I don’t trade often (because I believe in long-term investing), but recent market dislocation has created some very attractive buying opportunities. Year-to-date, growth stocks have been hammered, and as counterintuitive as that may seem—that can often be the best time to buy. In this report, we review the new buys, the new “buy under” prices, and the aggregate portfolio details.
6 New Buys
To get right to it, here is a link to the updated Disciplined Growth Portfolio. The new purchases are highlighted in green.
Before getting into the details of the new positions, you may want to notice a few things:
Sector Weights: You can see the sector and aggregate sector weights for each position and the aggregate portfolio. Monitoring the portfolio’s aggregate sector weights can be a very important risk management technique. And while you will notice that some sectors are more heavily weighted than others, these sector weights are not dramatically different from the aggregate sector weights of the overall growth market (for example, technology is the biggest sector in the Russell 1000 Growth Index).
Portfolio Objective: You’ll note in the sheet that the portfolio’s objective is:
“Long-term capital appreciation and compounding by investing in leading high-growth businesses with large total addressable market opportunities. The businesses owned in this strategy may forego current earnings and/or dividends by instead allocating capital to attractive long-term growth opportunities and in order to maximize future shareholder wealth.”
Market Caps: From a risk management standpoint, it can make sense to monitor your portfolio’s aggregate market cap exposures. We’ve broken this down into Microcap, Small Cap, Mid Cap, Large Cap and Mega Cap. And as you can see in the data, the Disciplined Growth Portfolio consists mainly of mid, large and mega cap stocks.
Buy Under Prices: the buy under prices for each stock have been adjusted. As a reminder, we select the buy under price based on a variety of objective and subjective factors (such as valuation multiples, analyst price targets and our own opinion about the stock). The recommendations (such as “Buy” “Strong Buy” “Top Buy” and “Hold”) are updated in real time based on our buy under price and the current share price in the market.
Performance: You can view the performance of the Disciplined Growth Portfolio (since the strategy’s inception) near the bottom of the page. Bear in mind, the actual Disciplined Growth Portfolio is managed in a non-taxable retirement account, so if you are buying and selling in a taxable account—you’ll want to be sensitive tax consequences (e.g. capital gains). And if you are rebalancing in a taxable account, now can be a good time to do so considering the market has been down this year.
More info on individual positions: We’ll have more to say about the individual new buys in the portfolio in the future, but wanted to first share the new buys right away. For your reference, here is some additional data on each position that you may find helpful.
The Bottom Line:
We believe the Disciplined Growth Portfolio is very well positioned for strong price appreciation in the quarters and years ahead. The market has been ugly this year—and that can be the best time to buy. We fully expect disciplined, prudently-diversified, goal-focused, long-term investing to continue to be a winning strategy.