Stock Of The Month: AMZN

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)

• $928.3B market cap
• no dividend
• $265.5B revenue
• 24% revenue growth
• $35.3B operating cash flow
• $22.6B free cash flow

Apple (AAPL)

• $1.38T market cap
• 1.0% dividend yield
• $260.2B revenue
• 2% revenue growth
• $69.4B operating cash flow
• $42.9B free cash flow

Microsoft (MSFT)

• $1.24T market cap
• 1.3% dividend yield
• $129.8B revenue
• 14% revenue growth
• $52.4B operating cash flow
• $33.8B free cash flow

NVIDIA (NVDA)

• $149.52B market cap
• 0.3% dividend yield
• $10.0B revenue
• -5% revenue growth
• $4.2B operating cash flow
• $2.8B free cash flow

Tesla (TSLA)

• $94.0B market cap
• no dividend
• $24.4B revenue
• -8% revenue growth
• $2.2B operating cash flow
• $1.0B 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) 14.58%
Apple (AAPL) 13.85%
Tesla (TSLA) 13.35%
Amazon (AMZN) 11.69%
Microsoft (MSFT) 10.06%
Alphabet (GOOGL) 5.49%
Facebook (FB) 3.67%
Intuitive Surgical (ISRG) 3.18%
Adobe (ADBE) 2.41%
Salesforce (CRM) 2.10%
Visa (V) 1.98%
Nike (NKE) 1.97%
UnitedHealth Group (UNH) 1.88%
Costco Wholesale (COST) 1.80%
Intel (INTC) 1.74%
Comcast (CMCSA) 1.62%
Starbucks (SBUX) 1.56%
Waste Management (WM) 1.27%
Advanced Micro Devices (AMD) 1.11%
Autodesk (ADSK) 0.85%
American Water Works (AWK) 0.83%
Union Pacific (UNP) 0.76%
Norfolk Southern (NSC) 0.73%
CSX (CSX) 0.67%
Kansas City Southern (KSU) 0.33%
Canadian National Railway (CNI) 0.30%

The Plan for 2020 and Beyond, and The Whole 16/5/2/1 Thing Explained

As alluded to in my 2019 summary, here are my investment plans for 2020 and beyond, as well as an explanation of my portfolio allocations.

At the end of each of my "Stock Of The Month" posts describing that month's particular buy(s), I list out all of my holdings followed by their individual current weighting at time of posting, color-coded for buy and hold. For example, here is December 2019's list:

NVIDIA (NVDA) 14.23%
Apple (AAPL) 13.29%
Amazon (AMZN) 12.31%
Tesla (TSLA) 10.77%
Microsoft (MSFT) 10.68%
Alphabet (GOOGL) 5.71%
Facebook (FB) 3.84%
Intuitive Surgical (ISRG) 3.54%
Adobe (ADBE) 2.47%
Salesforce (CRM) 2.16%
Visa (V) 2.13%
Nike (NKE) 2.07%
Costco Wholesale (COST) 2.06%
UnitedHealth Group (UNH) 2.02%
Intel (INTC) 1.90%
Comcast (CMCSA) 1.81%
Starbucks (SBUX) 1.68%
Waste Management (WM) 1.41%
Advanced Micro Devices (AMD) 1.03%
American Water Works (AWK) 0.95%
Autodesk (ADSK) 0.89%
Union Pacific (UNP) 0.83%
Norfolk Southern (NSC) 0.79%
CSX (CSX) 0.73%
Kansas City Southern (KSU) 0.35%
Canadian National Railway (CNI) 0.33%


While discussing stocks, I may refer to them as "16"s, "5"s, "2"s, or "1"s. For example, NVIDIA is a "16"; Canadian National Railway is a "1". This is referring to their individual targeted weighting, which does not change over time - i.e. there will always be four "16"s, three "5"s, seven "2"s, and seven "1"s, adding up to 100. (It is an idea borrowed from Warren Buffett's portfolio weighting in his Berkshire Hathaway portfolio, which historically has had 4-5 large holdings and 40-something other holdings.)

If I were to list out all of my holdings followed by their targeted weighting, it would look like this:

Amazon (AMZN) 16%
Apple (AAPL) 16%
Microsoft (MSFT) 16%
NVIDIA (NVDA) 16%

Alphabet (GOOGL) 5%
Facebook (FB) 5%
Tesla (TSLA) 5%

Comcast (CMCSA) 2%
Costco Wholesale (COST) 2%
Intel (INTC) 2%
Nike (NKE) 2%
Starbucks (SBUX) 2%
UnitedHealth Group (UNH) 2%
Visa (V) 2%

American Water Works (AWK) 1%
Canadian National Railway (CNI) 1%
CSX (CSX) 1%
Kansas City Southern (KSU) 1%
Norfolk Southern (NSC) 1%
Union Pacific (UNP) 1%
Waste Management (WM) 1%

Adobe (ADBE) ??%
Advanced Micro Devices (AMD) ??%
Autodesk (ADSK) ??%
Intuitive Surgical (ISRG) ??%
Salesforce (CRM) ??%


Astute readers will notice that the current and targeted weightings are incongruent - particularly Telsa, and the "??" grouping.

Regarding Telsa: it is the Fifth Beatle of the "16"s. It originally was a proper "16", then I promoted Microsoft to take its place; now, it is officially a "5" (for things-must-add-up-to-one-hundred's sake) and unofficially a "16" (for the-reality-of-my-holdings's sake). (For what it's worth, Telsa is at least greater than a "5", and averages out the underweighting of Facebook within its grouping.)

Regarding the "??" grouping: yes, these "extra" stock holdings mean that my 16/5/2/1s will never add up to 100% of my portfolio. I am essentially attempting to stuff ten pounds of awesome into a five pound bag. However, I feel like the presence of "bench" stocks I like enough to own lends some stability to my portfolio if, for example, one of my "starter" stocks falters. Think of them as cash++...or a side slush fund.


So...with all of that out of the way, what are my investment plans for 2020 and beyond? In short, to make my primary investment ideas the properly primary holdings, such that the "16"s (and Tesla) are true "16"s.

Each of the "16"s (and Tesla) is from 2% to 6% short of their targeted allocation. And, since I am adding to my portfolio instead of reallocating existing funds, each purchase moves the goalposts a little bit further away.

It will likely take 2-3 years of monthly purchases to get each of Amazon, Apple, Microsoft, NVIDIA, and Tesla to reach 16% of my holdings - and today, I am committing to doing exactly that.

2019 Stock Recap: The Ongoing Concerns

A tradition unlike any other...

2019 was a great year.  My portfolio outperformed the S&P 500 by +8.5%, gaining 40.0% vs. 31.5%.  It is my 2nd best rate of return after 2003 (46.5%) and 4th best relative to the S&P 500 after 2003 (+17.8%), 2009 (+12.5%), and 2017 (+11.9).  I am most proud of my 63.6% savings return for the year, pushing my net worth to an all-time high...and achieving a major milestone level.

We're going to keep 2020 just like 2019, and continue hammering away at limited number of winning investments (the specifics of which are coming very soon).

And now, let's look at all the stocks I've held going into this year, from worst to best - based solely on 2019's performance, while mostly ignoring any intra-year volatility:


CSX (CSX)
Year-opening price: $62.13
Bought more: Jan @ $61.36
Year-closing price: $72.36 (16%)
Hauling heavy things will always be useful, part one.

UnitedHealth Group (UNH)
Year-opening price: $249.12
Bought more: Jun @ $238.13
Year-closing price: $293.98 (18%)
Monster revenues, cash flows, dividend.  Expanded Medicare a concern.

Salesforce (CRM)
Year-opening price: $136.97
Bought more: Oct @ $146.06
Year-closing price: $162.64 (19%)
Worst-performing tech stock in my portfolio.

Canadian National Railway (CNI)
Year-opening price: $74.11
Year-closing price: $90.45 (22%)
Hauling heavy things will always be useful, part two.

Amazon (AMZN)
Year-opening price: $1501.97
Bought more: Jul @ $1919.00
Year-closing price: $1847.84 (23%)
Inexplicably, has upside of 31% and 42% vs. market caps of peers MSFT and AAPL.

Intuitive Surgical (ISRG)
Year-opening price: $478.92
Year-closing price: $591.15 (23%)
A company without peers.

Tesla (TSLA)
Year-opening price: $332.80
Year-closing price: $418.33 (26%)
The most successful company of the 2020's?

Intel (INTC)
Year-opening price: $46.93
Year-closing price: $59.85 (28%)
Has been surpassed by NVDA, but will still make lots of money.

Waste Management (WM)
Year-opening price: $88.99
Year-closing price: $113.96 (28%)
Some real hot trash.

Alphabet (GOOGL)
Year-opening price: $1044.96
Year-closing price: $1339.39 (28%)
Mild underperformer for two years in a row.  Needs a cloud presence vs. AMZN and MSFT.

Norfolk Southern (NSC)
Year-opening price: $149.54
Bought more: Jan @ $148.87, Mar @ $180.11
Year-closing price: $194.13 (30%)
Hauling heavy things will always be useful, part three.

Union Pacific (UNP)
Year-opening price: $138.23
Bought more: Jan @ $135.97
Year-closing price: $180.79 (31%)
Hauling heavy things will always be useful, part four.

Comcast (CMCSA)
Year-opening price: $34.05
Bought more: Jun @ $41.45, Sep @ $44.32
Year-closing price: $44.97 (32%)
5G a looming concern.  Needs to talk to Verizon.

American Water Works (AWK)
Year-opening price: $90.77
Bought more: Apr @ $104.15
Year-closing price: $122.85 (35%)
Water is the new oil.

Starbucks (SBUX)
Year-opening price: $64.40
Bought more: Sep @ $94.36
Year-closing price: $87.92 (37%)
Long-awaited breakout after years of underperformance.

Nike (NKE)
Year-opening price: $74.14
Year-closing price: $101.31 (37%)
Three year winning streak. Long-term growth story.

Visa (V)
Year-opening price: $131.94
Year-closing price: $187.90 (42%)
The best proxy for commerce that money can buy.

Autodesk (ADSK)
Year-opening price: $128.61
Year-closing price: $183.46 (43%)
Broke out in 2016, and hasn't looked back.

Costco Wholesale (COST)
Year-opening price: $203.71
Bought more: Dec @ $295.13
Year-closing price: $293.92 (44%)
The finest (brick and mortar) retailer in the world.

Adobe (ADBE)
Year-opening price: $226.24
Year-closing price: $329.81 (46%)
Has been on an incredible 7-year run of growth and outperformance.

Microsoft (MSFT)
Year-opening price: $101.57
Bought more: Mar @ $112.87, Jul @ $136.00, Sep @ $137.17, Oct @ $136.34
Year-closing price: $157.70 (55%)
The Satya Nadella winning streak continues.  Now a legitimate force in the cloud.

Facebook (FB)
Year-opening price: $131.09
Year-closing price: $205.25 (57%)
Cash cow had a big bounce-back year.

Kansas City Southern (KSU)
Year-opening price: $95.45
Year-closing price: $153.16 (60%)
Hauling heavy things will always be useful, part five.

Advanced Micro Devices (AMD)
Bought: May @ $26.90, Aug @ $29.48, Dec @ $37.35
Year-closing price: $45.86 (70%)
166% upside remaining to match market cap of NVDA.

NVIDIA (NVDA)
Year-opening price: $133.50
Bought more: Feb @ $145.37, Apr @ $183.21, May @ $180.86, Aug @ $161.19, Nov @ $206.00
Year-closing price: $235.30 (76%)
China deal removes any obstacles to future growth. Deep learning, AI, and datacenters/cloud computing leader.

Apple (AAPL)
Year-opening price: $157.74
Year-closing price: $293.68 (86%)
The best company in the world, bar none.

2019 Stock Recap: The Departed

A tradition unlike any other...

2019 was a great year.  My portfolio outperformed the S&P 500 by +8.5%, gaining 40.0% vs. 31.5%.  It is my 2nd best rate of return after 2003 (46.5%) and 4th best relative to the S&P 500 after 2003 (+17.8%), 2009 (+12.5%), and 2017 (+11.9).  I am most proud of my 63.6% savings return for the year, pushing my net worth to an all-time high...and achieving a major milestone level.

There are only 5 sells to report for 2019; the returns for all of these stocks were good in the absolute sense, but they all relatively underperformed my portfolio as a whole - and therefore I feel comfortable in no longer owning them.

Here's a look at all the stocks I've sold in the past year, from best to worst - based solely on 2019's performance, while mostly ignoring any intra-year volatility:


Aqua America (WTR)
Year-opening price: $34.19
Sold: Apr @ $36.48 (7%)
Year-closing price: $46.94 (37%)
Marginally outperformed its superior competitor, American Water Works (35%).

BlackRock (BLK)
Year-opening price: $392.82
Sold: Sep @ $420.99 (7%)
Year-closing price: $502.70 (28%)
Anemic revenue growth (3%), negative earnings growth (-8%).

Activision Blizzard (ATVI)
Year-opening price: $46.57
Sold: Jan @ $46.46 (-0%)
Year-closing price: $59.42 (28%)
Negative revenue (-15%) and earnings (-22%) growth.

Chubb Limited (CB)
Year-opening price: $129.18
Sold: Mar @ $134.71 (4%)
Year-closing price: $155.66 (21%)
Anemic revenue growth (4%), negative earnings growth (-11%).

Booking Holdings (BKNG)
Year-opening price: $1722.42
Sold: Jul @ $1900.00 (10%)
Year-closing price: $2053.73 (19%)
Flat over the past 2.5 years.  Weak revenue growth (4%).