Back in August 2014, I decided to put a collection of stocks together that represent the products and services of companies used most often by my wife and family. I decided to call it “My Wife’s Mutual Fund”.

Original Post:
August 6, 2014: My Wife’s Personal Mutual Fund Outperforms the Pros

Follow-ups:
February 21, 2016: My Wife’s Personal Mutual Fund Crushes the Markets, AGAIN

August 7, 2016: My Wife’s Buy & Hold Strategy Still Crushing the Professionals

Based on past experience, I noticed that these companies were outperforming the market by a wide margin, especially on an individual basis.

What started as a playful review, became a serious pursuit of stocks that we decided to grab shares in. We don’t own every stock on the list below but we do own and have owned many over the years.

As of November 19, 2017, the 22 stocks have performed as follows (for purposes of the exercise, no trades have been made):

• Total gain of 66.87% (adjusted for dividends & splits)
• 19 of the 22 stocks show a gain
• 17 of the 22 stocks show a double digit gain
• 11 of the 22 stocks show a gain of at least 50%
• 6 of the 22 stocks show a gain greater than 100%
• The leading gainer, also the 2nd highest initial priced stock, is up 264%: Amazon $AMZN
• 3 stocks show a loss: $CVS, $XOM and $KORS
• An 86% success ratio

I’m not surprised to see, after years and years of gains (pre-2014), that these stocks continue to outperform the general market indexes. At this point in 2017, I believe that many of these stocks will continue to outperform in the years to come (and I’m making this statement deep into a multi-year up-trend).

I subscribe to a strategy of “keep it simple”. The run from March 2009 has certainly helped but these types of companies should continue to outperform going forward (a few may fall out of favor but the stronger ones will continue to dominate and innovative within their respective categories).

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The Stock Trends for 2017, comprised of 21 handpicked stocks (discretionary style), is beating the major market indices by a healthy margin. The Nasdaq Composite is the closest but still trails by four percentage points. In order to be even, the Nasdaq would have to improve its year-to-date results (12.24%) by 30%.

The Dow Jones and S&P 500 would have to more than double their year-to-date gains in order to match the portfolio gains.

Year-to-Date Results:

• Stock Trends for 2017: +16.16%
• Nasdaq Composite: +12.34%
• S&P 500 Large Cap Index: +6.49%
• Dow Jones Industrial Average: +5.96%

Note: Dividends not included in calculations.

Fun Facts:

• 15 of the 21 stocks show a gain
• 13 of the 21 stocks show a double digit gain
• 6 of the top 8 gainers are triple digit stocks (5 started that way)
• The average gain of the positive stocks is +24.77%
• The average loss of the negative stocks is -5.36%
• MBLY is the leading stock, with a 62.43% gain, after being bought by INTC (another stock on the list)

I will continue to follow the logic of the opening paragraph from the original post:

The trends that I am watching in 2017 are not much different than what I have been following and investing in over the past two years. As Newton’s first law stated, “An object in motion continues in motion…”. I could search for the “next hot thing” each year but why make investing more difficult than it already is when certain trends, technologies, products, services and companies continuously work.

The plan is to keep riding all winning positions higher, until the market trend changes.

My wife’s buying habits are beating the pants off the market, most mutual fund managers, hedge fund managers, retirement plans, pension funds and short term traders. And all at NO FEE (free here on this personal blog).

In what started as an experiment two years ago (after years of discussing the strategy), a buy-and-hold portfolio of 22 stocks was put together to see how it would perform against the market and professional traders alike. The idea of the portfolio was to buy and sit on the stocks (no active trading – ride the ups and downs of the market with high quality companies that sell goods and services that we use most often within our household).

I put the portfolio together on August 6, 2014, exactly two years ago, titled: My Wife’s Personal Mutual Fund Outperforms the Pros.

As of August 6, 2016, the 22 stocks have performed as follows:

• Total gain of 36.08% (not including dividends)
• Total gain above 40% with all dividends re-invested
• 20 of the 22 stocks are positive
• A 91% success ratio

Further:

• 18 of the 22 stocks have a double digit gain, averaging 44% (80% of portfolio)
• The leading gainer, the 2nd highest priced buy, is up 145%: Amazon $AMZN
• 2 stocks show a loss: $KORS at 36.27% and $XOM at 5.62%
• The portfolio is crushing the DOW, S&P 500 and Nasdaq
• NOTE: Dividends have not been calculated into these stats (2 years of dividends increase the gains).

Not bad for buy “quality” and hold.

I completely understand that the market has been in an up-trend for much of the past two years so all I can do is compare against the general market indexes, fund benchmarks and professional results. In all three cases, this buy-and-hold portfolio outperformed them all. And they outperformed each of them without incurring additional fees, additional time wasted for research or any time actively trading in-and-out.

I wrote an update on the 2014 blog post about six months ago (February 21, 2016), showing how the strategy was winning: My Wife’s Personal Mutual Fund Crushes the Markets, AGAIN

The portfolio of 22 stocks:
$AAPL – Apple
$SBUX – Starbucks
$GOOG – Alphabet
$AMZN – Amazon
$FB – Facebook
$COST – Costco
$TGT – Target
$COH – Coach
$KORS – Michael Kors
$CVS – CVS Health Corp
$NFLX – Netflix
$DIS – Walt Disney Co
$JNJ – Johnson & Johnson
$PG – Proctor & Gamble
$V – Visa
$MA – MasterCard
$PEP – Pepsico
$TJX – TJX Companies
$HD – Home Depot
$VZ – Verizon
$XOM – Exxon Mobile
$WFC – Wells Fargo

The older I get, the more I realize that buy and hold (over a period of time), for a retail investor, will outperform most strategies within the market. Retail investors should just buy and hold low cost index funds and not entertain an idea such as the above buy if you must trade in the market, consider buying and holding the stocks of companies that you do the most business with. Know what you invest in.

The next step will be to see how this portfolio of stocks performs during a down-turn or major correction. Of course the stocks will lose value but how will they perform compared to the major indexes and other active investing strategies and professional traders.

I think they’ll do fine.

P.S.: KORS should be replaced with $MSFT (considering we use Microsoft every day – this was an oversight and bias two years ago).

My wife’s so-called “personal mutual fund” returned 22.72% from August 5, 2014 through to last Friday, February 19, 2016 (approximately 18 months).

As a comparison, the following stock market indices performed as follows:

Dow Jones Industrial Average: -0.23%
S&P 500: -0.13%
NASDAQ Composite: 3.48%

Her buying habits CRUSHED the general markets, by a HUGE margin, just as they had from the day we were married back in 2004.

The personal mutual fund (as outlined in the blog post, My Wife’s Personal Mutual Fund Outperforms the Pros, back on August 6, 2014), highlighted 22 stocks of companies whose products or services she religiously buys or uses on a daily or weekly basis.

Of the 22 stocks, 20 show gains while only two show a loss ($KORS and $XOM). The top five leaders are as follows:

• Amazon ($AMZN) leads the pack with a 71% gain
• Home Depot ($HD – actually my store) is second with a 56% gain
• Starbucks ($SBUX) comes in third with a 53% gain
• Netflix ($NFLX) is up 47%, a service used by the entire family
• Facebook ($FB) is up 43%: yes I admit it, we are both addicted (very bullish going forward)

This is simple investing logic (for our family) as we use the products and services of these five companies every day (HD being the lone exception for daily use, but monetarily, it may lead the pack).

Amazingly, 14 of the 22 stocks show a double digit gain:
$AMZN $HD $SBUX $NFLX $FB $V $TJX $COST $TGT $CVS $GOOG $MA $PEP $DIS

The other six positive stocks show a gain between 0.1% and 9.94%:
$VZ $JNJ $PG $COH $AAPL $WFC

For the second time in less than two years, I am convinced that my skills, or lack thereof, are no match for the power of my wife’s product and service buying habits. Hands down, her habits are kicking the market’s a$$ and my a$$ for that matter.

Who needs a financial advisor or one of these “trendy” new robo advisors when I can just copy what she is buying and doing?

As I said back in 2014:

Peter Lynch subscribed to the idea of “know what you own”. I know what my wife owns and can take the lesson that many other wives (and people in general) are buying what she is buying. Consumers = profits and profits typically lead to earnings which leads to a rise in share prices. Sounds like a simple formula.

The formula is WORKING!

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