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:
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.
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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.