Best Stocks and the Worst in My 2021 Portfolio

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Sharing my Best Stocks and Also the Least Performing Ones from my 2021 Portfolio

Our 2021 Bow Tie Nation portfolio is up 30% and beating the market by 20% but not all of the stocks have been big winners and a few are even down double-digits. In this video, I’ll reveal those biggest winners or the best stocks that I have as well as the stocks that haven’t done so well. I’ll show you how to review your own portfolio, how to decide whether to hold a stock, double-down or cut it fast.

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How to Know the Best Stocks to Buy

Nation, investors get so excited about finding the next hot investments that they end up with a portfolio of 50-plus stocks. They have no idea what’s in the portfolio or why it’s not growing.

In fact, the truth is, in the words of Peter Lynch, usually the best stocks to buy are those you already own.

The only way to know which stocks to buy, which to hold and which to run screaming from like a teen at crystal lake is to check your portfolio regularly.

So today I’m going to show how to do just that with our very own 2021 Bow Tie Nation portfolio. The portfolio is up 32% so far this year and beating the index by over 20% but it’s time to review the winners and losers.

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We positioned early in the energy and financials stocks to ride that shift in investor sentiment but it seems like some of these may be tapped out. We were also early to some of the reopening stocks in the consumer discretionary sector that haven’t quite panned out yet. So we need to review the portfolio, see what’s worked and how to invest going forward.

Now if we look into the portfolio, we’ve got some real flyers here like Diamondback Energy up 177% and EMCOR Group up 77%, 18 of the 24 stocks are up and beating the return on the S&P 500.

But there are also the ideas that haven’t worked out. Teladoc is down more than 20% and four of the stocks are underperforming the market by double-digits.

This is why you want to review your portfolio at least every three months, see what’s worked and what hasn’t. It’s going to give you clues into your investment strategy that you’ll never get by just reading more analysis or watching a YouTube video.

And for most investors, doing this every three months is more than enough. You might even be able to do this just once or twice a year if you have a lot of funds and a laid back approach to investing.

3 Steps to Reviewing Your Portfolio to Find the Best Stocks

I want to show you three steps to reviewing your portfolio and then we’ll apply it to our Bow Tie Nation stocks as an example. First here is, is there a link between the best and worst performing stocks?

Are the best stocks or the worst all in a specific stock sector or a theme like growth or value stocks? If they are, then do you see that trend continuing? All you out there in the Nation know, this bigger picture investing is my favorite strategy because it’s so much easier to spot those broader trends. Once you have a feel for that direction, then you’re just picking a few stocks in those trends to ride the wave!

Second, how much do you have in each sector or theme within your portfolio?

This means finding the sector and theme in which each stock belongs. Is it in healthcare or technology or energy? Is it a value stock or a growth stock? And then you add up each sector and theme to see where you’re most exposed in the portfolio.

finding the best stocks

Here you see the 11 stock sectors and the main industries in each. Stocks in each sector serve a common need like financial services or technology, while the industries are smaller groups of companies that sell a similar product or service.

And I know there are a lot of tech investors out there that made a ton of money last year by having every penny in those high-flying tech stocks but if you want to make money long-term, over decades instead of just one year, you have got to diversify that. I would aim for no more than twenty or twenty-five percent of my portfolio in any one sector, so no more than a quarter of your stocks in tech or healthcare or any single sector.

And third, what is your fair value estimate for each stock? Are there any that have surged way above what you think is reasonable or any screaming buys?

Now this doesn’t mean you have to sell a stock immediately when it goes higher than your target price. In fact, maybe there’s new information out there and your target price should be higher.

Using these three steps in our 2021 Bow Tie Nation portfolio, first it’s easy to see where the returns have come from. We’ve got an average return of 54% in our five energy stocks and 49% in the three banking stocks; Citigroup, Wells Fargo and Citizens Financial.

The healthcare stocks we added early like CVS and Anthem have done really well while the ones added this month; Teladoc, Fresenius and Teva are all lower.

Like we talked about in our last portfolio update, stocks in the energy and financials sectors are looking a little topped out. Most are kind of flat over the last month and I don’t think there’s quite as much opportunity here versus maybe stocks in the healthcare, materials or industrials sectors.

We’ve also got some underperforming stocks like Madison Square Garden and Cinemark in the consumer discretionary sector and I still like these on that reopening trade.

sectors to find the best stocks

I was actually really surprised at what I saw at the sector level and this is why you absolutely need to do this step in your portfolio. Using our stock tracker spreadsheet, I can see how much I have in each sector and it will even show you in comparison to the percentage of that sector in the S&P 500.

So we’ve got our biggest investments in Healthcare, along with Energy, Financials and Communication Services. These are sectors that I probably don’t need to add because they’re already overweight.

What’s really interesting that I didn’t even realize was we have nothing in Materials, one of my favorite stock sectors for the year, and very little in industrials which is another sector I think can do well. We’re also underweight in technology and real estate and while I think technology is still a little expensive, there are some solid real estate stocks that could help diversify the portfolio

Why It's a Great Way to Monitor Your Investments

This is a great way to look at your investments because most of the time, stocks are going to trend along with that broader sector or industry. That can mean hard times if the sector sells off so spreading your stocks out a little can help protect your sanity in a crash.

On those price targets, Diamondback Energy is above my $75 per share target and has struggled to stay above $83 each so it might be time to take profits there because the upside is going to be limited.

Citigroup is also one that I would look to take profits at $75 a share. I think we’ve seen a lot of the gains we’re going to see for most of the year though long-term investors can still collect that dividend and hold the shares. For our portfolio, if I’m looking to reduce that exposure to financials a little to make room for something else, I like Wells Fargo better than Citigroup here because I think Wells has more upside for the rest of the year. Wells Fargo is just coming out from under the capital controls set by the Fed after its problems over the last few years and there’s a good chance we get positive news on the dividend soon.

Also here, since we have so much in healthcare, it would be a good idea to revisit valuations to see if there’s something we can take profits in to make room for something else in the portfolio.

Anthem is right at my $400 price target and the risks are probably more to the downside, especially any kind of regulation out of Washington, so we could cut Anthem if we want to make room for stocks in those other sectors like Materials or Industrials.

If we take profits in a few of these, besides adding some stocks in materials and industrials, I think I would like to add more in Madison Square Garden Entertainment and Cinemark Holdings. I still like both of these on that reopening trade and think we were just early into the shares, so maybe add more for that upside into summer.

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