The Doubler Porfolio
New, what is it, what are the rules
What to expect
Monthly performance overview
Explanation of all purchases and sales + prior notification
Monitoring of corporate news
Explanations for extreme price fluctuations, and explanation of whether these are relevant to us or not
Monthly top buy-worthy companies
Why a “Doubler” Portfolio
In 2019, my book "Verdubbel je geld in vijf jaar" was published in Dutch, this translates to Double your money in five years. An introduction to value investing and a reflection on the fifteen years prior, during which I achieved an annual compounded return of 13.86%. Doubling in five years sounds better, even though it's rounded down. A challenging, yet truthful title to get people interested in investing.
However, in the five years since then, that sadly couldn't be repeated. Not only did I largely exit the market at the end of 2019 awaiting the establishment of our fund, but I also missed the great opportunity brought by the Corona crisis; our fund started on June 4, 2020, when the markets had already recovered significantly.
Additionally, smaller listed companies didn't perform as strongly, with the market's enormous focus on the large tech companies, the so-called Magnificent 7, resulting in modest gains. In the fifteen years from 2004 to 2019, there were aslo a lot of challenges, such as the major financial crisis in 2008-2009. During that period, the doubling didn't happen in a straight line either but fluctuated greatly.
Today, however, I am convinced that the turning point, where even the small, solid listed companies will be properly valued again, is near. Hence, I introduce the Doubler Portfolio, a new part of our Valuing Dutchman service.
What the portfolio isn’t.
The Doubler Portfolio is not intended to be copied or followed to the letter. Each investor is unique, with different personal circumstances, and it is important to assess each stock purchase based on your situation.
This example portfolio is also not a blueprint for how a complete investment portfolio should look like according to me. It represents a risky portion of the portfolio that requires a long-term horizon. Additionally, there are numerous other strategies and opportunities to consider and combine, such as a savings plan in holdings and real estate companies (which I also do), ETFs, dividend investing, bonds, and so on. As an investor, it is up to you to tailor this to your situation.
The rules
The portfolio starts with €50,000 on 29/04/2024.
Each purchase and sale will be announced in advance. As a reference, I take the closing price of the day the purchase or sale was announced. If the alert was sent less than 3 hours before the closing time of the relevant exchange, I take the closing price of the following day.
The companies we select are listed on exchanges in developed markets. This means you have access through a quality broker. Personally, I use Interactive Brokers as a reference.
Transaction costs are calculated at 0.45% of the transaction value, with a minimum of €15. This takes into account the Belgian (where I live) tax on stock transactions. Hopefully, you'll pay less.
Dividends are accounted for only with withholding tax. This means I don't have to take into account different legislations in different countries, deductions in personal income tax, double tax treaties, etc.
Holdings will not be a fixed part of the portfolio. This doesn't mean we won't include a holding that is ridiculously cheap in the sample portfolio, but this is outside the savings plan in these holdings.
The Double Portfolio ends once we have risen above €100,000 at closing prices.
The portfolio is carefully constructed with a focus on adequate diversification, potential, and stability. The idea is simple, as it has been for years: we select stocks that not only have a solid foundation but also have the potential to grow in the coming years, or are simply ridiculously undervalued.
If you want to know more or refresh your memory about my investment philosophy, you can read it here: https://www.valuingdutchman.com/p/my-investment-philosophy
About capital allocation
Although I still adhere to the philosophy of categorizing companies by quality, as described in the book (based on chess pieces), capital allocation has been simplified.
Upon the initial purchase of each stock, a half position will be bought, which corresponds to 2% to 2.5% of the portfolio at that time. At a later time, the other half will be bought if the market price still allows for it (i.e., if the price has not risen too sharply).
The reason for this is that I have noticed I am not a good market timer and therefore do not attempt to do so. By spreading out the purchases, we reduce the discomfort of a purchase immediately turning negative, as we still have the ammunition to buy more.
If over time it turns out that the company is a real compounder, and if the price allows for it, a third purchase can be made for another 2%-2.5% of the portfolio's value at that time. Purchases can be made up to three times, to protect ourselves, as we can also be wrong about these companies.
In other words, in most cases, about 4% to 5% of the portfolio will be invested in a stock, meaning we will have a maximum of 25 positions in the portfolio.
The maximum purchase value of a position can be 9% (if three purchases are made and the price later drops). We want to give well-performing companies the chance to grow for as long as possible. Only when they threaten to exceed 30% of the total portfolio value will we reduce the position.