2020 Stock Recap: The Ongoing Concerns

A tradition unlike any other...

2020 was the best year of my 20+ year investing career.  My portfolio outperformed the S&P 500 by +104.8%, gaining 122.5% vs. 18.4%.  These returns pushed my net worth to all-time highs, and also expanded my portfolio's annualized returns outperformance vs. the S&P 500 from +0.15% at the end of 2019 (3.42% vs. 3.27%) to +3.35% at the end of 2020 (8.62% vs. 5.27%).

We're going to keep 2021 just like 2020, and continue riding the winners while trending towards an eventual 50/50 stock/income portfolio.

And now, let's look at all the stocks I've held going into this year, from worst to best - based solely on 2020's performance, while mostly ignoring any intra-year volatility:

iShares Core U.S. Aggregate Bond ETF (AGG)

Bought: May @ $116.60, May @ $117.46, Aug @ $119.27, Sep @ $118.21, Sep @ $118.35, Oct @ $117.54, Nov @ $118.34

Year-closing price: $118.19 (1%)

Income, part one.

Global X U.S. Preferred ETF (PFFD)

Bought: Jul @ 23.53$, Aug @ $24.69, Sep @ $24.98, Sep @ $24.70, Sep @ $24.68, Sep @ $24.79, Oct @ $24.71, Nov @ $25.40

Year-closing price: $25.80 (10%)

Income, part two.

Xtrackers USD High Yield Corporate Bond ETF (HYLB)

Bought: May @ $45.34, May @ $46.91, Aug @ $48.66, Sep @ $48.66, Sep @ $48.44, Sep @ $47.85, Oct @ $47.93, Nov @ $49.47

Year-closing price: $50.09 (10%)

Income, part three.

Invesco NASDAQ 100 ETF (QQQM)

Bought: Oct @ $116.44, Oct @ $113.10, Nov @ $122.31

Year-closing price: $128.97 (11%)

Just like QQQ, but with a lower expense ratio.

iShares Broad USD High Yield Corporate Bond ETF (USHY)

Bought: May @ $36.62, May @ $38.05, Aug @ $39.80, Sep @ $39.89, Sep @ $39.63, Sep @ $39.25, Oct @ $39.36, Nov @ $40.67

Year-closing price: $41.26 (13%)

Income, part four.

Visa (V)

Year-opening price: $187.90

Year-closing price: $218.73 (16%)

Increased competition vs. rivals PayPal and Square.

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

Bought: Oct @ $26.30, Oct @ $25.23, Nov @ $28.91

Year-closing price: $30.87 (17%)

It's what one might wish the Russell 2000 to be, instead of the perpetual underperformer that it is.

UnitedHealth Group (UNH)

Year-opening price: $293.98

Year-closing price: $350.68 (19%)

Monster revenues, cash flows, dividend.  Expanded Medicare a concern.

Costco Wholesale (COST)

Year-opening price: $293.92

Year-closing price: $376.78 (28%)

The finest (brick and mortar) retailer in the world.

Alphabet (GOOGL)

Year-opening price: $1339.39

Year-closing price: $1752.64 (31%)

Continues to underperform cloud rivals AMZN and MSFT.

Facebook (FB)

Year-opening price: $205.25

Year-closing price: $273.16 (33%)

Cash cow facing increased regulatory risks.

Intuitive Surgical (ISRG)

Year-opening price: $591.15

Year-closing price: $818.10 (38%)

A company without peers.

Microsoft (MSFT)

Year-opening price: $157.70

Bought more: Mar @ $165.00, May @ $175.75, Jun @ $182.29

Year-closing price: $222.42 (41%)

The Satya Nadella winning streak continues.  The best proxy for dual trends of work-from-home and software eating the world.

Adobe (ADBE)

Year-opening price: $329.81

Year-closing price: $500.12 (52%)

Has been on an incredible 8-year run of growth and outperformance.

Autodesk (ADSK)

Year-opening price: $183.46

Year-closing price: $305.34 (66%)

Broke out in 2016, and hasn't looked back.

Amazon (AMZN)

Year-opening price: $1847.84

Bought more: Jan @ $1865.01, Feb @ $2039.39, Apr @ $1929.09

Year-closing price: $3256.93 (76%)

The most indispensable company in the world.  Inexplicably, has remaining upside of 5% and 27% vs. market caps of peers MSFT and AAPL.

2020 Stock Recap: The Departed

A tradition unlike any other...

2020 was the best year of my twenty-two year investing career.  My portfolio outperformed the S&P 500 by +104.8%, gaining 122.5% vs. 18.4%.  These returns pushed my net worth to all-time highs, and also expanded my portfolio's annualized returns outperformance vs. the S&P 500 from +0.15% at the end of 2019 (3.42% vs. 3.27%) to +3.35% at the end of 2020 (8.62% vs. 5.27%).

These gains were largely due to the stocks listed below, sold as part of my rotation out of stocks and into dividend income investments started in June.  It is remarkable that I began the year (as every year previous) with 100% stocks and ended the year with a 57/43 stock/income split.

Some of these stocks have been owned for over a decade.  I could not have achieved my financial goals without them, and they will be missed.

Here's a look at all the stocks I've sold in the past year, from best to worst - based solely on 2020's performance, while mostly ignoring any intra-year volatility:

Tesla (TSLA)

Year-opening price: $83.67

Bought more: Apr @ $101.74

Sold: Sep @ $401.37 (380%)

Year-closing price: $705.67 (743%)

First bought in 2011, and 21 times total.  An unbelievable, portfolio-altering year.

NVIDIA (NVDA)

Year-opening price: $235.30

Bought more: May @ $284.19

Sold: Sep @ $468.47 (99%)

Year-closing price: $522.20 (122%)

Position initiated in 2016; bought 24 times total (all-time leader).  Very difficult to sell.

Advanced Micro Devices (AMD)

Year-opening price: $45.86

Sold: Sep @ $75.42 (64%)

Year-closing price: $91.71 (100%)

Intel's pain is AMD's gain.

Apple (AAPL)

Year-opening price: $73.41

Sold: Sep @ $111.40 (52%)

Year-closing price: $132.69 (81%)

First bought in 2007.  13 buys and 2 stock splits.  The best company in the world, bar none.

Nike (NKE)

Year-opening price: $101.31

Sold: May @ $84.47 (-17%)

Year-closing price: $141.47 (40%)

Bounced back in a big way following early-year swoon.

Salesforce (CRM)

Year-opening price: $162.64

Sold: Dec @ $225.06 (39%)

Year-closing price: $222.58 (37%)

Actually traded this one properly.  

Kansas City Southern (KSU)

Year-opening price: $153.16

Sold: May @ $131.85 (-14%)

Year-closing price: $204.13 (33%)

Hauling heavy things will always be useful, part one.

CSX (CSX)

Year-opening price: $72.36

Sold:  Apr @ $66.17 (-9%)

Year-closing price: $90.75 (25%)

Hauling heavy things will always be useful, part two.

American Water Works (AWK)

Year-opening price: $122.85

Sold: May @ $116.99 (-5%)

Year-closing price: $153.47 (25%)

Water is the new (old?) oil.

Norfolk Southern (NSC)

Year-opening price: $194.13

Sold: May @ $165.39 (-15%)

Year-closing price: $237.61 (22%)

Hauling heavy things will always be useful, part three.

Starbucks (SBUX)

Year-opening price: $87.92

Sold: May @ $74.54 (-15%)

Year-closing price: $106.98 (22%)

Work-at-home affects morning routines.  

Canadian National Railway (CNI)

Year-opening price: $90.45

Sold: May @ $81.18 (-10%)

Year-closing price: $109.85 (21%)

Hauling heavy things will always be useful, part four.

Comcast (CMCSA)

Year-opening price: $44.97

Sold: Mar @ $33.97 (-24%)

Year-closing price: $52.40 (17%)

First sale of the year opened the floodgates.

Union Pacific (UNP)

Year-opening price: $180.79

Sold: May @ $152.94 (-15%)

Year-closing price: $208.22 (15%)

Hauling heavy things will always be useful, part five.

Waste Management (WM)

Year-opening price: $113.96

Sold: May @ $98.33 (-14%)

Year-closing price: $117.93 (3%)

Forever hot trash.

Intel (INTC)

Year-opening price: $59.85

Sold: Jul @ $52.00 (-13%)

Year-closing price: $49.82 (-17%)

The easiest sale of the year.  A second-rate chip manufacturer and third-rate chip designer.

(Preferred) Stock(/Bond ETF)s Of The Month: AGG, HYLB, PFFD, QQQJ, QQQM, USHY

I skipped November's post because...excuses. Here's what happened: 

• Bought more AGG, HYLB, PFFD, USHY
• Swapped my previous holdings of QQQ into mostly QQQM (just like QQQ, but with a lower expense ratio) and some QQQJ (an entirely new ETF consisting of "minor-league prospects" of the Nasdaq - it's what one might wish the Russell 2000 to be, instead of the perpetual underperformer that it is).

Detail-oriented readers will note that these same six ETFs are in the title of this post, as they were bought in December as well.

Also, a trigger sale!  Salesforce (CRM) just reported a so-so quarter and a high-priced acquisition of Slack, which sent its stock below my previously-established threshold.  First bought in October 2013 and purchased on three additional occasions, it posted a 178% gain (15% annualized).

Boilerplate time...

As a stretch goal: for dividend income purposes, I'd like this portfolio to eventually be as much as a 50/50 split between stocks and bonds. As seen below, it is currently 56/44.

I am in no rush to flip into bonds. I would rather let my winners run forever. However, if in any given month I see no stocks that present themselves as especially good buying opportunities, I have no reservations in simply adding to my bond and/or preferred stock ETFs. It is truly a month-to-month situation (as it has always been!).

For the foreseeable future, I want to track my Big Five Two every month, whether I buy them or not.

Amazon (AMZN)

• $1.60T market cap
• no dividend
• $347.0B revenue
• 37% revenue growth
• $68.4B cash
• $96.8B debt
• $55.3B operating cash flow
• $33.7B free cash flow

Microsoft (MSFT)

• $1.63T market cap
• 1.0% dividend yield
• $147.1B revenue
• 12% revenue growth
• $138.0B cash
• $83.2B debt
• $66.2B operating cash flow
• $32.2B free cash flow

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

Amazon (AMZN) 13.22%
iShares Broad USD High Yield Corporate Bond ETF (USHY) 12.33%
Xtrackers USD High Yield Corporate Bond ETF (HYLB) 12.30%
iShares Core U.S. Aggregate Bond ETF (AGG) 11.07%
Microsoft (MSFT) 10.02%
Global X U.S. Preferred ETF (PFFD) 8.00%
Invesco NASDAQ 100 ETF (QQQM) 4.59%
Alphabet (GOOGL) 4.18%
Facebook (FB) 2.84%
Intuitive Surgical (ISRG) 2.41%
Adobe (ADBE) 2.05%
Invesco NASDAQ Next Gen 100 ETF (QQQJ) 1.90%
Costco Wholesale (COST) 1.35%
UnitedHealth Group (UNH) 1.32%
Visa (V) 1.27%
Autodesk (ADSK) 0.73%