A Summary of My Grand Unified Theory of Investing

Check out my previous post for how we landed here...

Account:	IRA	Roth IRA	Stocks
Current percentage of total holdings:	~28%	~6%	~66%
Investment philosophy:	Jack Bogle	George Soros	Warren Buffett
Headline summary:	“Don't Just Do Something, Stand There!”	“You Call That A Position?”	“Wonderful Companies at Fair Prices”
Account holdings:	• 48% indices (IWM, QQQ, VOO) • 24% high-yield stocks (VIG, VYM) • 28% high-yield bonds (HYLB, USHY)	• 50% one “high-conviction” stock (???) • 50% bonds (AGG)	• 100% stocks (5 core holdings; entire portfolio detailed here)
Are dividends reinvested?	Yes	Yes (AGG only)	No
Investment schedule:	N/A	Asynchronous	Synchronous
When do I intend to make changes?	Never	When I have a higher-conviction bet than the existing one (AGG → ???), or no conviction at all (??? → AGG)	Monthly purchases; "I believe in all of these stocks - until I sell them"
Is account actively funded with new contributions?	No	No	Yes
Is account written about on this blog monthly / ever?	No	No	Yes

How an Extended Stay in Rollover Limbo, and Some Pandemic-Time Reading, Led to My Grand Unified Theory of Investing

On February 24th, 2020, I initiated two rollovers: one from my old job's 401(k) account to my existing IRA; and one from my relatively small, choice-limited, terribly underperforming Roth IRA set up by a naive young me in 1999(!) to a new Roth IRA account with a comparatively infinite amount of investment choices.

The former account rollover was executed fairly quickly, allowing me to do the thing I intended to do for both accounts: allocate most of my funds in index ETFs (IWM, QQQ, VOO), and the remainder in higher-yield ETFs (HYLB, USHY, VIG, VYM). My preference is always to be fully invested, such that I don't miss any market upside.

The latter account rollover took...a while. It finally completed on March 13th, 2020. In the meantime, the market - and the world - went through some drastic changes. And having been forced out of the market by this extended rollover process, I was now in the uncomfortable position of having to time my reinvestment back into the market.

I thought about holding my nose and investing everything as soon as I could, just as I had originally planned. It just didn't feel right.
I thought about investing some now, and some later. It just didn't feel right.
I thought about investing all of it at a later date, based on some back-of-envelope math from the previous 2 bear markets. It just didn't feel right.
I thought about making some bets on volatility via VXX. It just didn't feel right.
I thought about rolling with an all-bond portfolio...it just didn't feel right.

So, I stayed in cash. Until today.

I've been reading a lot of investment books lately, including The Winning Investment Habits of Warren Buffett & George Soros: Harness the Investment Genius of the World's Richest Investors by Mark Tier. I already knew a lot of Buffett's philosophies - I've been trying to emulate him, as it were - but not about Soros. (I had previously read the chapter about his successor at the famous Quantum Fund, Stanley Druckenmiller, in the book The New Market Wizards: Conversations with America's Top Traders by Jack D. Schwager.)

I can summarize my understanding of Soros (and Druckenmiller) as that of a thoughtful, concentrated, high-conviction bettor. It is a philosophy that I haven't had room for in my Buffett-like stock account or Jack Bogle-like IRA account.

Coincidentally, I have had a high-conviction feeling in my gut for a stock outside of my current holdings for several weeks running.

Then, it struck me. Instead of treating my Roth IRA as just a smaller version of my IRA, I could treat it as vehicle for Soros-like bets. Half is in my one (mystery!) high-conviction stock. The other half is in bonds via the AGG ETF. If my convictions fade, I'll tilt into AGG, until another high-conviction stock is found; if my convictions strengthen, I'll tilt out of AGG. It just feels right.

For my next post, I will summarize my entire investment portfolio in both non-retirement and retirement accounts.

Stocks Of The Month: AMZN, TSLA

First - a sale! Comcast (CMCSA) has been an underperformer ever since I bought it over three years ago. Additionally, inspired by this article warning of the fragility of growth via leverage (among other things), I looked at all of my stocks' cash-to-debt levels...and Comcast was by far the worst, with $5.5B in cash and a whopping $112.0B in debt. It was sold at an 18% loss (-6% annualized). Going forward, I will add cash and debt levels to my monthly tracking stats.

For the foreseeable future, I not only want to track which of my Big Five I buy in a given month - I want to track those that I don't buy.


Amazon (AMZN)

• $970.6B market cap
• no dividend
• $280.5B revenue
• 21% revenue growth
• $55.0B cash
• $77.5B debt
• $38.5B operating cash flow
• $18.8B free cash flow

Apple (AAPL)

• $1.11T market cap
• 1.2% dividend yield
• $267.7B revenue
• 9% revenue growth
• $107.2B cash
• $116.8B debt
• $73.2B operating cash flow
• $45.6B free cash flow

Microsoft (MSFT)

• $1.20T market cap
• 1.3% dividend yield
• $134.3B revenue
• 14% revenue growth
• $134.2B cash
• $87.2B debt
• $54.1B operating cash flow
• $35.1B free cash flow

NVIDIA (NVDA)

• $161.3B market cap
• 0.2% dividend yield
• $10.9B revenue
• 41% revenue growth
• $10.9B cash
• $2.6B debt
• $4.8B operating cash flow
• $3.2B free cash flow

Tesla (TSLA)

• $96.6B market cap
• no dividend
• $24.6B revenue
• 2% revenue growth
• $6.3B cash
• $14.7B debt
• $2.4B operating cash flow
• $1.5B free cash flow

Here's my current portfolio (buy and hold). As always, I believe in all of these stocks - until I sell them.

NVIDIA (NVDA) 16.10%
Tesla (TSLA) 15.79%
Amazon (AMZN) 14.70%
Apple (AAPL) 11.93%
Microsoft (MSFT) 10.97%
Alphabet (GOOGL) 4.70%
Facebook (FB) 2.98%
Intuitive Surgical (ISRG) 2.70%
Adobe (ADBE) 2.37%
Costco Wholesale (COST) 1.93%
Salesforce (CRM) 1.74%
Visa (V) 1.73%
Nike (NKE) 1.71%
Intel (INTC) 1.70%
UnitedHealth Group (UNH) 1.67%
Starbucks (SBUX) 1.20%
Advanced Micro Devices (AMD) 1.12%
Waste Management (WM) 1.07%
American Water Works (AWK) 0.85%
Autodesk (ADSK) 0.68%
Union Pacific (UNP) 0.65%
Norfolk Southern (NSC) 0.57%
CSX (CSX) 0.56%
Kansas City Southern (KSU) 0.28%
Canadian National Railway (CNI) 0.27%