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Strategies & Market Trends : Trader J's Inner Circle
SNOW 149.74-2.8%Dec 2 4:00 PM EST

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To: Trader J who wrote (55166)8/25/2022 10:45:05 AM
From: Trader J  Read Replies (1) of 55356
Portfolio weighting and thoughts: An interesting thing happened on the way to recession. Over this year I, as well as all of us, have been trying to load up on good companies, good 'value', income, etc. as the markets navigated these choppy recession-fueled market dynamics give war in Ukraine, rates up, inflation, etc. Then you throw a strong dollar into the mix and we've been through a lot but it sure seems the storm clouds are breaking up if only a bit and blue sky is peaking through.

In my primary portfolio, I always try to anchor with core names I feel great about given some combination of value, income and growth potential, with primary anchors given to names I feel I can own for the long term regardless of the strength of any of those three variables. "Value" to me may be very different than the definition you all share. While I may not define a growth stock in P/E terms related to value, I still look at valuation in truest sense of the terms, basically a "what am I willing to pay for this growth story?"

As I've mentioned before, in most cases, these growth stocks in this portfolio have a much lesser weighting than core holdings which really provide the foundation of the portfolio. Names such as BRK/B, DE, ABBV, PEP, JPM, KO, AEP, C, K, HD, VNQ, PG, MRK etc all help provide a mix of stability, income and beta-smoothing performance, though it's arguable just how beta-smoothing some of these names are. But you get what I'm saying.

But an interesting thing has occurred which I'm sure we've all experienced over the years. And it's the ol' topic of the need for re-weighting when things go well. In short, when we have a lower weighted position which does well, creates more alpha to the rest of the portfolio, it's weighting will increase. When I survey the the top weighting in this portfolio I see a few things. Here's the weighting of the top-ten:

1. GOOGL - By design. I'm so bullish on the value and growth
2. BRK/B
3. SNOW - The huge rise over the past two days has vaulted the weighting
4. DE - Will always be a core holding and it's risen $100/shr in short order, vaulting the weighting
5. ABBV - Actually trimmed some a while back and it's still #5
6. AMZN - Just entered the top ten after my addition today
7. PEP - Just a solid name I'll always own.
8. JPM - Some financials are better but I'm keeping it
9. BAC - Same as JPM in my book, along with C. Those are the three I chose a while ago
10. ABNB - My recent addition and price increase has moved into the top 10

Having two growth stocks move into my top ten was not expected. Looking at a few of the other names in the next positions:

11. NVDA - Want to add more but waiting a bit
12. KO - Like PEP, a core holding
13. AEP - Has been solid for a long time
14. C - There's my other financial
15. K - Another core holding
16. HD - Core holding.
17. VNQ - An income name
18. PG - Core holding and income
19. RTX - Core holding and income
20 REGN - Growth

I have another 23 positions or so below these top-20. You might be asking: "What is the weighting of the top positions vs. #20.

GOOGL (#1): 4.97%
REGN: (#20) 2.17%

This compares to the last stock in the portfolio, MTTR at .06%

Interestingly enough, the next to last stock is now INTC at 1.04%. Thanks for that stellar price action Intel, LOL.

So, back to the beginning of what I was saying. Seeing SNOW and ABNB creep into the top-10 in weighting has forced a degree of review. I always watch my growth names very carefully for change of story. It's been no secret, as posted here, that SNOW is near the top of my favorite growth names, arguably THE top name. Stands to reason as it now holds third place in my weighting.

When surveying both SNOW and ABNB I have such strong belief in those two models that given the long term nature of this portfolio (17+ years), I'm not inclined to reduce the weighting of either, 4.13% and 2.5% respectively.

So at this point, neither will be changing in my portfolio. My cash is dwindling though I will be selling KMB at some point in the near future, probably after ex-div, to raise more cash for allocation elsewhere

Have a good one all! Be safe out there

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