2024 Stocks Picks

 Top 20 2024 Stocks: 

Next 30 Stocks for 2024: 

Dividend Growth 40 Stocks: 

Final 50:

3$ Weekly Risky Picks: 

2023 Portfolio Performance

Last year (December 25, 2022) - I created 6 portfolio and following are the result as of today (December 25, 2023). 

Top 20 stocks Portfolio (where I buy 5$ on Daily basis): 167,366.59$ (100K invested)

Next 30 Portfolio (where I buy 3$ on Daily basis): 137,971.57$ (100K invested)

Next 30 Portfolio (where I buy 2$ on Daily basis): 139008.38$ (100K invested)

Last 60 Portfolio (where I buy 1$ on Daily basis): 130088.65$ (100K invested)

3$ On weekly basis to remaining 150 stocks: 134,399.09 and 134778.31$ (200K Invested) 

Note: Since Finviz at that time allowed maximum of 100 stocks to be tracked in a portfolio, I divided 3$ weekly portfolio in two bracket, one had 98 stocks and other one had 50 stocks. 

Overall, 600K invested (on paper) resulted in 843,612.59$ (40.6% gain). Just to compare results, SPY is up 23.70% during the same time period and QQQ (Nasdaq 100) is up 52.75%. 

Following are the screen shots for each portfolio performance: 

Thoughts on Apple

From 2019 lows - Apple stock has went from under $40 to almost $200 - close to 500% gain. But in five years, their revenue has not gone up 500%. Hack - its not even doubled. Their revenue increased from 265 Billion a year to roughly 400 Billion dollar a year. Their earnings have doubled but does not justify 500% gain in the stock price. 

Apple has lot of issues to cover up - Their profit margin is not growing anymore. They are expected to announce 4th quarter in a row -where they are going to show declining earnings and profit. Their iphone sales are not climbing in year over year data. Their growth market China has already ban them for government use. 

Apple is currently valued at 29 P/E ratio - highest it has ever been traded. Usually, third quarter is Apple's worst quarter (as they sell more stuff during holiday's season - 4th Quarter). So I would be not even cautiously optimistic, I would be very cautious on going into ER. 

Overall, market might be looking at Job data as prime indicator than Apple's earnings, but if it gaps up - it will most likely be sold. From technical chart perspective, it does look like it is going to visit 157 mark at some point. Perhaps not immediately after ER, but at some point. 

Soft Landing Probable?

Till yesterday- sentiment across the market was too negative. Clearly economy is slowing down but until yesterday there was no sign of Fed to stop raising rates. Although S&P has just declined 10% from the recent high in July - it was the overall effect that was being felt across the market. 

To just give a background IWM was where it was 5 years ago. That is small caps. 5 years of no return. 30% of the companies in IWM are still facing fear of bankruptcy. Technically it was in the verge of breaking down. Although S&P was not declined to that level but it is also at the same level 2 years ago. If you dollar cost average in S&P like I have since March 2021 - you have negative returns. Only handful of companies had positive overall returns while rest of the market struggles. 

I used to know a friend - whose father committed suicide in India when stock market crashed. I never understood that at that age but I could see or feel that fear - yesterday. It is not the market crash that kills people - it is the lack of hope that kills them. When you are 60 odd and you have all your life earnings put in the market and it crashes 50-60% - you can somehow gather the courage that market will bounce back - it usually do - it almost always do - but it when you lose that hope - that’s what kills people - usually old people - because they don’t have the years left for to remain hopeful. Japanese market has not seen the all time high since last 45 years. Imagine waiting for that. Situation was that bleak. 

My own 401k returns were negative since last 4 and half years till yesterday. So - today - although Powell did not declared a victory - but his speech and stance installed the much needed hope. 

The most important statement from todays speech was - that Fed feels there is equal amount of risk in raising or not raising rates. This means Fed does see signs of slowing economy and panic in the market. Fed also understands one more rate hike could break the market and economy. This is second consecutive pause and there is high probability that Fed is done raising rate now. 

This will install fear in the bond buyers the most. They may not see 5% Yield in longer term bonds. That means we may see first rally in bonds starting tomorrow. Particularly longer to medium dated bonds. 7 year- 10 year yield should decline as there will be demand for bonds. Yield decline temporarily also help stocks. Particularly mega cap stocks - but that rally will fade soon as rates are still very high and Economy is slowing. 

However - bonds will continue to rally and any signs of them going near to 5% yield - they will be bought. For stocks - it will stock pickers market for next 6 months - There are companies which is generating good cash flow and has better balance sheet - with low debts - will see buyers but there are others who has lot of debts will continue to struggle and sell off. We are still in higher for longer market and Fed is not thinking about thinking about thinking about cutting rates. 

However if inflation and job data support for next 2 to 3 months - particularly in Feb 2024 when we get Jan inflation print and that shows Year over Year growth of below 3% - Fed will start saying rate cut is coming - probably in June 2024. 

However next 6 months are critical for soft landing. Unemployment shouldn’t rise above 5% -  Mortgage rate need to decline to at least 6% from 8 - and inflation print needs to show below 3% for 2 or 3 months in 2024. Should all that happen we can consider we are out of this mess and pain ride. 

Thoughts on DISNEY

 Thoughts on Disney: 

Disney is valued at 180 billion dollar - roughly the same number that it was valued in 2015. For almost 8 years - stock price/valuation of the company has went no where. Yes- there was a good “trade” opportunity when it went to 80$ stock price during covid low of 2020 and went as high as 200$ during market peak in 2021, but it is back to where the price of the stock is in 2015 (just below 100$). There are multiple reason behind it. 

1. Company was decently priced back in 2015-2016 era. They were making 55-60 billion dollar in revenue - spending total of 45 billion and creating a profit of 9 to 10 billion dollars. You generally give 18 to 20 times profit as your valuation and hence it was valued roughly 180-200 billion dollar valuation. But there was no “Growth” - neither in Revenue nor in profit. 

2. So, they made the acquisition of “FOX” assets in 2015 for 70 odd billion dollars. If they would have executed that deal well - it might have worked out, as they were making 10 billion dollar in profit, they had some cash in hand - so to compete with Netflix and jump in the streaming business was the right approach. 

3. However, the problem was - completion of the deal took almost 2 years and in the mean time, Board was unwilling to pay their CEO Bob Iger big salary. So he wanted to move on and retire. Perhaps he had some political ambitions (not sure), but him leaving and not seeing through the completion of the FOX deal and success of Disney Plus - created big issues. 

4. On top of it - Disney Board made their next CEO as someone who handled their PARK - resulting in less focus on Disney Plus/ Movies. Their movie content went below par, parks were unable to do business during Covid, and they also had debt of buying fox assets for 70 billion (not all , but some debt). 

5. Disney board realized their mistake and got Bob Iger back but he said - he is here only for 2 years. He will probably focus on fixing issues with Disney Plus, but we are not so sure on who is going to take over once he leaves. 

So, now we have a company which makes 80+ billion in revenue but they spend 75+ billion - resulting in profit of only 3 to 5 billion dollars. Based on their current profit - it should be valued 1/3rd of it - but investors are willing to give a chance to Bob Iger to do his magic and put Disney back to business. But there are lot of issues..

1. Their current political fight with Florida Governor - put park business in a Jam

2. Political issues between US and China - also put their park business or movie business in china in a jam. 

3. ESPN is consistently losing money for years and they are not able to create a separate company for it. 

4. Hulu - seems to be a product that neither consumer, nor NBC/Comcast wants to buy from them.

5. Hotstar - Fox asset is also losing money. 

6. Debt they pilled up to get money for FOX Assets - now has increased interest based on Fed interest rate moving from 0 to 5%. 

Even if every issue gets resolved and some how Bob puts company back to 2015-2016 era of resulting in 9 to 10 billion dollar profit (which market assumes, he will in a year or two), that puts company valuation exactly where it is now. So, in order for it to “GROW” - it has to resolve all of above issues - and be able to compete with Netflix/Amazon on streaming business (which is a very tough ask). Market has so many great opportunities, I am not sure it is wise to stick to company just for the “Brand” name it has - in a hope that it will go back to it’s Glory days - plus - they do not even pay Dividend anymore (rightly so as they don’t have money for it). 

Trading advice

Most traders lose money; Most investors make money. 

You have to find a balance between "Trading" vs "Investing". Almost every investment, should start as a trade, but if it has worked - you need to hold on to it, for longer duration to become investment. Recipe of success is 

• Create an "Investment" account and deposit money in it for years and years. Whatever you can save - put it in it with the intention of never selling a stock. Invest wisely and in a good companies. Ideally, don't touch that account until it has went to significant amount - preferably a million dollars. It may take 10, 15 years to get there, but its worth it. 
• Once it has reached the first million - with an average return of 8% or so - you should make a return of 80,000$ next year.
• Transfer that profit - into a "Trading" account. Now, this is "House" money that you can play with. You may gamble it with options - risky stocks etc. 
• Since you have done the hard work in first 10-15 years of creating an investment portfolio of a million dollar - you now have luxury to play around each year with 80,000 to 100,000$ a year. If you make it big - great (because now you also have 10-15 year of experience of being in the market)- chances of massive errors are less but even if there are - it is the house money that you are losing - which you will get a new set of money to play with next year. 
• First step is the hardest though - It is not "Easy" to be able to "Save" a million dollars - and keep it in the market for long term and not touch it (touch it and you lose it). 

UPDATED PORTFOLIO LIST

 

5 Year Return

 5 Year Return: Mar 18, 2018 to Mar 18, 2023 (Currently valued more than 100B+ Companies)

1. AAPL 242%
2. MSFT 189%
3. NVDA 315%
4. TSLA 716%
5. UNH 107%
6. LLY 312%
7. AVGO 141%
8. ASML 200%
9. NVO 175%
10. COST 158%
11. DHR 134%
12. TMUS 117%
13. LIN 104%
14. AMD 729%
15. LOW 126%
16. PDD 250%
17. INTU 133%
18. DE 129%
19. ELV 100%
20. BX 148%
21. AMAT 98%
22. CP 114%

My observation for above data...

• Absence of FANG - Facebook Amazon Netflix Google.
• Other famous names such as Sales Force or Disney also not in. None of the Banks in it. Starbucks or American Express not in it either.
• Lot of chip companies in it - 6 out of 22.
• Sectors matter but not really. Even defensive names such as Railways can generate amazing return. Canadian Pacific Railway.
• None of the oil names in it but Linde which is chemical company in it - primary business of Gas.
• It’s not always the best in breed gets better result. Home Depot is better but Lows has generated better return in last 5 years because it was undervalued. Similarly BABA, JD not in it but PDD in it.

Buying a House is not a smart Financial Decision

Buffet purchased his first stock when he was 14 year old in 1941 and he bought his house in 1959. Many wealthy people concentrate on achieving something with their career (job or business) before purchasing a house. Buying a house is certainly one of the most important decision of life as it is the most expensive thing you will buy - car being the second most expensive thing. Buying a house - in my opinion - is not the most smartest financial decision - however it is more or less an emotional decision - as you will spend minimum of decade of your life in it (on average) - For many people they spend their rest of the life span in it - so it has to be the very right decision. 

There are lot of variables involved in terms of buying a house. Unlike a popular opinion - that when you buy a house, you are building an house equity - but at the same time, you are also taking a bigger debt that you have to pay - no matter what. Let's take a simple example of an average house price of 300,000$ - for someone who is just started their career. Assuming that you have 20% money to put down as down-payment (60,000$ + closing prices + escrow money + small repairs) roughly equal to 75,000$. You may buy some new furniture and that amount may very well go to around 80,000$. So, you have to have 80,000$ to buy a home - if not - you will pay Mortgage insurance and most likely slightly higher interest rate on your mortgage. 

Let's look at the path of someone who didn't bought the house with 80,000$ (30 years back) - 1992 and invested that money in stock market (S&P 500).

If you had invested $10,000 in the S&P 500 index in 1992 and held on with dividends reinvested, you'd now have more than $170,000. (From Google) - so if you had invested $80,000$ in the S&P 500 index in 1992 then that would have been - 1.36 Million US Dollars. 

It is hard to guess value of the house bought in 1992 - as it strictly depends upon "Location", however, looking at average price of housing in 1992 and comparing it in the 2022 will give a rough idea. 

Home prices rose steadily through the '80s, peaking in 1989 with an average price of $151,200 before sliding to $141,700 in 1992. (Google) 

The average home price in the U.S. is $348,079 in 2022. (Google)

So, by this logic - 300K house in 1992 might be valued today at 736,935$. Bear in mind - house that you might have bought in 1992 might already be 15-20 year old + 30 year - which means you are selling that house which is roughly 50 year old in 2022. So, 750K seems like a reasonable amount to go to for an old house. 

Now, just by literal calculation - you are at least half a million dollar ahead by investing in the stock market compare to house. Now, when you buy a house, you have agreed to make mortgage payment for next 30 years. Apart from the mortgage payment, you will have to pay property taxes, sewer charges, association fees or trash removal fee/cleaning snow fee and other maintenance which you might not have paid if you might have Rented a place. On an average, you would have ended up paying 500$ to 1000$ per month on added expenses - just because you bought a house and not renting it. Even if we go by 500$ (on minimum side) - that is roughly 180,000$ over the next 30 years. Should you consider dollar cost averaging just that amount and invested in S&P 500, that might have fetched you another million dollar by 2022. 

It was probably easy in last 10 years or so to buy a house as mortgage interest rate were very reasonable around 3 to 4% for a 30 year loan. It is also easy to rent that property and collect rent which may pay for mortgage and other expenses but now with interest rate close to 7%, you may not be able to pass down the entire expense to the renter. It is specially difficult to keep an house in a state where property taxes are as high as 2.5 to 3% of property value. 

300K house you may think of buying in a state like New Jersey - you will end up paying 400K in mortgage loan + 300 K in Property Taxes + 200K in other expenses. So your total expense to own that house in 30 years might be 1.2 Million Dollars. Would you recover all that money after 30 years for a house which might be 50 year old in 2052? Assuming that house value goes to 1.2 Million dollar, you just made it even. 

I bought a house in 2014 for 323K which is now valued at 460K - roughly 40% increase in 8 years (which is normal in real estate which goes up 5% annually) comparing that to SPY which is up 230% (from 180 to 414). 

Now - This does not mean, no one should buy a house. I am only saying - it is not a good financial decision to buy a house as there are other better alternatives. Buying a house is an emotional decision. You buy a house when you are mentally prepared to be in that house for minimum of 10 years - You especially buy a house when you have a family with a kid as growing up a kid gets a better environment living in a house (compare to rented place) and a better schooling district as well. You may buy a house as part of diversifying your wealth as real estate is considered as the most safest asset class. 

WEEK 1 2023 Important Financial News

January 4 2023: 

• Rivian Says Produced 10,020 Vehicles In Q4 2022
• GM GENERAL MOTORS TO ADD 5,000 JOBS IN NORTHERN MEXICO
• MSFT Microsoft And OpenAI Working On ChatGPT-Powered Bing In Challenge To Google
• Chinese regulators have said e-commerce giant Alibaba’s (BABA) finance affiliate Ant Group can raise $1.5B for its consumer finance unit in an important step forward after the government called off a planned IPO two years ago and ordered the firm to restructure.
• CRM Salesforce Inc - On January 4, 2023, Announced A Restructuring Plan salesforce Inc - Estimates That It Will Incur Approximately $1.4 BLN To $2.1 BLN In Charges In Connection With Plan- PLAN INCLUDES A REDUCTION OF CURRENT WORKFORCE BY ABOUT 10%
• BMW More Than Doubles Fully-Electric Vehicle Sales In 2022
• MSFT Microsoft to invest in autonomous trucking startup Gatik
• Qualcomm launches auto chip to handle both assisted driving and entertainment

January 5 2023: 

• US WEEKLY JOBLESS CLAIMS AT 204,000 LAST WEEK; EST. 225,000
• ADP RESEARCH INSTITUTE SAYS U.S. ADDED 235,000 JOBS IN DEC.
• TSLA Tesla Dec China sales 55,796 units vs 100,291 units in Nov.
• US Mortgage demand slumps 13% as home-loan rates turned higher at the end of a tough 2022
• U.S. auto sales totaled 13.7 million vehicles in 2022, the lowest figure since 2011 and an 8% decrease from the prior year
• AMZN Amazon to Lay Off Over 17,000 Workers,
• T-Mobile Delivers Record Customer Growth, Adding an Expected Industry-Best 6.4 Million Postpaid Customers and 2.0 Million Broadband Customers in 2022
• Shanghai Disneyland Increasing Ticket Prices Beginning in June 2023

January 6 2023: 

• US DEC. AVERAGE HOURLY EARNINGS RISE 0.3% M/M; EST. 0.4%
• US DEC. PAYROLLS INCREASE 223,000; EST. 203,000
• LUV SOUTHWEST AIRLINES CO - EXPECTS TO REPORT A NET LOSS IN Q4 2022
• LMT Lockheed Martin secures $139.7M contract and $130.7M modification contract for US Navy
• RTX Raytheon bags $208.7M Naval Sea Systems contract
• TESLA MOTORS JAPAN TO CUT PRICES OF MODEL 3, MODEL Y BY AS MUCH AS 9.9%
• ChargePoint and Mercedes-Benz enhance driver experience with fast charging network in North America
• COST: today reported net sales of $23.80 billion for the retail month of December, the five weeks ended January 1, 2023, an increase of 7.0 percent from $22.24 billion last year.
• Iridium, Qualcomm Collaborate to Support Satellite Messaging
• Buffett-Backed BYD Trounces Tesla as China Reopens; BYD new-energy vehicle deliveries surpassed Tesla’s in 2022
• Salesforce Inc. division Tableau was hit harder than other units in the company’s largest-ever round of jobs cuts this week.

WEEK 1 2023