One Hundred Stocks, One Hundred Pages
Over the last few months, we have been going over the hundred-stock “wish list” that we at Sicart have compiled over the last three years. It consists of stocks with good businesses, have dominated their industries for a while, yet still have plenty of room to grow. We like to pick a few at a time, download their annual reports, and take them home. It’s remarkable how many annual reports you can get through in a matter of months, since most of them are only about a hundred pages long. This practice has given us a wonderful opportunity to take a more careful look at familiar businesses, refresh our memory, and get up to speed with what’s new with our hundred stocks.
I personally keep a record of every single stock I have ever looked at, bought, or passed on over the last fifteen years. There are fewer and fewer companies that Sicart has never researched before. We examine every meaningful IPO, and gain a good understanding of what kind of businesses they are.
We’ve learned that what we don’t buy matters as much as what we do buy. Often, we see too many red flags in a business to make it a viable choice for us, and it just takes a couple of seconds to reject that stock. Then there’s what Warren Buffett calls his “too hard pile” where anything outside of his circle of competence ends up. We have one too! But even after eliminating the “two-second NO” and “too hard” options, there’s a lot to choose from. The Vanguard Total Stock Market ETF (a kind of Noah’s Ark of the market) lists over 3,600 stocks. Still, there are only about one hundred companies among them that we would like to own at some point.
We have no intention or ambition to own all of them at once. We would be happy if we acquired about a third of them in the near future, and hopefully many more in the next 5-10 years. We really need only a few new stocks each year, and a total of 30 stocks is enough to totally make over our portfolio.
We have a long record of buying high flying-stocks at a steep price discount soon after they have briefly fallen out of favor due to some transient minor issues. As a matter of fact, we picked up three of those this year alone. One of them took only a year from scoring a spot on our list to making it into the portfolio, and it’s already pulling its weight.
As the market scrapes the clouds, and everything seems expensive, we are working harder than ever to identify and research desirable stocks to snap up when the time is right. Last year’s December sell-off (which shaved off a whole 20% from the major indices) was a prime example of a window of opportunity. We put more money to work in a matter of days than in the previous two years.
Our wish list is ready, and we couldn’t be more excited to put more new picks into our portfolios.
Published: December 12th, 2019
This article is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally.