15th pick in the beat the stock market casino project

It is time to pick something to invest in again for the “put a pin in the newspaper” experiment.

We are travelling to a country we have ignored so far. Canada here we come. My UK newspaper is light on Canadian companies in the quotation page.

Some homework though worked wonders. Thanks to the internet the companies in the Canadian stock index the S&P/TSX 60 index were easy to find.

The TSX 60 is a stock market index of 60 large companies listed on the Toronto Stock Exchange.

Those 60 companies were pruned a little to only include stocks that also have some kind of listing in the US. Keeping track of how performance is going is a real pain otherwise.

Four A4 pages with companies to randomly select a stock from was the result.

Where was the blue marker going to land?

Well, the answer is something called Cameco Corporation (CCO).

The stock code in the US is CCJ. Apparently, it is an energy company. I would say more an expansive uranium energy stock. The forward price earnings expectation is about 86.

Cameco will be the pick for the monkey portfolio.

Valuations are ignored in this experiment. On average and over time valuations will average out to world stock market valuation levels if enough global stocks are added to the project.

An investment is needed for the crayon portfolio as well.

Regular readers will know I am a fan of Fairfax. Sadly, that one doesn’t have any US listing after a bad experience with some US hedgies so Fairfax is ruled out for the content of the monkey and crayon portfolios.

A warm fuzzy feeling for any other single stock in Canada in particular is lacking.

So, let’s just buy a Canadian ETF. Good for diversification at least. The iShares MSCI Canada ETF (EWC) springs to mind.

The great news is that the stock market is super forgiving for mistakes of long-term investors.

If one buys the same dollar amount, diversifies properly and just let the investments run, the winners will grow so big the mistakes become rounding errors.

Obviously, this only works if you have enough positions (100 plus) ...

This experiment is not quite there yet.

Concentrated investors better be right and not make too many mistakes.

Concentrated investors like to compare themselves with Warren Buffett and talk about diworsification.

Let’s coin a new word and start talking about bettersification.

For those who don’t pretend to know up front which investments will work out after 10, 20 or 30 years more diversification seems better to me.

It helps to sleep well at night and is not shy in admitting that Warren and Charly were in a league of their own. What worked for them will not necessarily work for me or other people.

I fully expect most of the crayon stock picks to be massive disappointments. Probably only 5% of the stock picks is going to shoot the lights out.

Some stocks will go up more than 100% and work compounding wonders.

Disappointing stock picks will go down 100%.

More upside than downside is math that Holland Park Capital London likes a lot.

This beat the stock market experiment started in May 2019. Two investments are picked every year like clockwork.

The project has been running for 7 years now. But the time weighted holding period has only been about 3.5 years for the overall portfolios.

Both the crayon and the monkey are comfortably ahead of inflation. Sadly, inflation was chunky after the money printing wave around the pandemic.

Dividends have not been tracked and have been excluded from the portfolio return tracking. Realistic returns would have been even higher with dividends included.

Keeping track of returns outside of a brokerage account has been a real pain.

In the crayon portfolio the OTC listing of Bitcoin Group simply doesn’t trade and has no volume. Semler Scientific got bought in an all-stock deal by Strive. Strive did a reverse stock-split after that as well. Not a sign of success to have to do a reverse stock split by the way. Lastly Ashtead decided to save investors some stamp duty bills to HMRC and listed in the US instead as Sunbelt.

Google Sheets needed some best efforts updating to guestimate returns.

The crayon portfolio is up around 64% now. The monkey portfolio is up around 58%.

Cisco, Deutsche Telekom, Philip Morris and Societe Generale are up more than 100% in the monkey portfolio.

Argenx, Sunbelt (used to be called Ashtead), ASML and MSCI are up more than 100% in the crayon portfolio.

ASML is now up 456% and certainly not cheap anymore.

Forward price earnings for ASML is close to 49 times expected earnings currently.

ASML is caught up in the AI bubble. That doesn’t seem to be the case for any of the other stocks.

Fifteen stocks in the crayon and monkey portfolios is work in progress in earning the free diversification lunch.

The blue marker for the monkey portfolio landed on the stock Cameco.  

I have bought Cameco Corporation already with my broker on the Toronto exchange and on this investment journey have purchased a Canadian stock market ETF listed in London.

HSBC MSCI Canada UCITS ETF USD (HCAN) with a yearly expense ratio of 0.35% was bought to be precise. Return should be close enough with the HCAN ETF compared to a US listed Canada ETF.

As always, the monkey portfolio picks a new stock randomly and the crayon portfolio follows.

Just to be clear these are paper portfolios, but Holland Park Capital London Ltd will have or has started in this case equity positions in both stock picks.

The 15th position will have a new position value of about $5000 according to the “no capital gain taxes growth investment plan” in the book ‘Beat the Stock Market Casino’.

Have you bought the book “Beat the Stock Market Casino” yet on Amazon?

As mentioned I bought the UK listed Canada ETF for my company.

For portfolio tracking I need the most liquid US listing for both investment picks. It is still tough to track performance outside of your brokerage account on the web.

CCJ had a high of $93 yesterday. A paper trade buy of 53 shares of Cameco at the price of $93 was recorded today for the monkey portfolio.

The US listed iShares MSCI Canada ETF had a high of $59.48 yesterday. The crayon portfolio adds 82 shares of this Canadian ETF at $59.48.

Stock prices are sometimes set by crazy buyers and crazy sellers so who know what will happen in the future.

Share prices long-term do like to follow earnings though but predicting at what valuation a stock will trade in the future is a fool’s game and predicting earnings is an equally tough gig.

Some companies manage to successfully re-invest retained past earnings in higher future earnings and that is the reason a diversified basket of stocks can be expected to compound.

Compounding is fantastic.

May the force be with you as you make your own investment decisions. Forza crayon and monkey portfolios!!! This world cup was great but hopefully Italy can finally play at the next world cup again. Watching Canada on a world cup was great, but it is not the same without the Azzurri.

Thanks for reading and making it so far. Paid publications have been turned on recently as my Substack can almost celebrate its second birthday now and some writers think that the Substack algorithm prioritizes paid blogs over free publications. The free content will stay similar as to how it was. For free subscribers I usually aim to publish one blog a month on things that keep me occupied in the stock market. I will just have to write more posts for the paid subscribers going forward.

Below is the boring disclaimer.

This is not financial advice. Do your own research please. This article is for information purposes, educational purposes and entertainment purposes only. Both paper portfolios have 15 holdings now. Slowly but surely the portfolios start looking a little like diversified portfolios. May the force be with both paper portfolios.  Thanks for reading this blog. Holland Park Capital London hopes you enjoyed the information in the blog. This is not a financial promotion. Holland Park Capital London Ltd is not receiving any compensation from anyone to write this blog (excepting the paid subscribers). Holland Park Capital London is long the stocks in the crayon portfolio and the monkey portfolio. Holland Park Capital London Ltd just doesn’t have the same number of shares per holding as the paper crayon and monkey portfolios. The purchase prices are also completely different. Holland Park Capital London Ltd is long the S&P 500 index (equal weighted version).

Holland Park Capital London has no business relationship with any company whose stock is mentioned in this blog. Holland Park Capital London expressed its own opinions.

This is not financial advice. This blog is for information purposes only.

Make your own decisions please. Do your own research. Please go and see an authorized financial advisor before making any investment decisions. What works for Holland Park Capital London may well not work for you and your personal situation is unknown to Holland Park Capital London. Stocks go up as well as down and you may get back less than you invest. Your capital is at risk when you invest in stocks. In other words, you can lose all your money by investing in stocks. Any information in this blog should be considered general information and not relied on as a formal investment recommendation. This blog is for information purposes only and helps Holland Park Capital London expand on the books “Beat the Stock Market Casino” and “Stock Market Blah Blah”. Both can be bought on Amazon.

This brings extra discipline in the investment process. Holland Park Capital London Ltd is not liable for any mistakes in this blog. This blog cannot be a substitute for comprehensive investment analysis. Any analysis presented in this blog is illustrative in nature, limited in scope, based on an incomplete set of information and has limitations to its accuracy. The information upon which this blog is based was obtained from sources believed to be reliable but has not been independently verified. Therefore, the accuracy cannot be guaranteed. Any opinions are as of the date of publication and are subject to change without notice. This Substack is not financial, investment, tax, legal or professional advice. Nothing in this publication is a recommendation, offer or solicitation to buy, hold or sell any investment. Individual stocks might have a higher risk and higher volatility than companies or investments your financial advisor is comfortable with.