I have 34 core holdings (equal to my age) that are my "default" dollar-cost averaging weekly adds. Over time these should become my most prominent positions and are theoretically my favorite picks in any given year.
However, life comes at you fast, and you fall out of love with stocks over time. So I allow myself a 10% turnover within my core holdings. Of course, this implies I'll hold each stock for an average of 10 years, which is why I limit myself to this figure.
So with 34 holdings in 2022, I'll replace these three (about 10%): $SE
, and $DOCU
I want to be clear -- I am not selling any of these, just not making them active buys anymore with new money. Sea's adjusted EBITDA minus headquarter expenses bugged me too much, while Twilio and DocuSign have stock-based compensation that equals almost 20% of revenue yet are still unprofitable. I'm just not fascinated by any of the three anymore, which may be the biggest red flag for me.
Here's the 31 I'm left with -- by sector:
But now the fun part -- who should I replace these three with, and what should be my new addition for turning 35 in 2023?
Here's my watchlist for my four new potential core holdings with why I'm considering them.
- $MA / $V - Probably a lock for me. It would be one "core" holding split equally between the two. The reasons why are pretty obvious, as they are incredible compounders. Keep it simple, stupid, comes to mind for me. 😂
- $IDXX / $ZTS - They would build out healthcare for me while adding exposure to the unstoppable animal care industry.
- $AZO / $ORLY - same as V and MA, but for cart parts and would act as an anchor stock for my portfolio.
- $DPZ / $SBUX / $CMG - I don't have any food and beverage exposure, and these seem to be my favorite operators. I would lean toward Starbucks for the addiction benefit.
- $POOL / $TREX - Best-in-class operators adjacent to housing/consumer/industrial-ish area.
- $ODFL / $UNP - Best-in-class transporters would build up industrials for me.
- $ULTA / $LULU / $NKE / $OLPX - I would love to add some consumer-facing brands, but not exactly sure where to turn as far as how safe to go.
- $PGNY / $DOCS - I love both of these companies but would probably lean toward Progyny as it's so easy to root for.
- $WM / $SHW / $BALL - I desperately need a boring stock like one of these to anchor my core holdings a bit more. Brings a more industrial allocation to my portfolio as well.
Who would you go with if you were forced to pick four off this watchlist?
Also, feel free to throw me a wildcard pick of your own if you have a stock that would fill a significant gap in my core holdings.
Thanks as always 🙏