2021 Investment Portfolio and Future Picks

Below are the positions I opened starting in 2020 and a description of a promising sector I think will do well in the future.

All of these positions are in a Roth IRA.

I don’t throw a lot of money into stocks, yet. Why?

Firstly, I contribute to my employer-sponsored retirement account more than my Roth IRA. My employer matches up to 5% of my contributions, and my money goes into funds of my choosing automatically (total market, international market, and a bond fund).

Secondly, there are better wealth generators than the stock market. Creating and selling a product that you can scale and purchasing properties that you rent out are much faster ways to build wealth. Those are my critical focuses at the moment.

However, learning about and investing in the stock market is fun, which is why I’ve detailed my current portfolio for you.

Largest Positions: Index Funds

Index funds make up the bulk of my portfolio.

Plenty of books, research reports, and experts praise index funds because they beat over 90% of all actively managed mutual funds, hedge funds, and individual stock pickers in the long run.

They are easy to put money towards each month, give you dividends, and have the lowest costs.

Why don’t people use index funds more often, then? Because most people are impatient and naive. Most people want to get rich right now, not later. Even worse, most people believe they can maintain above-average returns for the long term when professional Harvard/MIT graduates that run hedge funds professionally can’t even do it.

I have nothing against buying shares of individual companies that you believe in. But as a data scientist, I can’t deny the numbers. Index funds have generated the best and most consistent returns for decades.

Those are the reasons why I budget money every month to put into my index funds of choice (putting money in every month utilizes the benefits of dollar-cost averaging).

FZROX

• Returns since 2020: 25.46%
• Expense Ratio: 0%

The Fidelity Zero Total Market Index fund was released in 2018. A total market index fund consists of stocks that are representative of the entire US Market. Fees are the investor’s worst enemy, which means a free index fund like FZROX is the investor’s best friend.

The top 5 holdings:

• Apple Inc.
• Microsoft Corp.
• Amazon.com Inc.
• Facebook Inc. Class A
• Tesla Inc.

FSTPX

• Returns since 2020: 39.17%
• Expense Ratio: .74%

I chose the Fidelity Select Technology Portfolio because I wanted extra exposure to the technology sector. FZROX’s diversity will help me in the long run. But it also contains sectors that are lagging, which may hinder me in the short run.

Top 5 holdings:

• Apple Inc.
• Microsoft Corp.
• Sunrun Inc.
• Mastercard Inc. Class A
• Alibaba Group Holding LTD

FZILX

• Returns since 2020: 36.62%
• Expense Ratio: 0%

The Fidelity Zero International Index Fund works the same as FZROX, except it holds companies from everywhere other than the United States. If the United States stock market isn’t doing great, I can count on this fund to bring me returns from international markets.

Top 5 Holdings:

• Alibaba Group HTD LTD SPON ADR
• Tencent Holdings LTD
• Samsung Electronics CO LTD
• Taiwan Semiconductor MFG CO LT
• Nestle SA (REG)

FTBX

• Returns since 2020: 3.52%
• Expense Ratio: .45%

The Fidelity Total Bond Index Fund diversifies your money across all types of bonds throughout the United States. You may notice the returns on this fund are significantly lower. That is because I can almost always count on bonds returning in between 3–5%, even when the stock market tanks.

The stock market will eventually go back down (before making a gradual rise back up), and investors may experience years of negative returns. During those years, bonds are more likely to provide steady positive returns. Bonds are less risky, with less reward, but act as a hedge when the market tanks.

The top holdings in this bond fund are mainly U.S. treasury bonds and real estate bonds from Fannie/Freddie Mac.

How I Analyze Individual Stocks

I use the Yahoo Finance “Financials” tab to find all the numbers and the investor reports usually found on the company website. Here are the metrics and numbers I look at:

• YoY Revenue Growth (income statement)
• YoY Working Capital growth or explanation for a decrease (balance sheet)
• Current Ratio. Current Assets/Current Liabilities = Ratio.This shows whether they can pay for all their debt or not if they needed to. Ratios at or above 1.2 are good, at or below 1 is not good. (balance sheet)
• YoY Free Cashflow Growth (cash flow statement)
• Dividend Yield
• P/E Ratio (Above 20 is expensive in my opinion)
• Qualitative data that creates a company profile. Look for things like their products, strategic plans, acquisition of other businesses, and who is on their board of directors. Ask yourself, “does the company seem like they have plans to expand, do they have a diverse business, and do I trust the people who make the decisions?”

Best Performers in Individual: Tech Stocks

The next few stocks were on my watch list for several months before I placed my position. The goal was to expose me as much as possible to the tech industry’s biggest movers.

I had cash ready and was waiting for an opportunity for the prices to go down. Eventually, COVID hit. The prices tanked and I used portions of my saved up cash to buy in every two weeks as the price continued to drop (another example of dollar-cost averaging).

Using this strategy, I was able to buy in at the bottom of the dip and ride the returns up to our current highs.

• Apple Inc. ($AAPL)
• Total Gain: 115.67%
• Alphabet Inc. ($GOOG)
• Total Gain: 78.25%
• Amazon Inc. ($AMZN)
• Total Gain: 40.47%

Amazon has fewer gains because I sold some of my position towards the end of 2020 and put the profits into the index funds.

Recent Additions to Individual

After being extremely exposed to technology, I saw an opportunity to diversify. The main goal was to locate two companies with higher than the average dividend yield, that were not in the technology sector and would do well during the pandemic. I placed my positions in these stocks in November of 2020.

• Diageo ($DEO)
• Total Gain: 20.54%
• Johnson & Johnson ($JNJ)
• Total Gain: 14.96%

Diageo is a conglomerate of liquor brands. They own brands such as Bulleit Bourbon, Don Julio, Casamigos, Smirnoff, Bailey’s, and more. I felt that alcohol was going to do well during the pandemic and the brands they own are some of my favorites.

Johnson & Johnson impressed me with how many products they offer and their involvement in medical research. I had no idea they had an entire branch dedicated to that, and I assumed that would play out well when a vaccine was called for. A couple of weeks later, the government announced Johnson & Johnson as one of the contract award winners to create a COVID-19 vaccine.

Future Moves

One future move will be finding an opportunity to add to my current positions with Apple, Google, Amazon, Diageo, and Johnson & Johnson. I’m expecting a market correction (prices will go down) sometime in the next year or two. Once prices draw down about 10–15%, I will examine which companies I deem to have a reasonable price.

Another sector I’m looking into is nuclear energy.

Nuclear energy piqued my interest during the presidential elections. The libertarian candidate, Jo Jorgensen, had nuclear energy as her preferred way to combat climate change and create sustainable green energy.

I’ve been looking into it ever since. There are about 220 nuclear power plants in the world, 90 of them are in the United States, it creates more energy than wind and solar, and creates zero carbon emissions.

There is already a base level demand around the world for nuclear energy, but the uranium mining companies have been on a temporary shut down due to COVID.

The power plants are continuing to operate and are burning through their supplies. With power plants running out and mines not producing anymore, this has created a supply deficit of uranium. But the spot price has remained low!

With the growing demand for uranium and the expectation to have zero carbon emissions by 2050, nuclear energy is looking to be a profitable sector to invest in. However, I am taking my time when looking into which companies to invest in.

Would you like me to write an analysis on the company’s I’m interested in?

Summary

Portfolio’s Personal Rate of Return: 51.17%

*Calculated by Fidelity

My main investments are in index funds. I invest in individual companies when I have a specific goal in mind. All my positions in this portfolio are long, meaning I plan to hold and add to them for many years to come — probably until retirement.

Index funds are safe. Individual stock picks are pure speculation. All of this information is my opinion and is not financial advice.