck.
I hid the symbols. I don't want to just give out the fish.

« Last Edit: January 15, 2020, 11:27:12 AM by cloud72 »

EvenSteven

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Re: DIY mini growth fund
« Reply #19 on: January 15, 2020, 11:49:30 AM »
Quote
It's not only that people just want to take the fruit and don't want to plant trees.

Nobody wants your fruit.

Let's let this useless thread die and go away.

Davnasty

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Re: DIY mini growth fund
« Reply #20 on: January 15, 2020, 12:15:59 PM »
Quote
It's not only that people just want to take the fruit and don't want to plant trees.

Nobody wants your fruit.

Let's let this useless thread die and go away.

Useless? I think it's entertaining.

But OP, you should be aware that no one is going to take this seriously unless you can provide more information. If you insist on concealing the identity of your awesome stock selections, I would recommend just focusing on the 17 that you have given out and make the thread about those 17 only. No one is interested in the gains of your mystery stocks, excel snapshots or not. If you don't understand why, then this is a lost cause and I'm with EvenSteven.

bacchi

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Re: DIY mini growth fund
« Reply #21 on: January 15, 2020, 02:53:29 PM »
Besides, 30%/year is nothing. I made 276% last year with only a few minutes of work a week.

No, I'm not going to disclose my method except that it uses derivatives. You'll just have to trust me.

utaca

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Re: DIY mini growth fund
« Reply #22 on: January 15, 2020, 03:06:11 PM »
Quote
It's not only that people just want to take the fruit and don't want to plant trees.

Nobody wants your fruit.

Let's let this useless thread die and go away.

Useless? I think it's entertaining.

But OP, you should be aware that no one is going to take this seriously unless you can provide more information. If you insist on concealing the identity of your awesome stock selections, I would recommend just focusing on the 17 that you have given out and make the thread about those 17 only. No one is interested in the gains of your mystery stocks, excel snapshots or not. If you don't understand why, then this is a lost cause and I'm with EvenSteven.

I also find it entertaining. I disagree however that OP will ever be taken seriously here. That being said, I'm sure his rambling, delusional nonsense would go over well with the get-rich-quick crowd or unsophisticated seniors itching to be duped out of all their money.

Wolfpack Mustachian

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Re: DIY mini growth fund
« Reply #23 on: January 16, 2020, 11:05:13 AM »
Assuming you're not trolling and are discussing this in good faith, what are you hoping to accomplish? Your lack of disclosure of all of your stocks would seem to show that you're not genuinely interested in proving your success given the framework of trust a realistic person would give a random guy on the internet (the comments about creating a bubble are just straight up silly). Thus, your credibility is not ever going to be there with that caveat. You also comment about teaching a person to fish, but you haven't even done that. To do that, you would need to give a detailed description of the thoughts that went into your 17 stocks so we could learn from you. Shoot, even just 5 of them that were representative. The fact is, your comments seem to be there to just make yourself look good, but you're not really proving that because you're lack of willingness to share information that there's no good reason not to share and the lack of serious details on your strategy for a handful of specific stocks. So....what are you hoping to accomplish?

MissNancyPryor

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Re: DIY mini growth fund
« Reply #24 on: January 16, 2020, 11:13:53 AM »
It is nice to see that Mr. Percentage has a hobby again. 

Best of luck with this endeavor. 

Scandium

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Re: DIY mini growth fund
« Reply #25 on: January 20, 2020, 03:28:32 PM »
Stock picks are boring and who cares, but the mentality of not sharing, teaching to fish etc is rather fascinating. I mean does OP actually think anyone here would "steal" these hot picks? And if they did so what? They'd both get rich! OP would loose nothing, so why not help someone else out? If this was a universal mentality there would be zero how-to guides online, why should I show you something, figure it out yourself from scratch..

Wolfpack Mustachian

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Re: DIY mini growth fund
« Reply #26 on: January 20, 2020, 08:55:19 PM »
Stock picks are boring and who cares, but the mentality of not sharing, teaching to fish etc is rather fascinating. I mean does OP actually think anyone here would "steal" these hot picks? And if they did so what? They'd both get rich! OP would loose nothing, so why not help someone else out? If this was a universal mentality there would be zero how-to guides online, why should I show you something, figure it out yourself from scratch..

Exactly. That really is why this is interesting. OP commented "Yes, It makes perfect sense to disclose all my holdings. It's not only that people just want to take the fruit and don't want to plant trees. It's also because there's a tiny tiny risk of a bubble. If everyone is buying, then the bubble gets too big and bursts like in 2000!" The fact that he thinks his random post on the MMM forum has a chance of this above the chance of a lightening strike to him while he's getting attacked by a shark is either trolling, a monumental expression of hubris, or he really overestimates the influence of the MMM Investor Alley forum :-).

MustacheAndaHalf

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Re: DIY mini growth fund
« Reply #27 on: January 21, 2020, 04:51:19 AM »
Yes, It makes perfect sense to disclose all my holdings. It's not only that people just want to take the fruit and don't want to plant trees. It's also because there's a tiny tiny risk of a bubble. If everyone is buying, then the bubble gets too big and bursts like in 2000!  if I disclose them 5 years from now, they will still outperform the index for another 5 years because they are the highest quality among the index. It's also a good time frame to validate my picks worked.  Now I changed my mind and no longer wish to disclose my 158 stocks in the future.( just added 1 more).
You think if you "disclose all [your] holdings", there's a risk that "everyone is buying" those stocks?

So your theory is, you mention "TREE" (LendingTree) in this thread, and tens of millions of dollars flow into the stock, creating a bubble.  That's completely unrealistic for a $4 billion market cap stock - it would take tens of millions of dollars to own just 1% of that company.  Why would someone invest huge amounts of cash because of a random thread here?

What I think, is someone with no track record has discovered back testing.  That's why above I see "they will still outperform the index for another 5 years", meaning beating the US Stock market for 10 years in total.  You say that's a certainty, but about 90% of mutual funds fail to beat passive index funds over 10 years.  And they have millions to spend on research and staff.

jeroly

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Re: DIY mini growth fund
« Reply #28 on: January 21, 2020, 05:06:01 AM »
Stock picks are boring and who cares, but the mentality of not sharing, teaching to fish etc is rather fascinating. I mean does OP actually think anyone here would "steal" these hot picks? And if they did so what? They'd both get rich! OP would loose nothing, so why not help someone else out? If this was a universal mentality there would be zero how-to guides online, why should I show you something, figure it out yourself from scratch..

Exactly. That really is why this is interesting. OP commented "Yes, It makes perfect sense to disclose all my holdings. It's not only that people just want to take the fruit and don't want to plant trees. It's also because there's a tiny tiny risk of a bubble. If everyone is buying, then the bubble gets too big and bursts like in 2000!" The fact that he thinks his random post on the MMM forum has a chance of this above the chance of a lightening strike to him while he's getting attacked by a shark is either trolling, a monumental expression of hubris, or he really overestimates the influence of the MMM Investor Alley forum :-).
Letís not discount the possibilities of the Dunning-Kruger effect or mental illness.

StashingAway

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Re: DIY mini growth fund
« Reply #29 on: January 21, 2020, 07:30:48 AM »
I am still disappointed at the responses from MMM  forum so far. The replies so far sound so conventional except 1 or 2 good replies. I expected MMM group to be an unconventional and smart group of people..

I know, right? MMM lifestyle is all about picking an unconventional portfolio and beating the market. Can't believe no one is reading between the lines on that one.

Count me as a third good reply. Can't just eat other people's fish the rest of our lives. I, myself, have decided to grow a fish hatchery and skip this single serving nonsense. They have to figure it out for themselves! This ain't no communist capitalism!

cloud72

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Re: DIY mini growth fund
« Reply #30 on: January 21, 2020, 08:50:58 AM »
Alright, I will stop bragging about 160 stocks.. 

Yeah, what do I gain from here? nothing other than feeling good that only I know how to pick stock here but the fact is there are thousands more out there who knows how to pick stocks but just not telling everyone in the public, getting rich secretly. I know this from a search engine. Whenever I search a stock I like, it tells me stocks other people are searching for and not coincidentally, I already own most of them.

I already explained how I pick stocks: I buy stocks with steadily increasing stock price and revenue or profit.   The share price behaviour is a indication of the quality of the business. if stock price doesn't increase steadily at a high rate, it's mediocre stock/business. I don't care if it pays 5% dividend, if the stock goes no where for 5 years, it's garbage stock.  The fact it does, it's indication there's a steadily numbers of people buying this stock in the long term. There are lots of smart people out there.

Now there's a risk in picking growth stocks that when we are wrong and the stock goes down or goes nowhere. That's a reason to have large basket of them.  I won't feel comfortable putting 100% of portfolio in a single stock like shopify which would  make a person super rich if it was bought couple years a ago. I still see room for growth in Shopify so it's part of my big portfolio. A stock picker needs to know  how the share price performed in the past and if it's likely to repeat in the future. Maybe not at the same rate but similar rate. The simple algebra equation(highschool level? not even Calculus) I used to quickly check past performance is:  current share price/old share price, take exponential of (1/years). This will give annual return.  In stock market, history tends to repeat it self. The long term return bounces around a average return. For index, it's about 7% to 10% per year. For  a group of growth stock, the average is higher 20% per year..   Impossible?   I'll give a few examples Canadian stocks: Kirkland Lake Gold Ltd. (KL.TO), Cargojet Inc. (CJT.TO)....  For US stock, take a look at my latest addition: Goosehead Insurance, Inc (GSHD) which was recommended by a search engine and I liked it. GSHD is a recent IPO, a three baggers in 2 years, generated a 75% per year return.  It'll continue to grow at high rate for next couple years. Or how about Cardlytics, Inc. (CDLX) ?  Now diversify over a large numbers of stocks(160 in my case), even I am 90% right and 10% wrong, the result is still extraordinary. Most of my portfolio are well established businesses and a small portion in new high growth business like Goosehead Insurance.

What I found is that a well diversified growth portfolio not only out performs the index in bull market but also out performs in bear market. The growth portfolio has no negative years over the past 5 years and both TSX and SP500 had 2 negative years.

Let's focus on what I've shared.
I randomly picked 13 more stocks from my main portfolio to add to the 17 stocks so now there are 30 stocks, set to roughly equal weight initially and won't re balance.  Watch those 30 stocks out performs the SP500 with a few percentage and and TSX Composite by a large margin per year.

Here's the updated spreadsheet (30 stocks):
https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing

30 holdings:

Symbol
MLAB
XPEL
SLP
PAYS
NOW
NMIH
WLFC
SSNC
CARO
TREE
NCBS
LGIH
IBP
MIME
ASML
AVGO
TAL
FIVN
SPGI
MSCI
JKHY
MKTX
INFO
OGS
UHT
MPWR
TRNS
APH
PLNT
POOL



« Last Edit: January 21, 2020, 09:16:25 AM by cloud72 »

cloud72

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Re: DIY mini growth fund
« Reply #31 on: January 21, 2020, 08:57:48 AM »
And yes, I only spent a few minutes for each  stock to make a decision  to buy below 30 stocks to beat the market... Charlie Munger said there are lots of competitions out there sifting through the stocks. Consider I am one of them. Berkshire Hathaway can't acquire a whole company at a good price, that's why they are sitting at a huge amount of cash. That's the advantage for retail investors to live in an information age.

See what I mean:

Today:
TSX down -0.1%
SP500 down: -0.24%

30 stocks: Up 0.1%. YTD so far beats both index by 1%.


   
30 stocks   
Daily change(%):   0.09%
YTD(excl. dividend)   4.13%
   
   
SP 500 on Dec 31, 2019:   3,230.78
SP 500 now:   3,321.52
SP 500 YTD:   2.81%
   
   
TSX on Dec 31, 2019:   17,063.43
TSX now:   17,564.19
TSX Composite YTD:   2.93%
   
« Last Edit: January 21, 2020, 09:06:13 AM by cloud72 »

cloud72

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Re: DIY mini growth fund
« Reply #32 on: January 21, 2020, 09:23:06 AM »
Besides, 30%/year is nothing. I made 276% last year with only a few minutes of work a week.

No, I'm not going to disclose my method except that it uses derivatives. You'll just have to trust me.

Thanks for sharing.
I don't use options, don't short stocks, dont buy leveraged ETF etc...You get the ideas.
I just buy high quality businesses and sit on my ass and wait.  Much simpler and less work.





cloud72

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Re: DIY mini growth fund
« Reply #33 on: January 21, 2020, 09:43:49 AM »
Yes, It makes perfect sense to disclose all my holdings. It's not only that people just want to take the fruit and don't want to plant trees. It's also because there's a tiny tiny risk of a bubble. If everyone is buying, then the bubble gets too big and bursts like in 2000!  if I disclose them 5 years from now, they will still outperform the index for another 5 years because they are the highest quality among the index. It's also a good time frame to validate my picks worked.  Now I changed my mind and no longer wish to disclose my 158 stocks in the future.( just added 1 more).
You think if you "disclose all [your] holdings", there's a risk that "everyone is buying" those stocks?

So your theory is, you mention "TREE" (LendingTree) in this thread, and tens of millions of dollars flow into the stock, creating a bubble.  That's completely unrealistic for a $4 billion market cap stock - it would take tens of millions of dollars to own just 1% of that company.  Why would someone invest huge amounts of cash because of a random thread here?

What I think, is someone with no track record has discovered back testing.  That's why above I see "they will still outperform the index for another 5 years", meaning beating the US Stock market for 10 years in total.  You say that's a certainty, but about 90% of mutual funds fail to beat passive index funds over 10 years.  And they have millions to spend on research and staff.




Back testing is another word for checking the track record. We still need to determine if the past performance has any foundations.

An apple can fall down from a tree because of gravity. Or a person can throw an apple at us. Is it gravity or is it human force?  The question is: What is moving the stock price?   Randomness, speculation or business prospect?

If back testing is 100% useless, what's the point of HR interviewing employees? They can  hire anyone on the street?

Let's take countries as example, picking countries as picking stock, so I do "back testing" and exclude North Korea from my portfolio because they had such a horrible track record from the past couple decades and include US in my portfolio because US had a great track record in the past 100 years.  Is this back testing method good method ? Yes

Take another example, during the Tulip Bubble, is it smart to back test the Tulip price and buy into the Tulip bubble?  No. It's not smart. I don't even buy into the Cannabis hype. I don't buy that kind of stock anyway.


cloud72

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Re: DIY mini growth fund
« Reply #34 on: January 21, 2020, 09:53:17 AM »
This thread is not for indexer who has no interest in owning individual stocks. They'll jealous of stock picker return anyway.
This is for people who are stock pickers and want to improve their result.


I'll give two small examples why index fund/mutual funds  will under perform smart investor.  Stock pickers can avoid losers and buy winners very quickly.

As a investor, we should be aware of current events /trends ,how they affect the stocks.
1. Downfall of mutual fund industries.
In recent years, there are big outflow of money from mutual funds industries. The reason is there are more and more people decided to do self directed investing or indexing so mutual fund businesses are losing business year over year.
Example: Franklin Resources, Inc. (BEN)

2. Tariff effect on businesses. I estimate the tariff effect will last at least couple years.
The tariff war doesn't effect all business equally. Some businesses got big hit and some businesses are immune to Tariff.


As a picky investor, I sold all my stocks that has fund management as major source of revenue. I don't find they provide much value anyway.
I also avoided stocks that are being effected by Tariff. E.G. ALARM.COM, A. O. Smith Corporation.

Well, for index fund and most mutual funds, they'll still include the above mentioned categories of stocks. They hold onto losers until Index decides to remove certain companies from the whole index.

For winners,
The two recent trends is: 1. E-commerce. 2. Cloud computing.

I have decent amount of exposure of small/mid size businesses growing rapidly in those two areas.  one small example:  CargoJet, a air freight business which benefited hugely from the rise of e-commence. E-commerce will continue to grow for the next few years.




« Last Edit: January 21, 2020, 10:06:48 AM by cloud72 »

EvenSteven

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Re: DIY mini growth fund
« Reply #35 on: January 21, 2020, 10:17:15 AM »
I often make the joke that stock picking is really easy. You just buy stocks that will go up in value, and don't buy stocks that will go down in value.

But this seems to be the extent of the OPs "advice" on stock picking, and made in earnest.

Wolfpack Mustachian

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Re: DIY mini growth fund
« Reply #36 on: January 21, 2020, 10:25:15 AM »
Alright, I will stop bragging about 160 stocks.. 

Yeah, what do I gain from here? nothing other than feeling good that only I know how to pick stock here but the fact is there are thousands more out there who knows how to pick stocks but just not telling everyone in the public, getting rich secretly. I know this from a search engine. Whenever I search a stock I like, it tells me stocks other people are searching for and not coincidentally, I already own most of them.

I already explained how I pick stocks: I buy stocks with steadily increasing stock price and revenue or profit.   The share price behaviour is a indication of the quality of the business. if stock price doesn't increase steadily at a high rate, it's mediocre stock/business. I don't care if it pays 5% dividend, if the stock goes no where for 5 years, it's garbage stock.  The fact it does, it's indication there's a steadily numbers of people buying this stock in the long term. There are lots of smart people out there.

Now there's a risk in picking growth stocks that when we are wrong and the stock goes down or goes nowhere. That's a reason to have large basket of them.  I won't feel comfortable putting 100% of portfolio in a single stock like shopify which would  make a person super rich if it was bought couple years a ago. I still see room for growth in Shopify so it's part of my big portfolio. A stock picker needs to know  how the share price performed in the past and if it's likely to repeat in the future. Maybe not at the same rate but similar rate. The simple algebra equation(highschool level? not even Calculus) I used to quickly check past performance is:  current share price/old share price, take exponential of (1/years). This will give annual return.  In stock market, history tends to repeat it self. The long term return bounces around a average return. For index, it's about 7% to 10% per year. For  a group of growth stock, the average is higher 20% per year..   Impossible?   I'll give a few examples Canadian stocks: Kirkland Lake Gold Ltd. (KL.TO), Cargojet Inc. (CJT.TO)....  For US stock, take a look at my latest addition: Goosehead Insurance, Inc (GSHD) which was recommended by a search engine and I liked it. GSHD is a recent IPO, a three baggers in 2 years, generated a 75% per year return.  It'll continue to grow at high rate for next couple years. Or how about Cardlytics, Inc. (CDLX) ?  Now diversify over a large numbers of stocks(160 in my case), even I am 90% right and 10% wrong, the result is still extraordinary. Most of my portfolio are well established businesses and a small portion in new high growth business like Goosehead Insurance.

What I found is that a well diversified growth portfolio not only out performs the index in bull market but also out performs in bear market. The growth portfolio has no negative years over the past 5 years and both TSX and SP500 had 2 negative years.

Let's focus on what I've shared.
I randomly picked 13 more stocks from my main portfolio to add to the 17 stocks so now there are 30 stocks, set to roughly equal weight initially and won't re balance.  Watch those 30 stocks out performs the SP500 with a few percentage and and TSX Composite by a large margin per year.

Here's the updated spreadsheet (30 stocks):
https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing

30 holdings:

Symbol
MLAB
XPEL
SLP
PAYS
NOW
NMIH
WLFC
SSNC
CARO
TREE
NCBS
LGIH
IBP
MIME
ASML
AVGO
TAL
FIVN
SPGI
MSCI
JKHY
MKTX
INFO
OGS
UHT
MPWR
TRNS
APH
PLNT
POOL

So for clarification, with maybe a little bit extra in regards to sectors you like or don't, you pick stocks that are going up a lot. Is that pretty much it?

jeroly

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Re: DIY mini growth fund
« Reply #37 on: January 21, 2020, 10:26:57 AM »
I often make the joke that stock picking is really easy. You just buy stocks that will go up in value, and don't buy stocks that will go down in value.

But this seems to be the extent of the OPs "advice" on stock picking, and made in earnest.
You are unfairly belittling the OP.  You have ignored his sage advice to avoid investing in North Korean stocks.
Quote
Let's take countries as example, picking countries as picking stock, so I do "back testing" and exclude North Korea from my portfolio because they had such a horrible track record from the past couple decades and include US in my portfolio because US had a great track record in the past 100 years.  Is this back testing method good method ? Yes
« Last Edit: January 21, 2020, 10:28:40 AM by jeroly »

UnleashHell

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Re: DIY mini growth fund
« Reply #38 on: January 21, 2020, 11:04:34 AM »
T

As a investor, we should be aware of current events /trends ,how they affect the stocks.
1. Downfall of mutual fund industries.
In recent years, there are big outflow of money from mutual funds industries. The reason is there are more and more people decided to do self directed investing or indexing so mutual fund businesses are losing business year over year.
Example: Franklin Resources, Inc. (BEN)


https://seekingalpha.com/article/4315122-funds-experience-second-largest-annual-net-inflows-ever-in-2019


hard to know where to start in this thread so I'll pick that one.

I think that you are full of hot air.
throw down your 168 super duper business picks and trac kthem.

I suspect that within 3 to 6 months you'll throw a hissy fit and flounce out shouting that we don't understand you.
probably when your picks underperform the rest of the market.

but hey - I got no skin in your game so good luck.

cloud72

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Re: DIY mini growth fund
« Reply #39 on: January 21, 2020, 11:15:03 AM »
Alright, I will stop bragging about 160 stocks.. 

Yeah, what do I gain from here? nothing other than feeling good that only I know how to pick stock here but the fact is there are thousands more out there who knows how to pick stocks but just not telling everyone in the public, getting rich secretly. I know this from a search engine. Whenever I search a stock I like, it tells me stocks other people are searching for and not coincidentally, I already own most of them.

I already explained how I pick stocks: I buy stocks with steadily increasing stock price and revenue or profit.   The share price behaviour is a indication of the quality of the business. if stock price doesn't increase steadily at a high rate, it's mediocre stock/business. I don't care if it pays 5% dividend, if the stock goes no where for 5 years, it's garbage stock.  The fact it does, it's indication there's a steadily numbers of people buying this stock in the long term. There are lots of smart people out there.

Now there's a risk in picking growth stocks that when we are wrong and the stock goes down or goes nowhere. That's a reason to have large basket of them.  I won't feel comfortable putting 100% of portfolio in a single stock like shopify which would  make a person super rich if it was bought couple years a ago. I still see room for growth in Shopify so it's part of my big portfolio. A stock picker needs to know  how the share price performed in the past and if it's likely to repeat in the future. Maybe not at the same rate but similar rate. The simple algebra equation(highschool level? not even Calculus) I used to quickly check past performance is:  current share price/old share price, take exponential of (1/years). This will give annual return.  In stock market, history tends to repeat it self. The long term return bounces around a average return. For index, it's about 7% to 10% per year. For  a group of growth stock, the average is higher 20% per year..   Impossible?   I'll give a few examples Canadian stocks: Kirkland Lake Gold Ltd. (KL.TO), Cargojet Inc. (CJT.TO)....  For US stock, take a look at my latest addition: Goosehead Insurance, Inc (GSHD) which was recommended by a search engine and I liked it. GSHD is a recent IPO, a three baggers in 2 years, generated a 75% per year return.  It'll continue to grow at high rate for next couple years. Or how about Cardlytics, Inc. (CDLX) ?  Now diversify over a large numbers of stocks(160 in my case), even I am 90% right and 10% wrong, the result is still extraordinary. Most of my portfolio are well established businesses and a small portion in new high growth business like Goosehead Insurance.

What I found is that a well diversified growth portfolio not only out performs the index in bull market but also out performs in bear market. The growth portfolio has no negative years over the past 5 years and both TSX and SP500 had 2 negative years.

Let's focus on what I've shared.
I randomly picked 13 more stocks from my main portfolio to add to the 17 stocks so now there are 30 stocks, set to roughly equal weight initially and won't re balance.  Watch those 30 stocks out performs the SP500 with a few percentage and and TSX Composite by a large margin per year.

Here's the updated spreadsheet (30 stocks):
https://docs.google.com/spreadsheets/d/1R0vNQvZCujwG8uhoPfiOo-j7CTUC5sj309NZGCuW9fQ/edit?usp=sharing

30 holdings:

Symbol
MLAB
XPEL
SLP
PAYS
NOW
NMIH
WLFC
SSNC
CARO
TREE
NCBS
LGIH
IBP
MIME
ASML
AVGO
TAL
FIVN
SPGI
MSCI
JKHY
MKTX
INFO
OGS
UHT
MPWR
TRNS
APH
PLNT
POOL

So for clarification, with maybe a little bit extra in regards to sectors you like or don't, you pick stocks that are going up a lot. Is that pretty much it?

I don't have target allocation to certain industries. I think hard about business the company is in and ask is it stable? is there more room to grow?  So I don't invest in mining/resources with small exception. Volatility is opposite of quality in business. Imagine we are applying for a mortgage at a bank, does the bank like our income goes up steadily or goes up and down each year? Same as picking stocks!

I don't touch Defence, Tobacco, Alcoholic, Gambling, stocks for personal reasons. It ended up I have a fairly diversified portfolio across different industries. (Mainly financial, software, manufacturing,Tech..)

Not only the stock price has to go up a lot, also their revenue or profit has to match up.  or stock price will revert back to the mean(present value of their future of earning power and net worth). This sounds too simple to believe,  but that's the way to beat the average return.

Back in the old days, Buffett didn't have these much information so it's harder for them without social proof. He had to drive around and asked people in person to buy their stock!He had to dig deeper. Read all the annual reports manually. I think he still does due to habit. he doesn't like computers.

There's a culture in a business that sticks around for long time. If a business doesn't perform well for a while, it's likely won't perform well in the next while and vice versa. It's rare to find companies like Apple and Amazon which had humble beginning but risen to the top of the world. I go with the obvious and avoid the low probability.

e.g. Stock I avoided: Great West Life insurance company. i used to own it but sold few years ago. It turned out to be a good decision.Stock price went nowhere for 5 years. Ouch! 0% return is opportunity lost.  Yes, it still pays a 5% dividend but without price appreciation, all it gets is 5% return per year! Yeah.. Index return.. It's a sad thing that a lot of uninformed dividend obsessed people will happily own such stock without looking at the big picture. I understand retired people need cash flow and they love dividend without regard to total return. It's the insecurity to not trust the share price of growth stock to increase in the long term. Look at BRK.B stock price, how much it increased over decades and it didn't pay a dividend. It helps that Interactive Broker introduced fractional share so i can sell fractional share each year. As I build up the cash portion and pay down the leverage gradually, I'll be safe in a couple years even without a job.










cloud72

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Re: DIY mini growth fund
« Reply #40 on: January 21, 2020, 11:21:09 AM »
I often make the joke that stock picking is really easy. You just buy stocks that will go up in value, and don't buy stocks that will go down in value.

But this seems to be the extent of the OPs "advice" on stock picking, and made in earnest.

You are partially right but it's just the starting point of getting my interest and  it's not the only criteria I used to pick stocks and also people often ignore what's obvious and chase the exotic.  or they can't stick with their plan at all and got distracted by all the noise.

Let's take Apple as an example, it went up 20% per year in the past 5 years and 24% per year in the past 10 years.  Is Apple in my portfolio?  The answer is No.   Two main reasons: 1. It's too big. At 1.4 trillion market cap. Not much room for growth. Lots of room to fall.  2.  Selling phone and computer is not a strong business.  I do own a company selling IT product/services: CDW Corporation.  But not Apple.



« Last Edit: January 21, 2020, 11:35:18 AM by cloud72 »

PaulMaxime

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Re: DIY mini growth fund
« Reply #41 on: January 21, 2020, 11:21:52 AM »
Hey OP, I want to encourage you to keep on with your investing journey. You've had the courage to jump in here where index investing is the "One true way" and while that's great, it's really true that an individual investor has a lot of advantages over professionals on wall street.

Personally, I've been investing in individual stocks for a long time. I started tracking myself against the market back in 2007. I track myself against the S&P 500 total return index. Below is the time weighted return over these past 13 years.

Notice that I've beaten the index by almost 7% per year over this time including the last crash. This year so far I'm actually up 8.4%!

cloud72

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Re: DIY mini growth fund
« Reply #42 on: January 21, 2020, 11:46:13 AM »
Hey OP, I want to encourage you to keep on with your investing journey. You've had the courage to jump in here where index investing is the "One true way" and while that's great, it's really true that an individual investor has a lot of advantages over professionals on wall street.

Personally, I've been investing in individual stocks for a long time. I started tracking myself against the market back in 2007. I track myself against the S&P 500 total return index. Below is the time weighted return over these past 13 years.

Notice that I've beaten the index by almost 7% per year over this time including the last crash. This year so far I'm actually up 8.4%!

Congratulations for the return you achieved!
Nice to see a fellow stock picker here. and a good one.

It's unfortunate that during the first 10 years of my investing, I was brainwashed by dividend stock camp and was only focused on dividend stocks. As a result, my return was only 13% per year for the past 10 years. By focusing on all out "growth investing", I am optimistic to reach around 15% to 20% per year for the next couple years. My portfolio did not have a negative year in the past 5 years, due to, I believe, a healthy portion of new companies growing rapidly even when the whole market is down.

My dividend brainwashing is an example how one set of idea can make us a slave to one idea only and can't see the whole world out there.   I believe growth investing is the best strategy so far. 15% to 20% is the maximum reasonable return for growth investor.  Day trading/special situation/speculating/value investing/arbitrage is just not my cup of tea.

Do you trade or just buy and hold?  How many stocks do you hold?  Just curious.




« Last Edit: January 21, 2020, 12:09:08 PM by cloud72 »

StashingAway

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Re: DIY mini growth fund
« Reply #43 on: January 21, 2020, 11:46:59 AM »
Notice that I've beaten the index by almost 7% per year over this time including the last crash. This year so far I'm actually up 8.4%!

The problem with anecdotes such as yours is Survivorship Bias. We absolutely will not hear personal examples of losing to an index fund if/when it should happen on the scale of beating it. Either from sheer embarrassment, or lack of disposable time to post such things from needing to work to make up for the loss.

From your example, we can only glean that it is possible to beat it. Not a person on here would disagree with the possibility of beating it (someone has to, just like in Vegas). The more compelling arguments are that it's hard to do, and there is no real reliable way of telling who or what strategy will beat the market. Everyone's winning strategy wins until it doesn't. It's incredibly hard for professionals to do it, much less DIY investors. This is more of a psychology vs statistics discussion than it is an investing one. We have many biases working against us when evaluating personal stock choices, and they pretty much all go against what the stats show. Humans have to fight to go with the numbers rather than their gut, but that's really what it boils down to.

There are theoretical points in trading where an index fund can easily be beat by most people, but those are wildly different economic situations than we're in right now, or ever have been in.




cloud72

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Re: DIY mini growth fund
« Reply #44 on: January 21, 2020, 11:58:31 AM »
T

As a investor, we should be aware of current events /trends ,how they affect the stocks.
1. Downfall of mutual fund industries.
In recent years, there are big outflow of money from mutual funds industries. The reason is there are more and more people decided to do self directed investing or indexing so mutual fund businesses are losing business year over year.
Example: Franklin Resources, Inc. (BEN)


https://seekingalpha.com/article/4315122-funds-experience-second-largest-annual-net-inflows-ever-in-2019


hard to know where to start in this thread so I'll pick that one.

I think that you are full of hot air.
throw down your 168 super duper business picks and trac kthem.

I suspect that within 3 to 6 months you'll throw a hissy fit and flounce out shouting that we don't understand you.
probably when your picks underperform the rest of the market.

but hey - I got no skin in your game so good luck.

Wow! Calm down. Anger is one of the tree poisons: greed, anger, ignorance.

A trend is not all or nothing. There's always exceptions!  Another trend to watch for: Electrification.
I don't own any oil stocks because electrification is the future. Oil demand doesn't need to 100% gone to make oil industries suffer. Stock market is forward looking. It asks is demand increasing or decreasing. Not: is demand 100% gone?

Ask how these fund management companies are doing:

Franklin Resources, Inc. (BEN)
AGF Management Limited (AGF-B.TO)
CI Financial Corp (CIX.TO)
IGM Financial Inc. (IGM.TO)

StashingAway

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Re: DIY mini growth fund
« Reply #45 on: January 21, 2020, 12:59:23 PM »

A trend is not all or nothing. There's always exceptions!  Another trend to watch for: Electrification.
I don't own any oil stocks because electrification is the future. Oil demand doesn't need to 100% gone to make oil industries suffer. Stock market is forward looking. It asks is demand increasing or decreasing. Not: is demand 100% gone?


Ah, but you're missing on the carbon-content of oil vs coal. Should there be major move to de-carbonize the grid (environmental acts and all of that), then oil and gas demand would increase because coal creates significantly more CO2 per KWH. So for the next decade or two demand for oil and gas should go up if coal were reigned in. This is especially true on an international level.

Not to mention that oil is used for fertilizer and industrial products, those of which don't have any realistic substitutes, so the demand should remain fairly steady.

But no professional trading in the markets is looking at these things, right? I bet it would do them good to read "One up on Wall Street" rather than twiddle their thumbs speculating on 100% decrease in demand...

UnleashHell

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Re: DIY mini growth fund
« Reply #46 on: January 21, 2020, 01:16:38 PM »

Wow! Calm down. Anger is one of the tree poisons: greed, anger, ignorance.



me? calm as a cucumber. just calling out the excessive hubris that will disappear like fog under an equatorial sun when it goes wrong.

go right ahead and post your index. if you've picked it already then nothing you post here will influence it.

I have a few index funds and a few individual stocks. I've actually done the full research on my picks though. not just used a stock picking tool.

you may do well, but it won;t be with 150+ stocks. if you were that good you'd be running a hedge fund.
and you are not.

PaulMaxime

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Re: DIY mini growth fund
« Reply #47 on: January 21, 2020, 01:44:48 PM »

Do you trade or just buy and hold?  How many stocks do you hold?  Just curious.

Buy and hold. Longest hold is AAPL that I've been holding for >20 years (cost basis 2.87) I have sold some of this a couple times but now I'm just holding it.

I have 66 stocks at the moment, though 80% of my portfolio is in about 30 positions. I'm considering reducing that number down to about 30 or so since something that's <1% is not going to have a material effect. The difficulty is figuring out which 30 are my best ideas.

cloud72

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Re: DIY mini growth fund
« Reply #48 on: January 21, 2020, 03:38:18 PM »

Wow! Calm down. Anger is one of the tree poisons: greed, anger, ignorance.



me? calm as a cucumber. just calling out the excessive hubris that will disappear like fog under an equatorial sun when it goes wrong.

go right ahead and post your index. if you've picked it already then nothing you post here will influence it.

I have a few index funds and a few individual stocks. I've actually done the full research on my picks though. not just used a stock picking tool.

you may do well, but it won;t be with 150+ stocks. if you were that good you'd be running a hedge fund.
and you are not.

Maybe I mis-read, I posted 30 stocks a few posts above. You can take a look.   Yes, 160 sounds crazy but it's not a crazy if I combined the Canadian market and US market. It's amazing how many good opportunities are in US. US market is HUGE and very diversified.  I found 20 in Canada and 140 in US. It's very small number if you look how many total stocks are trading in Canada and US.(~5000). So it's 3% of the market.       The performance result of 160 stocks is impossible to believe and I won't share the full list here. Sorry.

 Let's forget about 160 and focus on the result of 30 stocks I posted here. The thing I looked the hardest at a business is its quality.The idea is that there are varied level of qualities in businesses. You can't argue with this statement. and If I picked out the best out there, the result will be extraordinary. 30 stock is fair number for a typical portfolio and good representation of my whole portfolio. i found it interesting that the return of just 20 Canadian growth stocks looked very similar to the whole portfolio. They are in a similar level of growth quality. If a group of equal weight stocks diversified across many industries returned 25% per year  during past 5 years, it's not inconceivable to think they'll return similar return in the next few years. For instance, US index has returned a consistent 7% to 10% for the last couple decades.. I looked much farther than 5 years. Many stocks performed really well for the past 10 to 20 years...Adjusted for splits, many stocks were trading at pennies in the 80s, 90s... I also invested in some recent proven IPO which are few years old that are still growing rapidly.  US market is the best in the world.

 I heard it second time on the internet that If I am that good, I'll be billionaire.  No, I don't have the credentials or interest to run hedge fund. It takes too much of my time dealing with other people. Also, running fund for other people is completely different than running my own portfolio. The experience won't be good.I've read from others. There will be people trying to withdraw money when market goes down and then they blame the loss on the fund manager etc.. It's a different feeling when other people's money is at stake. It's more responsibility, lots of emotional stress.   I prefer a simple life.


Repost:
30 holdings:


Symbol
MLAB
XPEL
SLP
PAYS
NOW
NMIH
WLFC
SSNC
CARO
TREE
NCBS
LGIH
IBP
MIME
ASML
AVGO
TAL
FIVN
SPGI
MSCI
JKHY
MKTX
INFO
OGS
UHT
MPWR
TRNS
APH
PLNT
POOL


« Last Edit: January 21, 2020, 04:23:41 PM by cloud72 »

Stimpy

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Re: DIY mini growth fund
« Reply #49 on: January 21, 2020, 03:49:16 PM »
I for one, don't care what stocks you have in your "Mini Growth Fund", cause frankly they don't match my own rules for my own "fund".   (Cause news flash, everyone has their own "fund", some are just made up entirely of index funds, while others have stocks or other investments.)

I do however want to make a promise to all of us.   To report back, at least once a year on the progress, be it failure, success, or somewhere in between.   That to me is what matters.  I promise I won't ridicule you if it fails to meet your expectations, hell ya might even be able to give a lesson or two to some people here.