Stocking up our hypothetical portfolio

  • Learning to invest: the Bermuda hypothetical portfolio is taking shape, with 12 stocks now chosen, and money market mutual funds and bond selections pending. The portfolio will run from December 31 to the same date in 2020, and there will be regular updates and insights from Moneywise (File photograph)

    Learning to invest: the Bermuda hypothetical portfolio is taking shape, with 12 stocks now chosen, and money market mutual funds and bond selections pending. The portfolio will run from December 31 to the same date in 2020, and there will be regular updates and insights from Moneywise (File photograph)

  • Learning to invest: the Bermuda hypothetical portfolio is taking shape, with 12 stocks now chosen, and money market mutual funds and bond selections pending. The portfolio will run from December 31 to the same date in 2020, and there will be regular updates and insights from Moneywise (File photograph)

    Learning to invest: the Bermuda hypothetical portfolio is taking shape, with 12 stocks now chosen, and money market mutual funds and bond selections pending. The portfolio will run from December 31 to the same date in 2020, and there will be regular updates and insights from Moneywise (File photograph)


This is part three of our series featuring a hypothetical portfolio of stocks.

Today we’ve finished the selection of stocks that we will be reviewing, analysing and tracking for an entire investment cycle, that is one year, from December 31 to the same date in 2020.

Chartered Financial Analysts, of which there are more than a 100 in Bermuda alone, are the qualified individuals who manage almost all global investment portfolios, and they may be bemused and quite possibly dismissive of my choices.

That’s quite all right, because I deliberately haven’t gone with conventional portfolio theory, but focused situationally on stocks of companies that are changers, disrupters, innovators, significant to the Bermuda economy, and/or on the cusp of possible new greatness.

Some, but not all stocks are registered on more than one stock exchange, such as in the US and the UK, possibly Germany, Japan, or Hong Kong. Some have made enormous multiyear profits, while others are still on the road to accomplishment with support of venture capitalists and corporate debt issuances.

Tellingly, we are also only three weeks away from December 31, an extremely significant, stressful time for local and global investment professionals, capital markets, as well as economic entities of all types, from companies and municipalities, to governments. Publicly traded securities’ valuations are analysed continually during the year, but the final results at year end are critical to either the frosting on the cake (gains), or losses with the possibility of a place in the redundancy line for investment personnel.

Year end results 2019 for the Moneywise Pretend Portfolio will be reported as the starting point values in the next instalment of this year-long series.

Hopefully, this hypothetical securities exploration will also help readers feel more comfortable with investing personally, understanding how to keep an eye on your pension investment performance, while receiving research tips on the pluses (and minuses) of investing in securities.

In the next article, part four, on January 4, 2020 (yikes!) we will introduce two money market mutual funds, and our bond selections thereafter. We’ll also be using various review components on stocks to help individual investors preview their own stock/mutual fund investments. Yes, we will feature the latest Bermuda Government bond issuance of November 2018, along with sovereign debt of other countries: UK, Japan, Brazil and the US Government, plus two corporate debt issuances.

Our stock choices, in brief:

1, Amazon. We had to include this trendsetter’s embrace of the digital age of ordering goods and services in the privacy of your home. Recently, Moneywise realised an epiphany in that Amazon adapted and totally modernised the 126-year-old precursor, Sears, Roebuck and Company’s postal delivery shopping service.

Some of us are old enough (and possibly lived for a time in the United States) to remember the Christmas-like specialness of picking some “marvellous” item from their massive catalogue, then to find the package on our doorsteps, more than a couple of weeks later. Consumer choices began to change long ago, we just didn’t recognise it.

2, American Waterworks. The over and under abundance of access to pure water is predicted to become a life essential trade necessity in the near future.

3, Aramco. The world’s largest oil company recently set a price for its IPO shares that marks the company’s value at $1.7 trillion. Saudi Aramco priced its IPO at 32 riyals per share ($8.53), putting it on track to raise $25.6 billion in what would be the largest IPO on record.

4, Chubb. Huge links to Bermuda. Remember the Bermuda Ace start-up with CEO Brian Duperreault et al, not that long ago it seems, but suddenly more than 20 years have passed. Ace Global purchased Chubb and kept the name, now one of the largest global insurance companies.

5, Cigna. How does a mega-insurance corporation manage healthcare? Very, very relevant to the initiatives and proposed healthcare changes in Bermuda.

6, Cisco. If we can’t link up, if the satellites are down, what do we do for access in our “almost completely electronic, internet, social media, digital world?”

7, FedEx. Since we can choose not to go out to shop, how will delivery to our door be handled in the future?

8, HSBC. This global banking institution has a presence in the UK, US, Canada, Hong Kong, and Bermuda along with 60 other countries and territories. Need I say more? At least, three of these countries are involved in political upheaval.

9, JP Morgan Chase. One of the first financial institutions to embrace blockchain technology as well as launching its own digital coin using the same. One of the largest financial institutions in the US and the world, JP Morgan Chase moves more than $6 trillion every day and participates in the repo market.

Take a look at Wall Street on Parade — a citizen’s guide to Wall Street, by By Pam Martens and Russ Martens: November 11, 2019. https://tinyurl.com/w72so3m

10, Mastercard. We all use credit/debit cards. Learn more about this fascinating, possibly irreplaceable, industry. Will it survive if we all take to phone scan payments?

11, Tesla. Another disrupter, innovator, and a wonder of magical thinking turned to reality. Tesla’s CEO has turned traditional auto manufacturers, sales, distribution, and marketing procedures on its head. Imagine producing a brand-new conceptual image of the car of the future, while engineering spaceship launches at the same time. Are Teslas the complete car now and the future?

12, Twitter. Who could ignore Twitter, possibly the greatest disrupter of the 21st century and purveyor of insults, derogation, government policies, constitutional law, innuendo, close-to- or prosecutorial slander, defamation, fake news, harassment, political hyperbole, tariff and trade war parry, economic reviews, bullying, and the use of Twitter has been slyly implied in security investment manipulation. Who could not fail to react to negative attacks by a top-of-the heap influencer regarding a company’s operations?

We’ll reveal the bond choices in future articles. They will range the credit-rating gamut from very high-grade to close-to-junk high-yield fixed-income securities.

Money market mutual funds are used everywhere for very short-term investing, as a means of short-term cash parking and short-term borrowing between institutions (eg commercial paper).

More to come in the months ahead.

Click on Related Media to see a PDF of the hypothetical portfolio.

Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette, Bermuda. All proceeds earned from this column go to The Reading Clinic. Contact: martha.myron@gmail.com

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Published Dec 8, 2019 at 12:01 am (Updated Dec 6, 2019 at 6:50 pm)

Stocking up our hypothetical portfolio

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