By way of variety I am showing a very long term chart. The Dow Jones since it was created at the end of the 19th century. The things which stand out for me are first the strength of the secular uptrend and second the two dramatic bear markets in 1929 and 2008. The biggest bear market for the Nasdaq indices, which did not exist in 1929, was the 2003 collapse as the late 1990s Internet bubble burst and America reeled from the attack on the World Trade Centre. Amazon shares fell by 95pc from peak to trough. Also less noticeable on this chart is the devastating UK bear market of 1974, when the FTSE All-Share index lost 75pc of its value.
The third thing which stands out is the prolonged consolidation running from 1965 to 1983, which coincidentally left the index trying to break through 1,000 for many years. The breakout, when it came, ushered in a spectacular bull market for bonds as well as shares as long and short term interest rates entered a multiyear period of decline.
I don’t think the chart gives any clear clues as to what is going to happen next. Will it keep climbing? Will share prices collapse? Will there be another 15-plus years of consolidation? I have no idea because these things would be determined by black swans – entirely unforeseeable events. My assumption is that share prices will continue to climb and this forms the basis of my investment strategy.
What is clear though, contrary to many assumptions, including my own for a while, is that share prices, especially in the US, do not need falling interest rates to move higher. This bull market is driven by growth as companies use technology, endless innovation and easy access to global markets expanded by the demise of communism to scale from small to large to gigantic in a process delivering astonishing returns for shareholders. Since it plunged in 2003 the Amazon share price has climbed 636 times to make Jeff Bezos the richest man in the world and his former wife one of the richest women.
Nor is it just technology where this is happening. There are opportunities in other fields too. Shares in luxury goods manufacturer, LVMH, are up 16-fold since 2009. Shares in fast-growing casual dining business, Chipotle Mexican Grill are up nearly 50-fold over the same period. Shares in Mettler-Toledo, which makes things like pipettes for research labs are up 104-fold since 1997.
Another key driver has been share buybacks. As companies mature and growth slows, they used their quasi-monopoly profits and strong cash flows to buy back their own shares in industrial quantities. This is precisely the phenomenon which has helped Mettler-Toledo shares do so well and it is becoming an increasingly common practice among successful quoted US businesses. Apple spent $75bn on share buybacks in 2019, $50bn in 2020 despite Covid and has authorised $90bn for 2021, which is enough to buy most of the world’s quoted companies outright.
The Quentinvest for Shares table is becoming very long. The is not a bad thing because the process of regularly updating it gives me ideas for action and a feeling for what is happening in that part of the stock market in which I am interested, namely shares in high quality, fast-growing businesses. I have been described as an out-and-out growth share investor and that is exactly what I am. What I struggle to understand is why would anyone want to be anything else. What is the attraction of slow-growing or not-growing-at-all businesses? They certainly don’t attract me.
However now that the table has become so big I think there is scope for a more disciplined approach within the table. Accordingly I have decide to create a list – The List – of all the shares which I think are suitable for adding to your portfolio. Funds permitting I think it would be an excellent strategy to hold all of them and that is exactly what I am trying to do. I think if I could make a meaningful investment in every single share in The List I would have a world-beating portfolio with exciting prospects for sustained capital gains and rising income from dividends.
The problem is that it is a big list. There are 200 shares in my list. This is a good thing. It means I am making good selections when I add shares to the table but it also makes it expensive to buy all of them.
Buying them all is a good idea because it combines strong growth potential with most of the advantages of diversity. I don’t target diversity in terms of sectors but in terms of companies I do think for most people it is a good idea. Putting all your eggs in one or two baskets is stressful whereas if one or even several shares in a large portfolio take a hit it is far less of a problem which makes it more likely you will adhere to my buy and hold strategy.
It is also good fun to have a large portfolio because there is always something happening and you have so many management teams out there working their socks off to make you money.
I have not yet fully decided but my thinking is that I may only apply the ‘buying the green’ buy signals to The List. The other categories, Other Bets, Behaving Badly and Living Dead, will require stronger signals, initially to win them promotion back to the premier league, aka, The List and then to start being the subject of the less powerful buy signals.
I don’t think of being listed in either Other Bets or Behaving Badly as being more than temporary states. Most shares should recover eventually. Living Dead is disaster territory but only includes four shares.
This is an unusual issue in that I am not recommending any action so it is not an alert. I am just going to tell you all the shares in The List and in the other categories so you know what I think about them at this moment in time.
The shares in The List in alphabetical order are as follows:
Abbott Laboratories/ ABBT
Accenture/ ACN
Adobe/ ADBE
Advanced Micro Devices/ AMD
Align Technologies/ ALGN
Alphabet/ GOOGL
Amazon/ AMZN
Apple/ AAPL
Applied Materials/ AMAT
Argenx SE/ ARGX
Arista Networks/ ANET
Ashtead/ AHT
ASML/ ASML
Atlassian/ TEAM
Autodesk/ ADSK
Automatic Data Processing/ ADP
Avalara/ AVLR
Axon Enterprise/ AXON
Baillie Gifford European Growth/ BGEU
Berkshire Hathaway.B/ BRK.B
BiliBili/ BILI
Bill.com/ BILL
Bio-Techne/ TECH
Blackrock/ BLK
Broadcom/ AVGO
Burlington Stores/ BURL
Cable One/ CABO
Cadence Design Systems/ CDNS
Carvana/ CVNA
Carl Zeiss Meditec/ AFX
Charles River Laboratories/ CRL
Chegg/ CHGG
Chewy/ CHWY
Chipotle Mexican Grill/ CMG
Cloudflare/ NET
Cochlear/ COH
Co-Star Group/ CSGP
Croda International/ CRDA
Crocs/ CROX
Crowdstrike/ CRWD
Datadog/ DDOG
Dechra Pharmaceuticals
Dexcom/ DXCM
Diageo/ DGE
Diploma/ DPLM
Docusign/ DOCU
Domino’s Pizza Inc./ DPZ
Domo Inc./ DOMO
Dynatrace/ DT
Edwards Life Sciences
Enphase Energy/ ENPH
Epam Systems/ EPAM
Estee Lauder/ EL
Etsy/ ETSY
Everbridge/ EVBG
Experian/ EXPN
Facebook/ FB
Fair Isaac/ FICO
Ferrari/ RACE
Fiserv/ FISV
Fisher & Paykel/ FPH
Five9/ FIVN
Fortinet/ FTNT
FreshPet/ FRPT
Futu/ FUTU
Fiverr/ FVRR
Games Workshop/ GAW
Gear4Music/ G4M
Genscript Bio/ 1548
Genus/ GNS
Globant/ GLOB
Halma/ HLMA
HelloFresh/ HFG
Hermes/ RMS
Home Depot/ HD.
Horizon Therapeutics/ HZNP
Hubspot/ HUBS
IDEXX Labs/ IDXX
I-Mab/ IMAB
Impax Environmental Markets/ IEM
InMode/ INMD
Intuit/ INTU
Intuitive Surgical/ ISRG
iShares World Momentum/ IWMO
JD Sports/ JD.
Kering/ KER
Lam Research Corp./ LRCX
Lightspeed POS/ LSPD
Liontrust Asset Management/ LIO
Logitech/ LOGI
L’Oreal/ OR
Lululemon Athletica/ LULU
LVMH/ LVMH
Marketaxess/ MKTX
Masimo Corp. MASI
Mastercard/ MA
Match Group/ MTCH
Maxcyte/ MXCT
Mcdonalds/ MCD
Meidong Auto/ 1268
MercadoLibre/ MELI
Mettler-Toledo-Toledo/ MTD
Meituan/ 3690
Microsoft/ MSFT
Middleby Holdings/ MIDD
Moderna/ MRNA
MongoDB/ MDB
Monolithic Power Systems/ MPWR
Morningstar/ MORN
MSCI Inc./ MSCI
Nasdaq Inc./ NDAQ
Natera/ NTRA
Netease/ NTES
Netflix/ NFLX
Nike/ NKE
Nio/ NIO
Novanta/ NVTA
Nvidia/ NVDA
O’Shares Global Internet Giants/ OGIG
Okta/ OKTA
O’Reilly Automotive/ ORLY
Palo Alto/ PANW
Paycom Software/ PAYC
Paylocity/ PCTY
PayPal/ PYPL
Pegasystems/ PEGA
Peloton/ PTON
Pinterest/ PINS
Polar Capital Technology/ PCT
Pool Corporation/ POOL
Procore/ PCOR
Invesco QQQ/ QQQ
Rapid7/ RPD
Repligen/ RGEN
RH/ RH
Rightmove/ RMV
Ringcentral/ RNG
Roblox/ RBLX
Roku/ ROKU
Rotork/ ROR
S4 Capital/ SFOR
S&P Global Inc./ SPGI
Salesforce.com/ CRM
Sartorius Stedim Biotech/ DIM
Sea Limited/ SE
ServiceNow/ NOW
Shift4 Payments/ FOUR
Smartsheet/ SMAR
Snap Inc./ SNAP
S&P 500 ETF/ SPY
SolarEdge Technologies/ SEDG
Spiral-Sarco/ SPX
Springworks Therapeutics/ SWTX
Square Inc./ SQ
Stamps.com/ STMP
Starbucks/ SBUX
Stryker/ SYK
Synopsys/ SNPS
Taiwan Semiconductor Manufacturing/ TSM
Team17/ TM17
Teledoc Health/ TDOC
Teleflex Inc./ TFX
Tencent/ 700
Tesla/ TSLA
Tractor Supply/ TSCO
The Joint Corp/ JYNT
The Trade Desk/ TTD
Twilio/ TWLO
Tyler Technologies/ TYL
UnitedHealth Group/ UNH
UP Fintech/ TIGR
Upstart/ UPST
Veeva Systems/ VEEV
Verisk Analytics/ VRSK
Victoria Carpets/ VCP
Visa/ V
Volex/ VLX
Waste Connections/ WCN
Waste Management/ WM
Watches of Switzerland Group/ WOSG
Water Intelligence/ WATR
West Pharmaceutical Services/ WST
Wingstop/ WING
Wisetech Global/ WTC
Wisdomtree Nasdaq 100 3x Daily Leveraged/ QQQ3
Wix Communications/ WIX
Workday/ WDAY
Wuxi Bio/ 2269
Xero/ XRO
Xilinx/ XLNX
YouGov/ YOU
Zai Laboratories/ ZAI
Zalando/ ZAL
Zebra Technologies/ ZBRA
Zendesk/ ZEN
Zoetis/ ZTS
Zoom Info Technologies/ ZI
Zoom Video Communications/ ZM
ZScaler/ ZS
The next group is what I call Other Bets. Shares in companies that just look a bit more speculative and uncertain than the shares in The List (there are 50 shares in Other Bets).
Abbvie/ ABBV
Activision Blizzard/ ATVI
Afterpay/ APT
Ambarella/ AMBA
Avast/ AVST
Bandwidth/ BAND
Beigene/ BGNE
Beyond Meat/ BYND
Blackline/ BL
Bruno Cucinelli/ BC
Burford Holdings/ BUR
Canada Goose/ GOOS
Corporate Travel Management/ CTD
Cyber-Ark Software/ CYBR
Delivery Hero/ DHER
Digital Turbine/ APPS
Disney (Walt)/ DIS
Dropbox/ DBX
Ecolab/ ECL
Ether/ Ether
Fevertree/ FEVR
Figs/ FIGS
Gamestop/ GME
Godaddy/ GDDY
GrowGeneration/ GRWG
Imogen/ INGN
Intertek/ ITRK
ITM Power/ ITM
James Cropper/ CRPR
Keywords Studios/ KWS
Li Auto/ LI
London Stock Exchange Group/ LSEG
Lyft/ LYFT
Magellan Financial Group/ MFG
Microstrategy/ MSTR
Monday.com/ MNDY
On The BeachGroup/ OTB
Par Technology/ PAR
Plus500/ PLUS
Restore/ RST
Sanne Group/ SNN
Shake Shack/ SHAK
Silvergate Capital/ SI
Splunk/ SPLK
Spotify/ SPOT
Superdry/ SDRT
Unilever/ ULVR
Weight Watchers/ WW
You Group/ YU.
Zillow/ Z
The third group is shares in the portfolio which are behaving badly, which is usually but not always a mixture of a declining chart pattern and some weakness in the fundamentals. This can change quickly so even with these shares it can be unwise to be too negative. However if you do need to sell something these would be the ones to go (there are 51 shares in the Behaving Badly list).
Abcam/ ABC
AB Dynamics/ ABDP
Accesso/ ACSO
ADC Therapeutics/ ADCT
Agora/ API
Airbnb/ ABNB
Alibaba/ BABA
Allogene Therapeutics/ ALLO
Alteryx/ AYX
Anaplan/ PLAN
Appian Corporation/ APPN
AptarGroup/ ATR
Aptitude Software/ APTD
Argo Blockchain/ ARB
ASOS/ ASC
Baidu/ BIDU
BioXcel Therapeutics/ BTAI
Bitcoin/ Bitcoin
BOTB/ BOTB
Blue Prism/ PRSM
Boohoo/ BOO
Booking Holdings/ BKNG
Boston Beer/ SAM
Bumble/ BMBL
C3.AI
Casey’s General Stores/ CASY
Coupa Software/ COUP
Craneware/ CRW
Fastly/ FSLY
FD Technologies/ FDP
Frontier Developments/ FDEV
Get Swift/ GSW
Guardant Health/ GH
Hargreaves Lansdown/ HL.
Hilton Food Group/ HFG
Inspire Therapeutics/ INSP
IQE/ IQE
Irobot/ IRBT
JTC/ JTC
Just Eat Takeaway/ JET
LendingTree/ TREE
Litecoin/ Litecoin
MCRO/ Micro Focus International
Naspers/ NPN
Pinduoduo/ PDD
Pliant Therapeutics/ PLRX
Renishaw/ RSW
TripAdvisor/TRIP
Turning Point Therapeutics/ TPTX
Vuzix/ VUZI
Wandisco/ WAND
Living dead shares speaks for itself. These shares should have been sold but if they haven’t they have effectively sold themselves. Fortunately there are only four.
GSX Techudu/ GSX
Nikola/ NKLA
NMC Health/ NMC
Wirecard/ WDI
I am going to stick with this format for this issue but in future I may just have three lists – The List of core portfolio holdings, Behaving Badly for shares that could be sold if needs must and Living Dead for shares that should have been sold long ago, when they started to implode. The idea is that I will not make too many changes to these lists unless I scrap the whole idea and just revert to having one list for buying the green, programmatic or whatever. Most likely the changes I will make are moving shares from Other Bets and Behaving Badly to The List because in many cases it is fairly marginal as to which list they were put in.
The attraction is that a 200 share portfolio for a private investor in these days of zero commission and fractional investing is surprisingly practical. My constraint is that I like each individual holding to be meaningful so building a 200 share portfolio is quite a serious venture but if you just want to build the portfolio it need not cost that much at all. In effect what I am proposing is that subscribers behave with their portfolios like small institutions or family trusts.
The aim is to build a substantial but highly liquid asset over time which delivers impressive total returns in the form of dividends, share buybacks and capital appreciation. Share buybacks don’t put money directly in your pocket but otherwise are very similar to dividends. They just provide the return as capital appreciation which has the advantage of deferring any tax liability.
As Warren Buffett notes if you hold shares showing substantial profits as long as you don’t sell it is as though HMRC is making you an interest free loan to make further gains.
The table is still going to be based on the Never Sell strategy. It would be far too complicated to try to incorporate sell signals and on past form might very well not improve the overall performance. The key to success as always is good share selection. Timing is much less important.
