Welcome to the annual 2019 update. This is part of a series where I track our financial progress on a regular basis. I present three parts in this series: (i) Investment & Portfolio Update, (ii) Passive Income Update, and (iii) Goals Update.
1. Investment & Portfolio Update
2019 was quite an interesting year. The broad equity markets performed phenomenally well with the S&P500 returning 28.9%. I finished the year with a return of 23.5%, underperforming the S&P500 but beating a 60/40 or 80/20 portfolio.
Changes to our portfolio are summarized below.
2019 saw more portfolio turnover. One of the big realizations I came to earlier in 2019 was how my overall portfolio was littered with low quality swing trades. I wanted to move away from this and focus on a smaller set of companies that can compound my capital over the long haul. As a result, I have been dropping most of the weak names and started initiating positions in some of the stronger companies, even though they appear to be expensive on the surface. Some of the highlights included:
- Selling my first chunk of Kirkland Lake Gold (KL.TO) in January after a rapid rise in share price. KL started forming too big a position (well above 20% of our combined portfolios) and I decided to sell and take some profits on 1/3 of the position. The share prices have continued to rise further since then and KL still makes the largest single stock at ~12% of total portfolio weight. Ideally I’d like this to be below 10%, but I am willing to let it run a bit more and then take some more profit in coming months/years, even though I am extremely bullish on this company.
- Sold other underperforming companies. In the resource sector this included: Brixton Metals (BBB.V), B2Gold (BTO.TO), Cordoba Minerals (CDB.V), RNC Minerals (RNX.TO), Sarama Resources (SWA.V), and Inter Pipeline Ltd (IPL.TO). In other sectors, sales included: Bank of Montreal (BMO.TO), Ventas Inc (VTR), EVI Industries (EVI), and Origin House (OH.C). All posts related to sales can be found under this category.
- On the buy side, I put a significant amount of capital to work in 2019. Proceeds from the sales mentioned above and the cash position in my portfolio dwindled in 2019 (cash portion in portfolio started at 25% at start of year and ended the year at 4.5%).
- New companies in 2019 included: Alphabet Inc (GOOGL), Constellation Software Inc (CSU.TO), Ferrari NV (RACE), FirstService Corp (FSV.TO), and Twilio Inc (TWLO).
- In addition to the above, I continued adding to existing positions and increased stakes considerably in companies such as Brookfield Asset Management (BAM.A.TO), Brookfield Infrastructure Partners (BIP.UN.TO), Johnson & Johnson (JNJ), Kinder Morgan Inc (KMI) etc. All posts related to purchases can be found under this category.
- There were also plenty of dividend raises to sweeten the deal going forward.
In 2020, I have also decided to be a bit more transparent with my portfolio’s position sizing. As of Dec 31 2019, my portfolio position sizes look like this:
2. Passive Income Update
Another great year on the passive income front. In 2019, we managed to earn a passive income of $9,571.24, which easily exceeded our $8K goal.
3. Goals Update
Onto the goals that I set and see how we did overall on that front.
- Earn $8,000 in annual passive income Achieved!
- Passive income for 2019 was $9,571.
- Continue building Baby R2R’s portfolio Achieved!
- Two main goals here: max out RESP & two more stock purchases in Nest Egg portfolio.
- Mortgage renewal Achieved!
- We moved mortgage providers to get a better rate and settled on fixed rate after some deliberation.
- Credit Report Checkup Partially Achieved!
- Completed the check, but found a couple of minor errors that need to be fixed
- (Non financial) Read 25 books Achieved!
- I managed to hit this goal and read some great books in 2019. I will post details of some of my faves of the year in a separate post.
That’s all folks! Thanks for reading & hope you had a great 2019 as well.