Increased Texas Instruments (TXN)

We started our position in Texas Instruments (TXN) in October 2019 right after the markets were disappointed in their quaerterly results back then. The share price had just dropped by about 10% at the time, which to us looked more like a "for sale" sign. We had TXN already on our shortlist for new positions, so that drop was a great opportunitiy. We got an average share price of USD 119.

Last week Friday was a weak day at the stock exchange with the major indices decreasing between -0.58% and -0.93%. In this market, TXN was down about 3.1% (though not as good as the -10% last time), so we felt this was a good opportunity to buy more of them. The average share price this time was USD 130.

As we wanted to keep our exposure to the technology sector and since we just reduced our Nvidia (NVDA) position, increasing TXN was a good option in our opinion. We like TXN because of the maturity of it as a company and also because they have delivered increasing dividends since 2004. While they do not qualify as a dividend aristocrat just yet, a track record of 15 yearly increases is quite impressive, too. Also, TXN is mostly active in analog applications which is quite different to chip manufacturers like Intel (INTC) or Advanced Micro Devices (AMD).

Going forward, if there are other opportunities such as weak market or a weak TXN share price, we will consider adding to our position, provided the investment story remains very good.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Reduced Nvidia (NVDA) after gain of 68%

On Wednesday, 23 Jan 2020, we reduced our position in Nvidia (NVDA). The average share price was about USD 252.

In May 2018 we started this position at a price of approximately USD 250. We never try to time the market as based on all the evidence, no investor gets the time right long term. At the time we believe that USD 250 was a good price but we were wrong. Nvidia had pushed a lot of inventory into the channels mostly driven by the bitcoin mining hype at the time. In the subsequent quarters, the company couldn't sell as much product as they had to wait until the inventory in the channel was back to normal. They simply overestimated the demand.

As a result the quarterly results in the subsequent quaerters disappointed the markets and the share price dropped to less than USD 150 in May 2019. We then decided to add to our position at that time.

By reducing our position we are essentially selling some of the shares we bought at USD 150 at a price of USD 252, which is a gain of approximately 68%. In addition we continue to be optimistic for Nvdia but trimmed back the position that grew too big for our taste within the portfolio. We believe that Nvidia's products continue to be well-positioned for graphics and artificial intelligence (AI) applications, both on-site and in the datacenter.

When you get the timing wrong - or more specifically, when the timing turns out to be wrong - then it makes sense to have another look at the company and consder buying more shares if all information and data available point confirm the investmen story. In our experience, if the investment story was good from the beginning buying more at the reduced level can boost the returns.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Rebalancing: Chubb (CB)

On Tuesday, 22 Jan 2020, we increased our position in Chubb (CB). The average share price was USD 154.00.

We continuously review all positions with the assistance of our computer programs. This week we determined that CB had a lesser share in the US portfolio than it should have. Chubb is an S&P 500 dividend aristocrat, which means it has increased its dividend every year for at least 25 years. We are confident that they will continue to do so.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

(The Chubb logo is a registered trademark of Chubb Limited)

Rebalancing: Chevron (CVX)

On Monday this week (13 Jan 2020), we increased our position in Chevron (CVX). The average price per share was USD 116.47.

We regularly review our positions and adjust them based on information available at the time. CVX was cheap relative to our other positions, so we decided to add more of this dividend aristocrat. While we don't see a lot of upside for big oil in general, the dividend yield for CVX is about 4% which is quite attractive by comparison.

We hold positions of companies that do not pay dividends (yet). On the other hand having a stream of cash separately from selling shares at a gain, provides additional options for managing our portfolio.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Rebalancing: Walmart (WMT)

As previously mentioned, we increased our position in Walmart (WMT) on the 06 Jan 2020. The average price was USD 117.40. Orginally, we started this position in September 2019 with an average price of USD 114.73. We continue to be optimistic that WMT will increase it's dividend on a yearly basis, which is the reason we bought the shares in the first place.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Results Dec 2019: -0.39% Active Return vs S&P 500

US Portfolio Performance

Because Dec 2019 saw a weak market, the yearly returns for the 12 months ending 31 December 2019 are somewhat misleading. Nevertheless, for our US portfolio we now have data for 3 years since we decided to share our experiences with investing in US equities.

We didn't quite achieve the same return for the twelve months ending 31 Dec 2019, falling short by -0.39% compared to the S&P 500. However, a gain of 28.49% is still impressive in our view.

Looking at the performance over two and three years, the results are quite satisfactory, too: +10.59% per year since 31 Dec 2017 and +14.81% per year since 31 Dec 2016. All of these numbers are after taxes and fees. The following table summarizes these results:

	1 year	2 years	3 years
Optarix US	+28.49%	+10.59%	+14.81%
S&P 500	+28.88%	+9.93%	+13.00%
Optarix US Active Return	-0.39%	+0.66%	+1.81%

Values are annualized for periods longer than 1 year.

Here are the updated graphs for both the active return over 1 year periods as well as the information ratio of the Optarix US Portfolio against the S&P 500, both for the time from December 2018 to December 2019.

Please note that past performance is no guarantee for future performance.

In Other Developments

With the killing of an Iranian general in Iraq by a US-american drone, tension in the middle east have increased. Although at the moment it appears that both sides try to dial back their threats and responses, there is no gurantee this conflict is over yet.

Meanwhile the Brexit, the trade wars and the reduced economic outlook for many economies and the world as a whole will keep a lid on markets. We believe it is very unlikely that 2020 will see returns similar to 2019. Later this year, we'll also start seeing the influence of pools and election results in the United States.

At least the Brexit has become a bit clearer. The United Kingdom will leave the US by end of January 2020. Then a transition phase starts that is scheduled to end 31 December 2020. It remains an open question if both sides, the EU and the UK, will be able to negotiate a free trade agreement by then. As this matter evolves, its impact on financial markets may increase again.

Changes in our Portfolio

In December we reduced our position in Microsoft (MSFT). We increased our positions in Franklin Resources (BEN), Federal Real Estate (FRT), Automatic Data Processing (ADP), Wallgreens Boots Alliance (WBA) and Aflac (AFL).

Suggestions for Your Own Portfolio

Generally we suggest an equal weight portfolio. That means that all your positions have roughly they same market value. Obviously this changes over time as some positions go up in value and some may go down. If that happens rebalance by buying/selling to get each position back to their average.

Increase

With this idea in mind, here are some suggestions for companies for your consideration to add to your portfolio. These are all dividend aristocrats. As of writing the look more attractively priced than the average.

1. Cardinal Health (CAH)
2. Franklin Resources (BEN)
3. People's United Financial Inc (PBCT)
4. AT&T Inc (T)
5. Wallgreens Boots Alliance (WBA)

Decrease

Equally, if you have a position of one of the following and that position is above average in your portfolio, we suggest considering reducing them. Relative to all S&P 500 dividend aristocrats they are a bit more ambitously priced at the moment.

1. Becton Dickinson and Company (BDX)
2. The Sherwin-Williams Company (SHW)
3. Abbott Laboratories (ABT)
4. Brown-Forman Class B (BF.B)
5. S&P Global (SPGI)

As always, while we can make suggestions to consider, we cannot accept any responsibility for your investment decisions. We strongly recommend that you do your own due diligence, buy only what you understand, buy only what fits your individual objectives and circumstances, and in particular that you seek professional advice from your investment advisor.

Disclosure

We hold positions in all of the companies mentioned in this post. We also intend to add to our position in CVX in the next 3 trading days. We have no intentions to change any of our other positions.

Today's Rebalancing: Apple (AAPL)

Today we decided to reduce our position in Apple (AAPL) to some degree. Originally we started this position in July 2015 at a price of USD 125.00 per share.

Today we sold shares at a price of USD 299.40 per share. This represents a gain of 139%. This is a quite satisfactory result.

The proceeds are intended to increase other positions in our portfolio next week. At present candidates are Walmart (WMT), Franklin Resources (BEN) or A.O. Smith (AOS). Typically, the final decision is made on the day.


Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.