Monthly Portfolio Update #3 (Mar. 2024)
Dear subscribers,
Welcome back to My Weekly Stock, where we blend in-depth market analysis with proven momentum-based trading strategies. My mission? Help you navigate the financial markets with unbiased, data-driven insights you can act on!
This mid-week post is about my long-term portfolios. Notably, I will share more about my investing approach, my holdings, and my performance.
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THIS MONTH’S HIGHLIGHTS
My portfolios for long-term investing are based on 3 common principles: entry/exit based on the weekly chart, diversification, and compounding. Here are the key highlights for March 2024:
Performance: Since their inception in October 2023, the stock and ETF portfolios have returned 17% and 18%, respectively.
Portfolio composition: my stock portfolio is almost fully invested (90%), while the macro ETF have a sizeable amount of cash (28%) available to deploy as opportunities arise. I currently own 18 stocks and 9 ETFs.
Activity: I have been deploying more cash in the past month as momentum remained supportive. I have initiated 4 new positions, while made 1 sales. I also took some profit in cryptos.
Takeaways:
The macro ETF portfolio has gained significant momentum over the past month, boosted by the crypto market's surge to record highs. This rally provided a prime opportunity to profit from Bitcoin and Ethereum.
On the other hand, the stock portfolio experienced more turnover, especially as the earnings season impacted several holdings. Moving forward, I anticipate further adjustments as I exit underperforming stocks and seek new, promising setups.
In a recent note on Substack, I shared how I was increasingly attracted to investing based on higher timeframes. These portfolios perfectly capture why I like this approach: reduced market noise, more discernible trends, less frequent need for intervention, and, just as importantly, excellent returns.
LONG-TERM STOCK PORTFOLIO
My Approach
I start the stock selection process by filtering S&P 500 stocks through fundamental criteria. This method usually narrows my focus to approximately 20-30 stocks. To ensure these stocks continually meet my investment criteria and to adapt to evolving market conditions, I update my watchlist every 3 to 6 months. This disciplined approach helps maintain a relevant and high-performing portfolio.
My investment approach is anchored in 3 fundamental screening criteria:
Growth: I target companies exhibiting over 10% Earnings Per Share (EPS) growth and more than 5% revenue growth
Margin: I focus on companies with a Return on Invested Capital (ROIC), Operating Margins, and Free Cash Flow (FCF) margins above 10%. These indicators reflect management's efficiency and attractive company's profitability.
Balance Sheet: I look for companies with a Debt-to-Equity ratio below 1 and a Current Ratio above 1, which suggests financial health and stability.
The essence of my portfolio strategy is to invest in growing companies with attractive margins and solid financial foundations. These traits closely align with the potential for long-term stock price appreciation.
Identifying such companies is crucial, but the timing of investments is equally important. To this end, I use the Exponential Moving Average (9 and 30) on weekly charts. The process helps me time my entries and exits and ultimately find setups with attractive risk-reward profiles.
I allocate around 5% of my portfolio to each investment, balancing risk management and potential returns. The holding period for these positions can extend from several months to years, contingent on sustaining positive momentum. This approach ensures that each investment has ample time to achieve its full value.
My Performance
I'm confident that my hybrid approach can produce substantial returns over time, and my back-testing has suggested so. Since its inception in November 2023, my portfolio has achieved a cumulative return of +17%. In the last month, the portfolio has grown by 1%.
My Current Holdings
Here's an overview of my current stock portfolio: 90% is actively invested, with the remaining 10% kept in cash. The portfolio has 16 positions, and the best performers are AMAT (+60%), PHM (+50%), and NFLX (+45%).
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