A Solid Base with Holding Companies
Holdings, Top Management at Low Cost
As an investor, I am classified as a value investor, although I find the term, like Charlie Munger, unnecessary. All investing is essentially value investing; if not, it is trading.
In short, I like to buy shares of companies that generate good profits, have moderate debt, and possess solid management. Also, I prefer not to pay too much for these companies, or let's be honest, ideally as little as possible.
These are the stocks that I want to present every month.
Additionally, I am a strong advocate for including listed real estate and holdings in the foundation of my portfolio. Of course, if you already have physical real estate as an investment, you include this in the overall ratio. Your own home doesn't count; it's not an investment.
When I look at the results of the holdings, I sometimes wonder if all the time and energy spent on researching and monitoring individual stocks is worth it. I will address this question next year at ValueX in Klosters.
For now, it has proven financially advantageous for me to spend my time on individual stocks. However, if my invested capital were smaller, or my expected remaining investment term shorter, that would be a different matter.
Holdings, Top Management at Low Cost
In the first place, holdings represent a diversified investment portfolio of one or more wealthy families. You receive top management at a very low cost. You won't become poorer by hitching your cart to that of the wealthiest on Earth.
For example, the management fee of Investor AB, the holding of the wealthy Swedish Wallenberg family, hovers around 0.10%. For such a fee, you'll hardly find passive ETFs.
In the past, holdings also declined during market crashes, but either they declined less severely or recovered more quickly. While this does not guarantee the same outcome in the future, I consider stable shareholders and a diversified portfolio as potential reasons, and that is just as true today as it was in the past.
Also, remember that the best investors are not necessarily those with the highest returns over 1 or even 5 years. The best investors are the ones who survive for 20 years and longer!
You could argue that when you are young, you can take higher risks to optimize your returns and fully embrace individual stocks. As you age, the preservation of capital becomes increasingly important. The difference in returns has less and less impact over shorter periods. In other words, the older you get, the more of your wealth can be placed in holdings and real estate. Your ever-decreasing time becomes much more critical than the growth of your capital.
However, for those who are just starting to invest and still need to build capital, beginning with holdings and real estate through the stock market and investing the majority of your portfolio in them is certainly something to consider. The difference in returns doesn't justify the time investment required to track individual stocks, especially with smaller capital. You're better off spending that time increasing your capital through work and entrepreneurship. While you can get rich on the stock market, unfortunately, it happens slowly, not quickly. If you want to get rich quickly, you have to venture into entrepreneurship.
Personally, I am a strong advocate for periodically adding to these holdings to weather the ups and downs. Sometimes you buy cheap, sometimes a bit more expensive. However, I don't buy when prices are too high, as was the case with Sofina in 2021.
After the recent market downturns, the holdings are now available at very attractive prices for the long term. With an average growth of 10.48% for the holdings based on their net asset value and increasing dividends, they are ideal for a long-term savings plan.
Real estate investment trusts took an even harder hit due to interest rate concerns, where the risk is indeed greater with rising interest rates. However, in my view, we are currently being well compensated for that. However I will not present REIT’s as I follow only Belgian real estate due to tax reasons. And due to those same tax implications, they are of little interest to investors outside of Belgium.
I will briefly present to you all the holdings I’m monitoring.