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Stocks B / Berkshire Hathaway


Subject:  Re: Stock Picking Getting Harder Date:  11/23/2017  11:48 PM
Author:  OrmontUS Number:  232782 of 253295

I posted my current portfolio on another board yesterday, but it might be just as applicable here.

My current problem revolves around the shrinking universe of stocks which offer any particular sense of 
value (on a fundamental basis) and I find myself building hypothetical stories of what “might” take 
place, rather than choosing between a pile of companies  who would likely succeed based on their balance 
sheets.  Hell, as companies borrow money to buy back stock, many major concerns (Boeing comes to mind) 
might be profitable, but have negative book values.  Makes me have to tear up my high school economics book :-)

Once in a while, I've posted my current equity portfolio on METAR for comments and heckling.  Obviously I 
am not one to come to for investment advice, but rather seek the feedback of others.

Less than half of the portfolio are companies based in the US.  Many of the foreign companies were picked
up when I was inspired during my travels to their native countries by observing them in their native environment.

Since Yahoo melted down, I've had to hand-work more of my analytics, but such is life and while the 
designations are far from perfect, I've at least attempted to separate the positions by sector as well as geography.

While it's not obvious from the breakdown, one of the major threads tying many of the choices is that
they are involved in various functions of artificial intelligence and robotics.  There is also a 
perception that emerging markets (and even Europe) will grow at a faster rate than the US.

Just for fun, while I've sorted the portfolio by position size (both A and B shares of Berkshire 
Hathaway have been combined for simplicity). 

Yes, I know there are a lot of different shares represented, but it is rare for me to hold mutual funds 
or ETF's and this lets me play around and have fun, rather than just hold a slug of SPY and a bunch of 
foreign ETF's.

There are an awful lot of very good companies which are not represented (some of which have been 
recently sold), in general, because I feel they have become overvalued.  As an explanation, there is a 
fair amount of trading done from time to time, so most of these shares have not been represented in the 
portfolio for more than a couple of years.  I am frankly becoming more than
a little nervous about the valuation of the US market and this probably explains why my tools keep 
telling me to sell US stocks and replace them with foreign ones.  Oh, one more note, if you're having
problems finding some of the symbols, the ones ending with ".AX" have been procured on the Austrailian
market in Aussie bucks and the ones ending in ".VX" have been bought on the Swiss bourse in Swiss Francs.
This adds currency risk on top of market risks, but that's another game I regularly play.
If you think the positions should be parsed in some other fashion, please let me know.


     Ticker                Company            % of Port   % Gain/Loss        Country
BRK-A,B         Berkshire Hathaway Inc. A and  13.12%        7.47%                       Financial
GOOG            Alphabet Inc.                  10.62%        10.60%                      Technology
RDS-A           Royal Dutch Shell Plc Royal D   6.50%        13.64%     England          Material
NESN.VX         Nestle N                        6.04%        25.73%     Switzerland      Consumer
RIO.AX          Rio Tinto Fpo                   5.92%        12.53%     Australia        Material
BHP.AX          Bhp Blt Fpo                     5.31%        1.24%      Australia        Material
IBM             International Business Machin   4.67%        5.71%                       Technology
NOVN.VX         Novartis N                      3.93%        8.78%      Switzerland      Pharma
BABA            Alibaba Group Holding Limited   3.89%        8.17%      China            Technology
VWO             Vanguard Ftse Emerging Market   3.75%        7.02%      Emerging Mkt     Emerging Mkt ETF
AAPL            Apple Inc.                      3.59%        13.78%                      Technology
MSFT            Microsoft Corporation           3.41%       128.70%                      Technology
SAN             Banco Santander, S.A. Sponsor   2.67%        19.29%     Spain            Financial
OMRNY           Omron Corp                      2.61%       139.20%     Japan            Technology
ROG.VX          Roche Gs                        2.53%        -1.93%     Switzerland      Pharma
TCEHY           Tencent Hldgs Ltd               2.25%        31.25%     China            Technology
CSCO            Cisco Systems, Inc.             2.24%        15.81%                      Technology
SNY             Sanofi American Depositary Sh   1.86%        8.93%      France           Pharma
FB              Facebook, Inc.                  1.85%        64.67%                      Technology
JMHLY           Jardine Matheson                1.33%        19.37%     Hong Kong        Financial
IEMG            Ishares Core Msci Emerging Ma   1.18%        6.51%      Emerging Mkt     Emerging Mkt ETF
FANUY           Fanuc Corp                      1.12%        46.09%     Japan            Technology
BAC             Bank Of America Corporation     1.09%        3.35%                       Financial
DHR             Danaher Corporation             1.09%        36.07%                      Technology
ABBN.VX         Abb Ltd N                       1.07%        13.85%     Switzerland      Industrial
SAFRY           Safran                          1.05%        1.51%      France           Industrial
DANOY           Danone                          1.01%        2.36%      France           Consumer
ECH             Ishares Msci Chile Capped Inv   0.97%        -5.29%     Emerging Mkt     Emerging Mkt ETF
SFTBY           Softbank Group Co               0.89%        45.06%     Japan            Technology
SVNDY           Seven & I Holdings              0.70%        11.33%     Japan            Consumer
FTV             Fortive Corporation             0.41%        67.98%                      Technology
SBGSY           Schneider Electric              0.38%        33.51%     France           Industrial
RCL             Royal Caribbean Cruises Ltd.    0.28%       311.39%                      Consumer
NCM.AX          Newcrest Fpo                    0.24%       136.64%     Australia        Material
FYRTY           Familymart Uny Hld              0.17%        59.61%     Japan            Consumer
CCL             Carnival Corporation            0.14%        22.21%                      Consumer
SJM             J.M. Smucker Company (The) Ne   0.06%       426.14%                      Consumer
NAB.AX          Nat. Bank Fpo                   0.04%       -10.99%     Australia        Financial
ADEN.VX         Adecco N                        0.03%        29.64%     Switzerland      Industrial

SECTOR                                                  NATIONALITY
Technology                             38.63%           United States              42.56%
Financial                              18.24%           Switzerland                13.60%
Material                               17.97%           Australia                  11.50%
Consumer                                8.41%           England                     6.50%
Pharma                                  8.32%           China                       6.14%
Emerging Mkt ETF                        5.90%           Emerging Mkt ETF            5.90%
Industrial                              2.53%           Japan                       5.49%
                                                        France                      4.30%
                                                        Spain                       2.67%
                                                        Hong Kong                   1.33%

Based on subsequent comments:

I figure (as much as anything else to make sure I think about each comment) it's worth addressing each 
of your comments:

1) Great idea to pick up ROBO (after I get the chance to peek under the hood), or alternatively to 
cherry pick from its positions

2) Again, a good idea to buy direct on HK exchange after tracking relative costs/values of raw vs ADR

3) IBM is mainly a play on Watson (AI thing again). One day, before the cows come home, maybe, but the 
point is well taken that they can't get out of their own way.  Omron, Fanuc and Danaher (and now its 
offspring Fortive) are my attempt to own the companies which make the gadgets of which robots are made.  
Softbank is my play in the “built” robot arena and Google (as well as bits of Microsoft, Facebook etc.) 
are my attempts to play in the software space.  IBM seemed to fit in, but you’re right, their approach 
of scaling a pile of PC’s is probably not the best approach.  Actually, my bet is that Google’s major 
play into “natural” speech recognition (now that it’s headed by Ray Kurzweil – who developed Dragon 
Dictate, probably the best PC based speech recognition software) will give them the depth of research 
into pattern recognition to allow their cloud based approach to grab the Turing test brass ring first.  
While I’ve recently sold Baidu, I still have positions in Alibaba and Tencent.  I believe many Americans 
are underestimating the growing technical prowess of the Chinese.  (While most millennial Chinese aspire 
to own an Apple iPhone, this American engineer carries a Chinese phone made by Huawei).  

4) Good point about the small positions. These are the left-overs from a previously more diversified 
grouping, but Bio is worth adding (probably as an ETF because it's such a crap shoot to pick the winners)

5) That's there as an object lesson that I have to stare at each day. It is the residual of a dividend 
payment (DRIP) which came in after a position was sold (which accounts for its relatively small size). 
I've kept it to teach me that I wasn't as smart as I thought when I sold the position.

6) See #5 (above) and #9 (below) as rational for some small positions. Also, some of the foreign small 
positions, were tentative purchases but, in aggregate, create a single "position" (call it a mini-ETF). 
Also, since there is no scale to the portfolio, I might as well state that, all but the smallest 
positions, are still worth a buck or two.

7) I've held BHP/RIO for quite a while. Sooner or later, people have to start making "stuff" again out 
of "things" that come out of the ground. I avoided VALE because of perceived political issues, but may 
pick up the Brazilian ETF as I think things may have calmed down. I'm heading down there in February and 
will decide. The Shell is a very recent acquisition (couple of months IIRC). I noticed that its books 
were not as bad as people thought, it was paying a hell of a yield (in dividends), and I guess I got 
lucky for a change.

8) Good idea to look into regionals (any ideas are appreciated :-). I did well on Australian banks for a 
while. The Santander position is a residual of a larger one. I figured that it was being treated like a 
Spanish bank (it is), even though only around 15% of its business is there. One of those asymmetric 
punishment things. I got in too early and the position was under water for a while, but is doing OK 
nowadays (and the yield based on original acquisition price is generous).

9) Both RCL and CCL (and NCL) award significant on-board-credit (to cover expenses of all sorts) to 
stockholders who take any of their ships. We are currently traveling 6-10 months a year (where many of 
the stock ideas come from) and while only a fraction is on ships (mainly to get from point A to point B 
around the world), these positions have been very profitable beyond what's shown here.

10) Schneider Electric (yup, it's a French company) is best known in the US as the owner of the APC line 
of computer battery backup systems. It and ABB are vestiges of a group of electrical equipment 
manufacturers (which at one point also included Emerson, Eaton, GE, Seimen and Phillip) which I had 
assembled when I thought the US had no choice but to beef up its electrical grid. I still think that it 
will be a requirement if electric cars become "all the rage", but I got bored of waiting. Similarly, 
Nestle and Danone are vestiges of a theme that bottled water will be a growth industry world-wide and 
the grouping used to include Coke and Pepsi. I still think the idea is valid, but I got a bit bored 
waiting, picked up my chips and bet on other numbers.

As a student of relative currency valuations and of how they tend to reflect on equity prices, things 
are fairly stable right now. Interestingly, the Swiss market has gone up, despite a rise in the Swiss 
Franc and the Aussie market has stagnated despite the currency being a bit low. The US equity market 
still drives world share prices, but I'm wondering if, the next time we plunge, the Chinese will not 
attempt to fill the vacuum - in the fashion that they are now filling our shoes in international trade 
agreements and foreign aid to emerging nations. Their Silk Road project, their driving of the production 
of electrical cars, their penetration into the high-speed train field and many other signs indicate that 
it is likely that the RMB will, within the next few years, become an accepted trading currency - forcing 
it to appreciate. China, I assume, is currently turning the ship so that this will not trash a 
dependence on an export economy. As all currency valuations are relative (gold being non-issue), this 
would favor RMB oriented investments. Incidentally, my holding of Jardine Matheson, while listed in Hong 
Kong, has massive investments in China as well and was my first dip of a toe into those waters (I 
figured, at the time, that they knew more about investing in China than I did. They've underperformed a 
bit, but still have done OK for a security blanket).

Thanks again for making me think this mess through :-)


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