This is the 7th month of this little project I am building out. Here are some details of the top 10 holdings in my portfolio (by market value). This is not an investment recommendation…
As I’ve discussed, when on the Millionaires Unveiled Podcast I did last October, I have a large chunk of my net worth tied up in a concentrated number of holdings (you listened to it right). More specifically, my top 10 holdings makes up 44.82% of my net worth.
One question I was asked is “does it concern me to have so much equity tied up in a few positions?” My response was something to the effect of no, I feel I am diversified enough in my holdings that I don’t see a need to own hundreds of stocks like a mutual fund or ETF would hold.
The markets are a random walk. There have literally been test where monkeys throw darts at ticker symbols in a newspaper and can outperform an actual stockbroker.
Lets take a look at the top 10. You’ll see a few common themes. For the most part, there are no surprise holdings. Companies like MO, XOM, KO, JNJ are your basic holdings common in many large cap funds. While PM and CLX are pretty much also household names. These holdings provide stable and consistently growing dividend income for me to live off.
Some of my more “oddball” holdings that you’re probably scratching your head are WWE, CME, and TTWO. These holdings didn’t ever initially start out as my largest holdings, they just kind of grew like crazy to get too that point. And ironically, these are some of my highest performers in my portfolio, and while not necessarily dividend growth investments (excluding CME), have provided crazy capital appreciation.
When looking at the sectors, the top 10 holdings are spread across consumer staples, consumer discretionary, energy, financials, and industrials. There is a lack of tech in my top 10, but some of those holdings are just outside the top 10 (MSFT at #12).
For the month, there were quite a few shake ups in the top 10. MPC dropped out of the top ten, down to #13. WWE regained it’s position at the top of the portfolio after a disaster in October. MO tumbled on news about the FDA banning menthol cigarettes in the US (I’m not worried about it). TTWO tumbled on weakness by association of other video game companies.
What does concern me though is looking at some of my staples. Consumer Staples really outperformed. Seeing KO, CLX, (PG at #11 and KMB further down the list), and even JNJ perform so well in a month sets off an alarm to me that investors are looking to safety given the crazy volatility in the last 2 months. This is good for me as an investor already holding these positions, but I do worry when the street floods in. Is weakness in the economy on the way finally? We definitely need a catalyst for growth as the economy is beyond the definition of full employment, consumers are carrying greater than pre-recession levels of debts, housing may be showing some signs of slowing down as rates start to creep up and housing prices seem out of reach, the Fed is more foe than friend with their stupid rate policy, and the tariff talks are providing unnecessary head winds.
Physics says what goes up, must come down. The markets have been hot for a while, and there was good reason. Right now there are too many headwinds. Hopefully the US/China meeting has something useful come out of it, to provide some sort of good news for the US economy. We need something. I don’t thing the Federal Reserve has their rate policy right and will do too much too fast to choke the economy.
While I am not an active trader, or a passive index investor, my portfolio ties closely to benchmarks like the S&P500, but the differences from some of the more oddball holdings gives an opportunity for outperforming the benchmark. Sometimes it works for me, sometimes against. This month it didn’t help when looking at my entire portfolio. This is actually the first month in a long while, where my top ten holdings didn’t account for the majority of my returns for the month (check back tomorrow to see how the portfolio grew for the month). That’s a benefit of diversification for a portfolio.
So what do you think. Was this what you expected to see from a million dollar portfolio? Would having that high of a concentration of a portfolio in a small number of holdings concern you? What other content would you like to see added to the spreadsheet?Follow me on the social medias: