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Apple, Microsoft Dominated This Decade
publication date: Jan 2, 2020
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author/source: Brian Nelson, CFA
Apple, Microsoft Dominated This Decade
Note: Due to the New Year holiday, we will be releasing the January 2020 editions of the Dividend Growth Newsletter and High Yield Dividend Newsletter Thursday, January 2. The quarterly Financial Advisor Level publications will be released Wednesday, January 15.
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Top contributors to the S&P 500 return this decade
 Source: Marketwatch. Data by Andrea Riquier, through December 27, 2019*.
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This article was released to members December 31. The email can be accessed here.
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By Brian Nelson, CFA
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Hi everyone -- hope you are doing great this New Year's Eve!
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Many of you haven't had a chance to read about the performance of the Best Ideas Newsletter portfolio this year, or the performance of the Dividend Growth Newsletter portfolio, and I wanted to make sure you had a chance to do so. The evaluations can be accessed here and here, respectively. (We'll also address the performance of the High Yield Dividend Newsletter and the Exclusive ideas in their upcoming January 2020 newsletter editions.)
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In our piece, "5 Things We Learned in 2019," I mentioned how we learned how economic moats underperform, how factor investing jumped the shark, and why the growth versus value conversation is nonsense, but I also emphasized how unusual outperformance is in today's marketplace, where many investors are being charged 1%-2% each year to have exposure to the market in an index fund.
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Furthermore, only about 20% of global stocks outperformed the S&P 500 during the past couple years, meaning the probability of picking a winner in recent years has been very low in the recent past (note how few 9s and 10s on the VBI system we have had--this means our methodology is working). I expect the percentage of stocks outperforming the S&P 500 to catapult higher during the next decade, however, and I sincerely believe that the next few years will be a stock pickers' market like never before.
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Today, I read a piece from Marketwatch that I wanted to share with you titled, "These 2 Stocks dominated S&P 500 returns in 2019--and the decade." Those two stocks, of course, have been Apple (AAPL) and Microsoft (MSFT). For those that don't know Valuentum, we were founded in 2011 to take research and analysis to the next level within the blogosphere and on the web, using our investors-first principles to do so, showcasing the benefits of a DCF-based fair value approach in the context of the Valuentum methodology.
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Since we've been around for almost this whole decade, I wanted to make sure that you were aware that in the concentrated newsletter portfolios, where we hold just 15-20 securities most of the time, Apple was weighted greater than 10% in the first edition of the Best Ideas Newsletter portfolio (released July 2011), while Microsoft was weighted greater than 8% in the first edition of the Dividend Growth Newsletter portfolio (released January 2012). Both stocks have been included in the newsletter portfolios since that time, with Apple subsequently added to the Dividend Growth Newsletter portfolio.
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Again, we're not here to brag. I'm writing to you to let you know just how valuable our service has been this entire decade, and I want you to stick with us for the next decade. If you've had a falling out of the markets, or if you've opted for one of our competitors, come back, or at least use us as a second opinion. We've been one of the few publishers that have truly hit the ball out of the park in putting our best ideas in front of you, and we're willing to work harder than anyone for your business. We think we've shown that during this past decade.
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Please make sure your membership is up to date. If you are unable to log in with your credentials (check here), it means that your membership to our website has expired. You can lock in the subscription rates today by ensuring your membership has an active payment profile. Our subscription page can be found here >>.
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I can go on and on. Also included in that inaugural Dividend Growth Newsletter portfolio was Johnson & Johnson (JNJ) at a 7% weighting (January 2012). J&J has been the fifth-best contributor to the S&P 500 total return this decade (see image above). Then there's Facebook (FB), which was the third-best contributor to the S&P 500 during 2019 (see image at the end of this article). Remember -- we are showcasing relatively concentrated portfolios that are identifying huge winners, overweighting them in an environment where few stocks are outperforming.
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In short, the three best contributors to the S&P 500 return during 2019 have been included in the Best Ideas Newsletter portfolio for a long time, two of them, Apple and Facebook are top weighted (see image at the end of this article). Three of the biggest contributors to the S&P 500 return during this decade have been included in the Dividend Growth Newsletter portfolio for a long time (see image above). Sure -- these are household names, but it's important you understand that mispricings can occur anywhere, even with some of the most popular names. Investing is synonymous with identifying mispriced securities.
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When you think about the performance of our top-weighted ideas, all of the commentary we produce on the site and in the newsletters, how well the Dividend Cushion ratio has performed in predicting dividend cuts, our DCF-based fair value methodology and the Valuentum Buying Index rating system -- all in one membership...I don't think there's anything better. You know our best ideas, and you know what has dominated the market this decade. Let us continue to help you cut through the noise out there. Update your membership today here >>.
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With all of that said, here's to another fantastic year in 2020, and thank you all so much for making Valuentum what it is -- one of the most successful financial publishers launched this decade! Let's celebrate tonight, my friends.
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Congratulations and cheers!
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Brian Nelson, CFA
President, Investment Research
Valuentum Securities, Inc
brian@valuentum.com
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Top contributors to the S&P 500 return during 2019*
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