Play it forward: Introducing TCSI model portfolios in 2024
Publishing modeled investment portfolios and results in an open, real-time demonstration of the TCSI investment process
I’m kicking off 2024 with something new, albeit slightly later than I originally planned - a live test of my systematic investment strategies, as applied to several markets and currencies. I have learned many valuable lessons, and have both suffered bad luck, made occasion foolish choices and also benefited from some lucky escapes regarding some investments made through the years since Corona struck, and have emerged with my wallet intact and hopefully wiser as a result.
My approach
Based on those experiences and learnings, my systematic rules evolved accordingly, placing an even more rigorous approach and strict requirements before a stock is considered a worthy candidate for inclusion in my portfolios, all enforced by my custom rules-engine software that allows me to
scan the world for candidate stock investments
rank those stocks in terms of desirability
allocate portfolio funds to a concentrated set of positions with reasonable confidence that they are, in aggregate, strong economic performers and high quality businesses
be reasonably confident that I am not overpaying, and
help me to avoid FOMO, excessive fear, excessive greed and all the other behavioral biases that we all suffer from as investors.
What I intend
Going forward, I intend to publish:
a set of stock trades on (or as soon as possible after) the first day of each calendar month, for model portfolios of
stocks listed in USD, AUD, JPY, EUR at a minimum, and potentially add other currencies in future (GBP, TWD, SEK, NOK, anything I find compelling),
and subsequently: monthly status reports on performance vs a comparable index
additional commentary, research and findings as the process unfolds and the future throws us it’s best and most trying challenges!
How it works: modeling & reporting assumptions
Each model portfolio will assume the following:
50 000 USD (or some roughly equivalent local currency, e.g. 50 000 AUD, 50 000 EUR, 5 000 000 JPY etcetera) will be added to the model portfolio on the 1st day of the month
Those cash injections will subsequently be allocated as evenly as possible across the most desirable stocks , ideally between 1-10 purchases on each “BUY” date (the first open market day after the cash injection)
Stock “SALE” dates can technically take place on any date, but are likely to be very very rare based on the long-term, buy-quality-and-hold approach that I endorse
Cash will never be withdrawn from the portfolio
All dividends are reinvested on the next BUY date
I will not model fractional share purchases — whole integer share counts only.
Block volume requirements of exchanges such as Japan, that require stocks be purchased in lots of 100, will be ignored (my model will assume that any amount of stock can be purchased so long as it is an integer number)
Taxes are not included, but as noted in earlier posts, the effect of these will largely be delayed until far into the future, and be minimal based on lo trading volume
Trading fees are not included, but again, due to the extremely low trading volume and the low-cost brokerage accounts, these can be effectively ignored with little affect to the outcome.
I will at times release sample portfolio WITH taxes and fees modelled, to demonstrate the above points (i.e. the limited effect of taxes and brokerage fees on these portfolios due to the investment style)
What you can expect
As part of this open portfolio modeling, you can expect
model BUY trades (stock ticker, purchase price, purchase date)
model SELL trades (stock ticker, sale price, sale date)
end of month tearsheets, that is: a report of progress and investment performance as compared to some comparable benchmark index ETF
The tearsheets will look like the following (see attached PDF for full version, a backtest of trading results for stocks listed in the Taiwan dollar, modeled since 2016 and assuming 5 000 000 TWD invested per month)
So let’s get started
Modelled with stock prices and fundamental data available as at the 1st of January 2024, our model portfolios will launch with the following target purchases:
USD denominated stocks (50 000 USD)
REGN - Regeneron Pharmaceuticals: 6-7 shares @ ~ $877
AMAT - Applied Materials: 34-35 shares @ ~ $162
USLM - US Lime & Materials: 24 shares @ ~ $231
KLAC - KLA Corp: 9-10 shares @ ~ $580
PAYX - Paychex Inc: 46 shares @ ~ $120
LRCX - LAM Research: 7 shares @ ~ $785
CPRX - Catalyst Pharmaceuticals: 330 shares @ ~ $17
VRTX - Vertex Pharmaceuticals: 13-14 shares @ ~ $410
ODFL - Old Dominion Freight Line: 13-14 shares @ ~ $405
AUD denominated stocks ($50 000 AUD)
SNL - Supply Network: 305 shares @ ~ $16.40
CAR - Carsales.com: 161 shares @ ~ $31.00
NCK - Nick Scali: 406 shares @ ~ $12.33
JBH - JB Hi Fi: 94 shares @ ~ $53.20
REA - REA Group: 28 shares @ ~ $181.50
CDA - Codan: 583 shares @ $8.57
SIQ - Smartgroup Corporation: 568 shares @ ~ $8.80
TNE = Technology One: 324 shares @ $15.40
PWH - PWR Holdings: 505 shares @ $9.90
PME - Pro Medicus: 52 shares @ $96.50
JPY denominated stocks (5 000 000 JPY)
4318 - Quick Co: 195 shares @ ~ 2 565 Y
6323 - RORZE Corp: 34 shares @ ~ 14 970 Y
6777 - Santec Corp: 158 shares @ ~ 3 155 Y
4848 - Fullcast Holding Co: 274 shares @ ~ 1 822 Y
7839: Shoei Co: 274 shares @ ~ 1 822 Y
8117 - Central Automotive Products: 120 shares @ ~ 4 165 Y
4063 - Shin-Etsu Chemical: 85 shares @ ~ 5 915 Y
4975 - JCU Corp: 126 shares @ ~ 3 970 Y
7729 - Tokyo Seimitsu Co: 58 shares @ ~ 8 565 Y
4763 - Creek and River Co: 227 shares @ ~ 2 200 Y
EUR denominated stocks (50 000 EUR)
MEKKO - Marimekko: 375 shares @ 13.30
SII - Societe Pour L’Informatique: 72 shares @ 69.60
TRI - Trigano: 34 shares @ 148.60
TITAN - Titanium: 289 shares @ 17.30
CATG - Catana Group: 871 shares @ 5.75
ATE - Alten: 37 shares @ 134.80
EQV1V: eQ PLC: 317 shares @ 15.80
EQS - Equasens: 81 shares @ 62.10
RBO - Roche Robois: 93 shares @ 53.60
KGP - Kingspan Group: 64 shares @ 78.65
So, please, hit the subscribe button and follow along as I (slowly, over month and years) put this systematic investment approach, with strict purchase criteria, into action. Publicly, openly, and with as much clever learning along the way as I can share.
Thanks for following, more soon…