Eleventh pin stuck in the newspaper

The Monkey and Crayon stock portfolios project continues with the 11th stock pick for both.

Like numbers, but don’t try for pinpoint precision!

The monkey portfolio picks a new stock randomly.

The crayon portfolio follows where the monkey portfolio leads.

So it will invest a similar dollar amount on paper.

The crayon chooses a stock with the same primary listing country as the monkey stock pick.

What you will not find here is four pages with reasoning and arguments as to why stock XYZ is amazing and expected to be a great multi-bagger for the long-term investor.

Why not?

Most investors are overconfident.

The reality is that most single stock picks will disappoint.

A small number of the stock portfolio equities will provide the majority of returns – the so called power-returns.

Predicting which ones will work out and which ones won’t is not Holland Park Capital London’s cup-of-tea.

Future returns are likely to be determined by future earnings (impossible to predict).

& future multiples other investors will want to pay for those earnings on a stock exchange (no visibility there either).

Warren Buffett;

“Some business leaders practice false precision.

A CEO with a 15% hurdle rate, works out the rate to be 15.1%.

Business is not that precise.

We like numbers, but we don’t try for pinpoint precision.” 

It is better to be approximately right than precisely wrong.

So far the portfolios have ten stocks each.

Picture above; Cherry on the cake

Holland Park Capital London is happy to be a very small co-owner of those businesses for the long term.

This project started in May 2019.

The portfolios are paper portfolios.

The company doesn’t own the same amount of shares as the portfolios.

Also the positions were not bought at the same time and were bought at different prices.

Dividends are not taken into account.

The crayon portfolio owns three stocks that are up more than 100% so far.

Ashtead (ASHTY) is up $10392 versus $30274 for the entire crayon portfolio.

ASML (ASML) is up even more with $13960 versus $30274 for the entire crayon portfolio.

MSCI (MSCI) is up $6076 versus $30274 for the entire portfolio.

Power returns from these three stocks are responsible for all return of the crayon portfolio.

So luck by default plays a huge role.

There is a professor who believes one can only tell luck from skill in stock picking after 64 years.

Some people don’t even live that long!

Deutsche Telekom (DTEGY) is up most for the monkey portfolio so far with a rise of 61%.

The $4567 rise in DTEGY compares to a rise of $9126 for the entire monkey portfolio.

DTEGY by itself is responsible for 50% of the return in the monkey portfolio.

This shows how important it is to have big winners in your portfolio for the long-term investor.

Always look for the cherries on top.

Power-returns will drive performance.

https://x.com/marketplunger1/status/1608865389282267139

Stanley Druckenmiller on his recent Argentina investment;

“I followed the old Soros rule, invest and then investigate.”

However you look at the amount of research you do before you invest is a personal matter, but for everybody the following applies;

“If you do not invest in something, you can’t make or lose money from it.”

Someone even wrote a book along those lines that is called “Just Keep Buying”.

So every time we add a position to the portfolio it can change everything or nothing.

Power returns mean that if we are right and or lucky and manage to add a super-stock the long term portfolio returns can be transformed.

Equities can be so completely random.

“A random walk on Wall Street” was another good book name.

The eleventh 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?

The crayon portfolio follows where the monkey portfolio leads to keep things simple and comparable. 

Both portfolios will invest around $5000 in the eleventh round of investment picks.

Holland Park Capital London Ltd’s stock selection skills are completely incompetent compared to famous investors.

Diversification, buy-and-hope with a long time horizon and asset allocation is the name of our game.

For the eleventh round an attempt is made to diversify with companies with primary stock exchange listings that can’t be found in an UK newspaper.

The DividendMax website has about 29 indices on it.

For Denmark it has 48 companies that have headquarters there and are listed in Copenhagen.

The investing.com had 32 Denmark ADR’s on their website.

My broker clearly doesn’t like Danish stocks.

Only five of the above companies were tradable.

The pink marker landed closest to tradable stock Pandora A/S (PNDORA).

This stock has a US listing with code PANDY.

The pink OTC listing doesn’t have the best information or liquidity, but it will do.

The day range on Friday the 24th of May 2024 for this listing was 41.44-41.93 in USD.

For the monkey portfolio a paper transaction was added to the paper portfolio of 119 shares at $41.93 the day’s high price.

That transaction had a value of about $4990.

Above; Pink marker landed closest to investable circled option Pandora A/S for the monkey stock pick of the eleventh round.

For the crayon portfolio a paper transaction was added as well.

The advantage of buying a stock every six months for the long term is that it focuses the mind.

It reminds of the Wannabe song from the Spice Girls.

“Tell me what you want. What you really really want”

To the crayon paper portfolio the stock Novo Nordisk A/S with code NVO listed in the USA was added.

The traded day range on Friday the 24th of May 2024 for the NVO listing was 134.22-136.70 in USD.

For the crayon portfolio 36 shares of NVO at $136.7 were added.

That transaction value on paper was about $4921.

Future performance of the two new stocks will depend on the future multiple of the earnings paid by investors and the future earnings themselves.

Both are impossible to predict.

There is no analysis here of why Holland Park Capital London Ltd put NVO in the crayon portfolio in the eleventh round.

A detailed research note could be added but surely long term it wouldn’t age well.

It is just the opinion of Holland Park Capital London Ltd to like this stock at this moment in time best for the Danish stock market.

The long term chart goes from bottom right to top left.

This is important as it shows the stock hasn’t been cyclical.

For long term investing you want your stocks to be able to compound and not come back crashing down to earth all the time.

Of course just the fact that a stock hasn’t been dead money in the past is no guarantee that that will remain the case in the future.

The future for Novo looks bright thanks to the well known drug discoveries that help people eat and drink less.

My model predicts 161% annual returns over the next ten years assuming a P/E of 30 in ten year’s time.

Obviously the model is going to be guaranteed 100% wrong.

Still numbers may help to be a little right in this beauty contest.

Novo Nordisk looks competitive versus other equities.

This is not financial advice. Do your own research please. This article is for information purposes and entertainment purposes only.

Both paper portfolios have 11 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. 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 amount of shares per holding as the paper crayon and monkey portfolios. The purchase prices are also completely different. Holland Park Capital London Ltd is also long the S&P 500 index. 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 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 book “Beat the Stock Market Casino” and 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.