One Year, Two Month Update of the MBP
Up 30.22% since Inception
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*Link to the spreadsheet for anyone interested in how we calculate returns
This is the 13-month update of the Market Brothers Portfolio, or MBP. It is a mock portfolio of our favorite investing ideas. Since it began in November 2018, the MBP is up 30.22% vs. the S&P 500’s 25.65%. All prior monthly updates can be found here.
Another solid month from us, which was definitely boosted from the U.S. market hitting new highs again in January. The returns were spread around, with outperformance coming from a few different companies including JD.com, Teladoc, and MongoDB. We still have 10% or more of the portfolio in cash or short-term treasury bonds, which has held back our returns in the short-run but will help us once the market inevitably heads in the opposite direction.
If you’ve read our previous updates (and if you have not, I’d recommend checking them out here) you know that beating the market for 14 months is not our goal. Our goal for the MBP is to show that spending 1-2 hours with one “trading” day a month can outperform heavily managed funds.
Here are the rules we have set to try and mimic a real portfolio as closely as possible:
We can only change our asset allocation on the 20th (or around then) of each month. All other days are off-limits, meaning we can only add or subtract from our allocation once a month. (We’re not the day trading type anyways, so this should not affect our investing philosophy).
No derivative securities (options or futures).
We are not reinvesting dividends, for calculation purposes. Although we highly recommend that you do so in a real scenario.
We cannot incorporate any commission fees so we will act like we are investing through Robinhood
We are competing against the S&P 500 so the benchmark for the portfolio will be how much it has beat or lagged the market since its inception.
Shares Held 12/21/19 - 1/20/20
*From initial purchase price, not time-weighted.
Top Performer
Teladoc shares had a good month, reaching all-time highs on the news of a revenue beat last quarter and acquisition of InTouch Health. InTouch Health provides telehealth services for hospitals and clinics, similar to Teladoc's direct-to-consumer offerings. If interested, you can read a post that Brett did on the acquisition here.
Worst Performer
Target, although still up 90% since we started buying shares, gave back some gains this month. They announced less than stellar holiday comparable sales, which investors did not like. As a small part of the MBP, we are still confident in Target's long-term potential for providing value to shareholders.
Dividends Paid
None.
Buying and Selling
Schwab Short-Term Treasury ETF (SCHO): With all the selling we did this month, our cash position got higher than we want, so we bought more treasuries that pay a 2% annual yield. Will this hurt the upside of our portfolio in the short-run? Yes. But in the long-run, when some of our favorite stocks (or the market in general) take a 20-50% dip, we'll be ready to take advantage.
Semler Scientific (SMLR): A new addition! This is the smallest company we've ever held, at a market cap of around $350 million. It also is traded on OTC markets instead of the NASDAQ, leading to it having a lot less volume than every other stock in the portfolio. Semler Scientific makes technology/software to help medical professionals diagnose chronic diseases. You can listen to us discuss the stock on our podcast here.
Sonos, iRobot, and Turtle Beach: Pretty simple for these three. We don't believe these stocks have a high enough probability of market-beating returns, so there's no reason for them to be in the portfolio.
Allocation for Next Month
Our podcast going over the MBP will be released soon. You can listen to the show here.
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See you in a month,
Brett and Ryan
Disclosure: The author is not a financial advisor, and may have an interest in the companies discussed.