Why My Stock Portfolio Will Crush the Market In 2022!

Why My Stock Portfolio Will Crush the Market In 2022!

So here’s the premise of this video: Quality matters. Because having companies of above-average quality in your portfolio in 2022 – and stocks that are growing (growth stocks) – is the easiest way to beat the market over the long term and in 2022. But how can you compare and benchmark the quality of your portfolio and the growth stocks you are invested in to a widely-used index like the S&P 500? Would you maybe be better off by simply being invested in an index fund? And how does my own portfolio fare against the S&P index in 2022 in terms of business quality?

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Today you are going to learn why owning quality stocks matters in 2022, how you can measure the strength of your overall portfolio, and how my portfolio performs in terms of the quality of the stocks I am invested in. So, to get started, I believe that an investment style that focused on businesses that can compound their business value internally at high rates is the most suitable approach for the vast majority of both private and professional investors. I think such an approach reduces the impact of behavioral biases, it reduces your trading activities and thus it reduces the amount of fees and taxes you have to pay, and it is the most time-efficient way to compound your wealth as a quality-focused portfolio doesn’t really require many decisions. Most of the time you will just sit there, do nothing, and let your compounder stocks do the work for you.

Let me just quickly show you that in fact quality stocks beat the market and explain why quality works. Terry Smith, the founder and CEO of Fundsmith, recently published his 2021 letter to investors, and in it, he compared the performance of the very popular MSCI World index to the MSCI World Quality index which according to the factsheet of the index quote: “aims to capture the performance of quality growth stocks by identifying stocks with high quality scores based on three main fundamental variables: high return on equity (ROE), stable year-over-year earnings growth and low financial leverage.” And in his letter, Terry Smith included a chart that showed the excess returns generated by the quality-focused index. To quote Terry Smith here: “Over the last 25 years there has never been a rolling ten-year period when quality has not performed as well as or better than the MSCI World Index.”

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Chapters:
0:00 Intro
0:44 Video Structure
1:02 The Best Investment Style?
1:45 Quality Works!
2:52 Why Quality Works
4:24 My portfolio
5:36 The most important metric
7:32 Charlie Munger
8:23 The second variable
9:14 Another way of measuring quality
10:50 Financial health
11:43 Premium Valuation?

DISCLAIMER:
The content provided on this channel should be considered an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. The stocks and funds discussed on this channel are examples only and may not be appropriate for your individual circumstances.

Before making any financial or investment decisions, I recommend you consult a financial planner or advisor to take into account your personal investment objectives, financial situation, and individual needs.

In no event shall René Sellmann be liable to any viewer for any damages of any kind arising out of the use of any content published on this channel, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages.

I hope you enjoyed the content!

[Stockado]

Great content Rene and the background music really suits your videos.

[jeremynewell]

Rene, you are my new favourite voice of reason. Thank you for your efforts!

How much emphasis do you place on business quality and valuation?

[sufiansaid]

This is insanely informative and awesome video!! Thank you for posting this Rene and keep it up! I am sure others would love it if you post a video where you pick a potential stock (or any stock really) and you go through it with the look through ratios. Basically showing us a glimpse of your process. Just a suggestion. Again.. great video and keep it up brother!

[Neil.Denize]

Great video mate, hope you are well. I have not looked closely at Terry Smith before cheers for sharing, I really like the idea of running calculations on the entire portfolio, Its not something I have done before.

[dhirajmeenavilli]

I agree with Terry Smith on a lot of things but I fundamentally dislike the characterization of companies as good or bad for purely illustrative purposes if we take 2 companies with similar risk profiles but one in a good industry and the other in a bad industry. Then uts easy to show that if the one in the good industry is accounted for properly and discounted appropriately by the market and the second consistently sells at a discount to the same discount rate obviously the bad company is going to do better for your portfolio. So my thought is investing is find low risk mis priced gambles, and because human nature tends to extrapolate you're more likely to find a bargain in a decling not growing company and in a cyclical not stable company. Obviously that comes with the caveat you're able to appropriately value those things but ultimately that's the investors job and I think money is left on the table if you buy good companies at reasonable prices as opposed to bad companies at depressed prices.

[whatabout_carry]

Thanks René. I ll now try to build a similar spreadsheet myself 👍🏼

[cv]

Hi Rene, I see that you mentioned you won't share your portfolio but would you mind sharing one of the companies and walking us through the valuation so we could follow along...this would make a great video :)

[miso]

Great content! Unfortunately, at this time I can't find any quality companies fairly valued

[cv]

what site do you use to determine ROCE for US stocks - better yet is there a site that gets all of this information or mainly ROCE/rev growth/ebit growth

[cv]

Are you only looking at the past years performance of the stock and not an average of the past 5 or 10 years?

[Spencer-vmkt]

Man as soon as I heard you say quality, immediately thought of terry smith ahahahah

[freizeit]

Revenue Growth -3.54 % in 2020 and 14, 88 % in 2021. As you can see the numbers are too different. For all average calculations, I would use 3 or 5 year averages.

[BWJM]

What I did last year was do dump 10k in one penny stock and dump 20k in good companies like Apple Intel and waste management. I checked my profile after 3 months and what I saw was my dividend stocks were at 23k while my penny stock gained to 17.6k

[jiteshsejwal]

When does one churn these kind of portfolios? Does one sell when the company doesn't meet quality parameters, or does one hold them for a fixed time period?

[danguee]

Haha! Renee - everyone wants to know your portfolio! They want someone to tell them what to invest in rather than do the work that's needed to skill themselves up to do something similar.
Great content, as always. I intend this year to work up a very detailed and thoughtful stock-picking method. I will use a number of tools - essentially spreadsheets I've written (DCF, ratio checking etc) - plus a number of screening and qualitative analysis methods you've very kindly shown us.
I hope you have a great 2022 - both with your portfolio and with life in general.

[lexanderMA]

I understand/respect why you are not showing the stocks in your portfolio, but I think it would increase dramatically the number of views or subscribers to your channel if you did... ;)

[jan]

Sorry, did I miss something? Didn't you say you wanted to show your performance? I was hoping you would show your equity curve comparing it to the S&P 500 (ideally total return index) over the last few years. And maybe share some metrics like Sharpe ratio...

[bistrowmic]

my advice to new investor buy good companies stock and hold them as long as they are good companies just do this and ignore and forecasts and market views which are best entertaining but completely useless

are you suprise about bitcon dump?
is your portfolio 80% down?
mrs dollis wi definitey help you sort that out with good crypto signal

[AllGrindNoGimmics]

Has your portfolio been crushing it so far?