Happy new year everyone: After a quick break in December/January for my exams, I am now back. Starting off with this breakdown of my investments and portfolio performance over the full year 2021. With this update I will be sharing some changes to the format going forward as well as my expectations for 2022.
First let us have a look at my growth portfolio – my main portfolio which makes up approximately 90% of my net worth. As you may know it consists entirely of companies that I follow closely and that I share the highest conviction in. My background in technology and digital interaction are reflected herein.
So how did it fare?
I am happy to report that 2021 has been a great year for this portfolio up just over 55%. Looking at it, it is still a little hard to believe as the year has also – by far – been my most volatile one in my 8 years of investing. It also marks a year where I started more positions in a single year than ever before and whereas none of them have panned out. Let us now have a look at my positions by year end:
My biggest winners in 2021 were also my biggest holdings. Microsoft (MSFT) my longest holding exploded with a 52% gain, reaching a market cap of nearly $2.5 billion. Tesla (TSLA) continued its rally from last year rising 49.8% and now makes up over 60% of my portfolio. My decision to invest in semiconductors made last year also started paying off big with Nvidia (NVDA) creating my biggest return of the year of 125.5%. Taiwan Semiconductor Manufacturing Company (TSM) did not do big numbers but that allowed me to further build up my position as I had planned for. And from the looks of it, 2022 will be a great year for TSM, being one of the best performing stocks of the new year already. On the other hand, Amazon (AMZN) stood completely still for the entire year, which was a huge disappointment to me – but I hope their infrastruture and logistics investments made this year will pay off long term.
And as I alluded to before, all of my new positions started in 2021 have done rather poorly. I have only kept a single one in this portfolio: Namely Coinbase (COIN) as part of my plan of exposing at least 1% of my net worth to crypto. The good news here is that Coinbase as a company has shown great results, beating expectations most quarters. With new catalysts on the way for the stock I remain bullish and hope to average down on my position in 2022. I continue to admire their leadership and integrity. CRISPR Therapeutics (CRSPR) which I made a big deal out of starting a position in back in March dropped more than 40% since and even averaging down I ended up selling at a loss. Despite this I have not lost conviction in CRISPR long term and have instead opted to move this position to a new portfolio and combined it with a biotech ETF as well as another invididual CRISPR stock. All of that is described in more detail in my last update of the year.
I also gave up on holding Virgin Galactic (SPCE) long term in 2021. Triggering a stop loss in April 2021 I made it out alive and at net zero at $22.66 per share. Considering the stock has plummeted to below IPO prices trading now at $10 I feel fortunate. I have never experienced being invested in a company before where its founders and leaders do everything in their power to punish their shareholders. Interestingly the stock topped at $60 while I owned it which could have netted me quick gains, had I had the foresight to get out while hype was at its highest. All in all I consider it a learning experience and nothing more. With the funds from this venture I went on to another SPAC company, namely Tattooed Chef (TTCF), which too had exciting prospects for the future. I thought its legacy in the business and stronger fundamentals would make for a better long term position than the prior – but it seems I am just not cut out for picking the right SPACs. TTCF disappointed me hugely in November, failing to report their earnings on time and with this huge red flag I just had to exit this one as well.
In total, that makes me two for two in failing to picking good companies going public via SPAC and means I will treat that category with more caution in the future. While I was lucky to make it out of both at net zero, the same cannot be said for the other two (COIN & CRSP) – but I much prefer taking a short term loss and remain commited to those than be in a situation like with SPCE & TTCF where I give up on them as a long term position entirely. I think those experiences give good insight into just how volatile this market has felt for me this year – but it only tells half the story. For even within my winners, I have experienced more volatility this year than ever before. Macro-environments have had such a big impact on the market this year and has made me think more fondly of the times where companies where judged on their individual performance rather than the general news cycle. But I guess that is just another side effect of the pandemic and the change it has made to investors psyche.
Nonetheless, the current environment has made me extremely grateful over my decision in 2020, to start a different and little more conservative type of portfolio, which we will look at next.
First up, let me explain what this portfolio aims to do. That should also explain why I made in the first place. First off, its main purpose is to provide me with a stream of consistant passive income in the form of dividends. Secondly, it stands as a stronger alternative to cash for the profits I have and will be taking from my growth portfolio over the years. To best adhere to that purpose, I have created some guidelines I intend to follow as closely as possible:
- Invest in established, stable companies. Boring if you will.
- Maintain an average yield of at least 3%.
- Hold these companies forever unless fundamentals change.
- Quality companies only. Limited to a maximum of 10 holdings.
With this in mind it also means I have much lower expectations for this portfolio in terms of growth compared to my other portfolio, but that is one area I have been pleasantly surprised so far. Let us have a look at its performance:
With the global stock market doing very well in 2021, up near 17% I never expected my conservative dividend portfolio to beat it. But it seems that I not only managed to do so, but closed in on almost doubling returns of the general market. And still this portfolio has managed to remain completely stable all year and served as an anchor for me to lean on through volatile times. I never expected it to do so well and do not expect it to repeat, but regardless I am both proud and happy of the good start I have been given to my entry into the more conservative traditional investing. Before breaking down what dividends I have recieved on top of this, let me quickly go over what is inside:
Danske Invest Denmark Index is an ETF which I have added to consistently every single month since creating this portfolio. It consists of the largest publicly traded companies locally and yields a massive 10%+ each year. Realty Income (O) and Federal Realty (FRT)are both REITs commited to paying out 90% of their earnings each year – Orion (ONL) is as well, but a completely new one at that, which I have recieved as a sort of dividend from holding Reality Income, after they were spun off. AT&T (T) is the only company I have sold out of, due to them soon losing their status as a Dividend Aristocrat. I still have not made up my mind entirely about this matter, but as things stand now I do expect to exit out entirely from AT&T in 2022. Broadcom (AVGO) is my newest addition to the portfolio and one that I picked up partly from the money from my two failed SPAC ventures. It has the lowest yield of the bunch, but is growing that fast. 3M (MMM) and Abbvie (ABBV) are both absolute titans of their industries and are by 2022 both considered Dividend Kings, meaning they have raised their dividends consistantly for at least 50 years, the latter being a newcomer to this category.
Thoughout the year I have reported on the dividends payed out to me each month. Here are the dividends I have recieved for the full year 2021:
I am more than pleased with more than $1300 dividends recieved in my first full year of keeping to this strategy. Do keep in mind however that not all of it comes from this portfolio alone. Microsoft, TSMC and Nvidia from my main portfolio all pay a dividend as well – with Microsoft, my longest holding of 8 years, contributing the lion’s share of that, TSMC a good chunk as well and Nvidia an entirely neglible amount. $1300 is equivalent one months salary for a part time position like I might have next to my studies at University. That feels pretty great,though I do expect to continue to reinvest my dividends for the forseeable future rather than try live off it. But with this strategy in place I should be able to consistantly increase this number every year until one day where I might never have to work again out of need rather than passion.
Going forward, these updates will change slightly. As I have written new updates each month, the format has changed a little already, moving from a very plain explanatory performance report in the beginning of last year to now a more reflective evaluation of the latest news and the reasoning behind my decisions. For that reason I have created a new section on the website called Investment Journal where each monthly update will instead become an entry. They will still be published as seperate posts, just like before, but now it should be seen as part of something greater. The monthly updates are not my most popular posts nor the kinds of post that make much sense sharing outside of the platform itself – but I am okay with that. In fact, I do these updates just as much for my own sake, to be able to go back and reflect upon why I made certain moves. The format change also means the dedicated sections for website traffic and personal updates are going away. Instead I will try to naturally integrate that type of content into the updates when they make sense to do so, rather than sharing something no one may care about.
I have been adviced to keep an investment log or journal before and I am taking this oppotunity to finally do so. Sometimes you may make decisions you come to second guess later – and it can be good to revisit those from time to time to understand what your thinking was at the time. A good example comes probably from the objectively biggest mistake I have made all year: Selling Novo Nordisk (NOVO-B) at the time that I did. Novo Nordisk was until then my longest held position and while it had done well enough, approximately doubling over a 7 year period I thought I could find better oppotunities elsewhere. After getting into CRISPR and researching that thoroughly I thought it would be a good idea to replace one health- care/biotech position for another. Since then the price has gone up by more than 50% and the stock had its biggest break in a decade. Despite having a great year in the markets, that still stings – and in cases like that I am happy to be able to go back and reassure myself that my logic was not entirely flawed – it was just a matter of bad timing.
So while 2021 has been a tough year for many and an extremely volatile year, it has fortunately been a good one for building my wealth. My growth portfolio beat the market more than thrice over, riding on the performance of my highest convictions, while my new ventures did not work out so nicely. Luckily through it all I had my dividend portfolio to cling to all year. My dividend strategy has proven succesful and netted me one month’s part time salary on top of nearly doubling the average market return. Going forward the format of these type of posts on the site will change slightly with monthly updates now turning into individual entries in my newly launched Investment Journal.
I have no way to see into the future, but I will continue to execute on the same strategy going forward. Although in my growth portfolio I will try to prioritize increasing the size of my existing positions such as Unity (U) and Coinbase rather than looking for new ones like in 2021. I have learnt my lesson and will focus on definite quality companies at reasonable prices – which of course does fit best with my overall strategy of being a long term investor anyway. I hope to open at least one new position in my dividend portfolio in 2022 – which I plan to share more details on later in the year. As to my expectation of returns this year I hope to simply follow the market or slightly beat it when it comes to the dividend portfolio and keep up my average of approximately 35% yearly return in my growth portfolio. But we have had a rough start on the year and having to recover from that first will only make things harder. If you would like to share your own returns for the full year 2021 or expectations for this year please feel to do so in the comments down below. Either way, here is to a great 2022!
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