Outlook for 2020

Happy New Year! 2019 is in the books and what a year it has been. Almost every asset class did well in 2019 and investors have been well rewarded for staying invested.

The US economy is chugging along as the stock market rings in new all time highs. The US Fed has pivoted from raising rates to cutting over the year, so debt rollover has become a lot more manageable for companies.

There were more interest rate cuts than raises from the central banks around the world in 2019. In addition, we saw increased liquidity with the Fed’s “Not QE” and ECB joining the party in 2019. This trend is expected to continue with other CBs increasing the bond purchases according to JPMorgan (source). In other words, expect this bull market to continue running as the expensive market gets even more expensive.

Outlook for 2020

Right after the start of 2019, I pivoted from being focused on macro to more of a micro (company-specific) level. This change in mindset allowed me to deploy more of my capital into the markets instead of waiting for major macro events to take place. I expect to continue down this path in 2020 as well, so getting close to fully invested is where I am currently at.

I have also made some major changes in the portfolio in 2019. The work is not complete (is portfolio management ever complete?) but I am starting to get closer to what I want my portfolio to look like. The two major themes that I am following as I go through these transitions are (i) smaller number of positions, i.e., holding a more concentrated portfolio and (ii) raising the quality of my holdings — in my hunt for performance, some low quality names made their way into my portfolio, so I want to get rid of those and acquire stronger companies that can compound my capital over the long haul.

My Focus for 2020

Even though I continue losing some of the weaker names, I am not done yet. I look forward to drop a few of these names in the coming months.

I am also getting close to being fully invested with my current cash position less than 5%. This is the first time my cash position has dwindled to such a low amount since 2015-2016.

Portfolio as of Jan 1 2020 is as shown below:

Portfolio Transparency

One other major change going forward is that I intend to share my position sizing in percentage terms of my holdings. I have been considering it for a while, but shied away from disclosing too much information online. I believe that sharing this can be valuable both for myself as a feedback mechanism and others who are looking for such information.

Without further ado, following is the position sizing in our combined family portfolio as of Jan 1 2020.

Looking for investment ideas? Check out this Top Investment Picks for 2020, where 30+ investors present their top pick and a reason to invest in those securities.

What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.

Full Disclosure: Our full list of holdings is available here.

8 thoughts on “Outlook for 2020

  1. Interesting. Cool to see your position sizes.

    I guess things may have changed a bit after yesterdays air strikes eh? I know its just news and we should ignore it but just killing other military leaders because they were plotting something doesn’t seem good. If Americas top military leaders got killed Im sure America would retaliate pretty hard.

    Either way I’ll stay invested and keep doing the monthly thing. If this situation doesn’t blow up I agree the markets will keep running. Time will tell.
    cheers Road!

    • I was/am expecting ppl to call me an idiot for having that outsized KL position…but decided that it will good to have a bit more transparency on the blog.

      Yeah its an instigation from the US…we’ll have to see how things develop going forward. So far, theres no overreaction in the market.

      Best
      R2R

  2. JC says:

    On a personal level I’m looking forward to 2020 since it should bring about some big change. In the long run I think it’s for the best. On the investing front I have no idea what will happen. 2019 seemed crazy to me, but the net worth sure liked it. With pretty much all CBs committed to funding the government spending there’s no telling what that will do. But I do want to increase my exposure to gold mainly through gdx and gdxj. I still haven’t ventured into the individual miner space yet.

    • GDX & GDXJ are perfectly viable options for exposure to the space if you dont want to go with individual picks. Will be interesting to see how things progress over the coming months with the increased liquidity.
      Wishing you the best with whatever is having on the personal front.

      cheers
      R2R

  3. Neil Singh says:

    I noticed your dividend income has been down since 2017. It seems like you paniced and started investing in silver & gold.

    What are you going to do to make up for the lost income?
    If you actually stuck with the original plan, you would be much better of?
    Do you have a new strategy?

    Thanks for the blog and good luck.

    • Yes, I saw issues a lot of my holdings and saw big opportunity in gold/silver in 2016 when this bull market was starting in precious metals. Since then I have made money on some and lost money on some, but overall doing well on the moves.
      Dividend investing is still very much a part of my multi-pronged approach to investing. But its not the be-all & end-all. Part of the portfolio is in index funds, part in dividend/income focused stocks and part of portfolio is focused on growth — I am still fairly young and have 20+ years of compounding before I need to rely on portfolio income for sustaining lifestyle (hence the need to exposure to growth stocks).

      Hope that clarifies
      R2R

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