It has been a little over a month since the turn of the calendar, but I am writing this the day after the Washington siege as my first column of the new year. What other zaniness might occur between day of writing and day of reading remains to be seen, but a constant has been the resilient performance of the Titanium-Strength Portfolio. I will use the portfolio performance to punctuate the key message of my 50 columns written to date.
The stock markets have been unusually volatile since inception of the demonstration portfolio. Shortly after its launch the United States entered a mild bear market, carving 20 per cent off the S&P 500 index with slightly less impact on the TSX. The following year, 2019, was all up and a lot of fun. Then came 2020!
Through that period our portfolio has gained 28.1 per cent. The only tool required to benefit from the ride was a seat belt.
The key message has been that a well-selected portfolio of stocks, diversified across sectors of the economy, will do well over time and requires minimal attention. I hope the bottom line punctuates that message. The only change to the entire portfolio over the two and a half years was to reinvest Canadian dividends collected, adding XEG with the previous update. Oil has rebounded nicely since then.
To further emphasize this point, please look at the individual security performance. With the last update, I ranked each security in order of performance from best to worst in each currency. With this update, I am leaving the order in the chart the same as in May, making it easier to pick out the variation by security. TRP has gone from second in Canada and, overall, to worst. CNR has moved from middle of the pack to best in Canada and DIS has moved from middle of the pack to runaway leader. Tinkerer’s would have probably sold Pentair because of its worst overall ranking, and subsequently missed out on its 50 per cent move since May, to bring it up to middle of the pack. None of these moves were predictable short term.
What is predictable, but only from a long-term perspective, is the performance of a well-selected portfolio of stocks.
I may have just joined the modern world with a subscription to Netflix (a great company with a grossly inflated stock price) and we are enjoying a series called “The Crown.” One line that has been repeated, hit home with me and is relevant to this discussion, goes something like, “Sometimes the most difficult job is to do nothing.”