My Portfolio 2021

 Here is my portfolio as of 12-28:

Security	Weighting
Cash	13.9%
Berkshire Hathaway	12.2%
Enterprise Products	12.1%
Wells Fargo	9.9%
Norfolk Southern	9.7%
NVR	9.0%
W.R. Berkeley	7.5%
Melcor Developments	6.8%
New England Realty	5.2%
National Western Life	4.4%
Lukoil	4.4%
ADF Group	2.0%
J. Smart & Co.	1.5%
Nicholas Financial	1.5%

Not much activity this year. I sold Gazprom for roughly double the price I paid. I grew to feel like there was no need for me to take what I felt like was a significant risk holding the security. I read a book about the Russian natural gas industry which made me more skeptical of long-term growth prospects. 

I initiated one new position, New England Realty, which I had previously owned several years ago and sold for a modest profit. It seems like an entrepreneurial company which owns Class B apartments in Boston and trades at a reason price. I believe the price is low due to the company being a partnership rather than a REIT and also having a very low distribution. I don't remember why I sold it originally - I think I would have been better off staying put.

The S&P this year is up 27.6% and I up 28.4%. While that modest outperformance doesn't make up for my poor returns last year, I am still very pleased. I think the valuations of companies in my portfolio are reasonable while I feel like valuations in the overall market are fairly high. I also have grown my cash position significantly, and while I have no reason to think a downturn is imminent, I do feel comfortable holding a sizeable cash position and am not in a rush to invest it.

Toward the end of last year I bought a house and now have a 30-year fixed 2.75% mortgage. While I hope I can outperform that rate, since treasury rates are still well below that level I have been making some prepayments to keep my cash balance in check. I prepaid roughly 10% this year and plan to prepay about the same amount again next year. It is the first debt I have had in my life and I dislike the feeling. Unless rates rise significantly and it becomes completely irrational to do so, I will probably direct a portion of my excess cash toward reducing the mortgage down to a level that I find more comfortable (say 25% of the value of my house rather than 75%).

My Portfolio 2020

 Here is my portfolio at the end of 2020:

Security	Weighting
Berkshire Hathaway	13.34%
Enterprise Products	12.15%
Norfolk Southern	11.05%
NVR	8.99%
Wells Fargo	8.65%
W.R. Berkeley	8.60%
Cash	8.11%
Melcor Developments	6.61%
Gazprom	6.50%
National Western Life	6.00%
Lukoil	4.91%
ADF Group	1.97%
J. Smart & Co.	1.65%
Nicholas Financial	1.48%

This has been my worst year ever in terms of both absolute and relative performance. At the time of this writing my main account is down -2.96% for the year while the S&P 500 is up 17.46%. I do not hold any of the large technology stocks that done very well this year (though I did hold Apple at the beginning of 2020).

Over the longer term, I have still done well. I started investing in early 2008 (great timing I know) but I have lost the records of my performance prior to 2014. My recollection is that I generally outperformed the market during the 2008 - 2013 period. Since 2014, returns for my main account have averaged 14.1% annually, compared to 12.8% for the S&P 500 over this same time period.

I do not feel any particular concern about having done so badly this year. I do wish I had capitalized better on the dip in prices earlier this year. I bought some but I should have bought even more. 

The valuations across my portfolio are generally quite low, especially compared to the broader market. Hopefully that is a set up for a stronger 2021. If I am still doing badly at the end of next year, I may need to reconsider my approach!

Coronavirus!

Okay... it is the most exciting time in markets in quite a while... we are in the midst of the one-two whammy of a global pandemic and an oil price war!

As of today, my main account is down -24.5% for the year compared to -23.0% for the S&P.

I started buying on 2/28 after the market was down about 8%-9%, but then between March 4 and March 23 it dropped to about -30% before recovering to where it is now. I also bought on 3/12, 3/18, and 3/27. I did buy some on March 23 as well, but not for my main account (bought for my dad and my smaller foreign stock account).

I still have my t-bills and some cash left, so if prices drop more I have more room to buy. I was a little lucky in that I had extra cash right before the drop because I sold quite a bit of stock because we were trying to buy a house. Now it looks like that won't happen for at least another year.

It doesn't really bother me to see the prices on my existing holdings drop, but it is almost physically painful to try to buy stuff that is dropping a lot on big down days. It just feels like I am taking my money and lighting it on fire.

So far my feeling is that the energy fallout is more interesting the broader economic fallout. I have bought two new names, both in the MLP space, because it felt like they was more technical pressure in this sector as there were certainly redemptions and forced selling but there are not a lot of natural holders of these securities anymore now that they are not popular with retail.

I bought a lot of Enterprise Products, one of the highest quality and lowest leverage names in this space. It had been around $28 before the crash and I had thought it was interesting there. I bought a lot at $22.20, then kept buying down to $11.51.  My average cost now is $17.89.

I also bought Alliance Resources, an Illinois basin coal producer, which also operates with much more conservative leverage than most coal producers. This stock had already declined a lot due to hatred of coal and has really crashed now, I guess because natural gas is so cheap. I bought at $3.55 with around 30% dividend yield, this was trading around $20 less than a year ago. My hope is that a lot of other mines shut down and they can hang on for a while.

In addition, I have added to my holdings in Wells Fargo and Melcor, a Canadian real estate firm.

Who knows how this all plays out, but my guess would be that it turns out to not be very severe. New cases in Italy and NYC look like they are moderating. The reported death rate is very low, almost entirely for people who are very old or with multiple underlying conditions, and the reported death rate is vastly overstated by some unknown amount. I went back and read Ben Graham's memoirs and he doesn't even mention the 1918 Spanish Flu as a market event.

Certainly feels like a panic, but if I'm wrong and there is a major economic contraction then I am prepared to deal with that too.

My portfolio 2019

Here is my portfolio again at the end of this year. My main account is up 29.6%, right in line with the S&P 500 which is up 29.3%. Not a lot of action this year. Up 30% feels about the same as up 3% last year. I feel like the valuations for some things I own are getting fairly high but are not crazy.

I think there will probably be more action in 2020. Right now I feel like I want to increase concentration out-of-favor areas like energy and commodities. I am still over 15% cash and treasuries which is a little higher than I want to be.

Name	Percent
Berkshire Hathaway	11.26%
Short-term Treasuries	10.59%
Apple	9.02%
Gazprom	8.20%
Norfolk Southern	7.90%
WR Berkeley	7.68%
National Western Life	7.24%
NVR	7.13%
Wells Fargo	6.71%
Lukoil	5.98%
Cash	5.51%
GM	4.10%
Melcor Developments	3.97%
ADF Group	1.89%
JM Smart	1.49%
Nicholas Financial	1.33%

Amdocs

I feel like the annual report is a window into a company's soul, and this company's soul is filled with buzzwords.

Neurocrine Biosciences

A biotech company that recently commercialized its first drug for a a relatively rare muscle disorder. This was the first year of positive net income and cash flow.

Erie Indemnity

I don't really get this one. I think the business is basically an insurance agency? I don't understand the advantages of arranging the structure of their business in the way that they have, nor do I understand their competitive advantage.