Last year, I recapped the five previous years of returns and my investment ground rules for the taxable portfolio I discuss on this website. Today I am sharing my 2017 DIY investment portfolio recap. This will detail:
- 2017 investment results
- Six Year Portfolio Growth
- Top 2 Investments for 2017
- Worst 2 investment for 2017
Why DIY Investing?
I previously mentioned this, but to repeat – I invest in index funds primarily in our retirement accounts (in addition to fixed income.) In our taxable accounts, I invest in individual securities with as little turnover as possible to minimize the tax implication. I think for most investors they will do better with index funds. However, three primary reasons why I invest in common stocks are:
- Investing is my hobby. I measure my performance against benchmarks and attempt to outperform the usual investing benchmarks.
- Active Investing allows me to personally select what I feel will provide the best risk adjusted returns.
- Active Investing helps me achieve my goals for my taxable portfolio. Overtime this portfolio will be used as income to pay for our monthly expenses. A far greater yield can be generated from your investments than what he S&P is currently providing at 1.91%, with potentially less volatility than the S&P 500 index.
SERIP Portfolio Allocation
This view generated from my Personal Capital dashboard displays only the accounts I selected for our early retirement portfolio. This shows the allocation between the US stocks and International. I currently hold no bonds and very little in alternates in the form of a REIT in this portfolio.
After drilling down into the US sector breakdown, you may notice that I am over allocated to consumer cyclical. We made some investments in retail companies that were particularly beaten down over the past 2 years. These investments started to take off towards the end of the year which has inflated the overall allocation to this sector.
2017 Investment Return
At the start of this year, I thought 2017 was going to be a flat year from an US market perspective. I remember thinking about selling some holdings with the intent to redeploy into an investment property. I am glad that opportunity never came to fruition as the S&P returned over 20%.
Our early retirement investment plan (SERIP) returned 29.34% for 2017. This handily beat the S&P500 which returned 20.49% with dividends reinvested. The SERIP returned nearly a full 9% more than the index. This makes 2017 the second best year in my documented history for beating the S&P500 over the last six years of tracking.
I used the annual return figures for the S&P 500 from YCharts.
Six Year Growth of $100
After 4 years of tracking very closely to the index, our portfolio started to take off relative to the index. I am not here to tell you that I figured out how to beat the market consistently. I haven’t. I uncovered a few opportunities and made larger investments as a percentage of the portfolio than previous years. No investment was made for more than 10% of the portfolio. Each one of these investments has done rather nicely.
Top 2 Investments for 2017
- Fiat Chrysler – I discussed my investment with Fiat Chrysler previously. This company is now my largest holding and it returned a whopping 97% for 2017. I continue to watch and hold this company. It is definitely not the overwhelming value buy that it was over a year ago, but they still project significant earnings growth next year. I may trim this position for 2018.
- Brown Forman – This company returned 52% not including dividends received for 2017. I thought the company was overvalued at the start of the year and I still believe it is overvalued. I will likely continue to hold this excellent blue chip. This company usually holds up nicely in recessions, however the valuation is starting to get uncomfortable for me.
Top 2 Worst Investments for 2017
- IBM – I have been holding IBM stock for years. IBM had a capital loss of 7.91% for the year, partially offset by the dividend yield. I continue to hold this company, collecting the dividend and waiting for management to find ways to grow the business again. I have held this company for over a decade now.
- Exxon Mobil – Exxon had a capital loss of 7.43% for the year, partially offset by the dividend yield. I sold part of my position in this company as part of my tax-loss harvesting strategy to offset capital gains for 2017. We still believe the long-term outlook is rather good for this company.
Looking back at 2017 and to the future.
It was an unexpected return for 2017. I feel quite happy that all of our accounts are at record highs. In the back of my mind, I am still awaiting a correction. I know it is coming. If only we knew the exact moment. I am not making any predictions, but I can’t fathom 2018 will be as good a year as 2017, but you never know what is in store.
Happy New Year!