2026 Investing Observations

Approximately 45 days into 2026, the market saw a reversion of trades that worked in recent years. Here are some themes I've observed in the early weeks of 2026.

Sell America, Buy International

International stocks are performing better than US stocks so far. Total international funds like VXUS are up 9-10% year to date. The S&P 500 is slightly negative so far this year. International stocks have continued their trend of ouperformance established in 2025. Seeking to diversify internationally, I decided to buy EWY. It is an ETF that tracks the MSCI Korea 25/50 Index. It provides healthy exposure to Samsung, SK Hynix, Hyundai and other South Korean companies. This ETF of South Korean stocks is up 31% year to date! I wanted to diversify internationally and also liked to add significant memory chip exposure via Samsung and SK Hynix. This is also an "emerging markets" allocation because South Korea is considered an emerging market by most. I feel happy I chose to buy more international stocks in December and January. I also invested in VXUS, SCHC and SCHF ETFs, all of which are international. So far, it couldn't have been better timing.

On Jan. 1st, my international stock allocation was 17% of my portfolio. As of today, 28% of my stock portfolio is allocated to international. I've been buying on the way up and reaping the outperformance against US stocks. From last September to January, I sold approximately 33% of my Microsoft position and about 25% of my Nvidia shares. I did this last year to buy a house and more recently to lower my US equity/large caps exposure and secondarily lower my technology sector exposure. However, Nvidia and Microsoft are still my two largest current stock positions, in addition to the S&P 500 index and Tesla. The drawdown in Microsoft, currently -18%, has hurt. But it hasn't hurt as much since I took profits from the $455 to $507 range. In spite of the rough start too the year, I'm not worried about Microsoft. In my view, their business looks as flourishing as ever.

Additionally in my HSA, I divested part of my maxed out S&P 500 allocation. I then reinvested it into VTPSX mutual fund, which is the mutual fund equivalent of VXUS. Now my HSA is exposed to 57% S&P 500 index and 31% international FTSE Global All Cap Ex US Index which both VXUS and VTPSX funds track. My HSA forces me to hold a minimum cash balance, so 12% in cash.

In retrospect, my rebalancing was "selling America" and mega-caps before it became solidified as a trend. Lucky timing was caused by the principles of seeking more diversification abroad. I'm still ridiculously long mega-caps and US equities at 71% of my stock portfolio. As bullish on America as ever. Just more diversified now to the rest of the world and looking to expand my international stock exposure.

Emerging Markets Buzz

Your international stocks can either be "developed" markets or "emerging" markets. So far, I've enjoyed the boom in South Korean stocks. I also have exposure to developed markets like Japan and Canadian stocks via VXUS and SCHF funds. Additionally, emerging markets funds like IEMG are up 11% year to date. This is equivalent to investing in markets like China, Brazil or Korea. Emerging markets have started 2026 with lots of momentum. Anecdotally, I have seen more people talking online about them in bullish tone.

Choppy Action for Magnificent 7

Microsoft, Tesla and Amazon saw the steepest drawdowns through 1.5 months of 2026. Google and Nvidia have remained steady but seem to have plateaued in recent months. The Mag 7 make up the core of the S&P 500 and QQQ. It's not surprising that these indexes are lagging. Is it just some digestion until the next leg up, or could these hyperscalers be entering a period of extended chop?

Small Caps and Value Stocks Are Back

The Russell 2000 index has also outperformed year to date. Small Caps are working. I bought VBR and IJS ETFs, both of which are up 9% year to date. Both are "small-cap value" ETFs where you buy a subset of value stocks in the S&P 600. Similar to international stocks, small caps are catching a bid so far in 2026. My value stocks like Coca-Cola and FEMSA are steadily appreciating and both hit new 52 week highs. One fund that has also performed well for me is SCHC, Schwab's "small-cap international" fund. In a significant upset, small caps and value stocks have outperformed the S&P this year. Will this outperformance continue?

REITs Are Rockin'

REITs are outperforming the index. Real estate has seen great returns since January 1st. I'm holding O, Realty Income REIT. It's up even more than my international stocks (ex Korea) surprisingly, 16% year to date. Totally unexpected to see this asset perform so well. It seems a theme is rotation to stability so far in 2026. Investors are buying stable businesses with dependable cash flows.

Energy, Materials, Industrials and Consumer Staples

Energy and materials have been the strongest sectors to start the year. Industrials like CAT and DE are surging year to date. Costco and Wal-Mart have appreciated steadily. It seems the stock market has swung to favor businesses with inelastic demand like staples and energy. Industrials are a 2nd or 3rd order winner of the AI boom. Recently these sectors are popular places to stash some cash.

Technology and Software Slumping

Technology and software stocks have been the poorest performing sectors in 2026. Software specifically has been collectively in drawdown. Some stocks like Duolingo are down 60-70%. "SaaS" stocks, or software as a service stocks have been hammered. My holdings in Cloudflare and Crowdstrike have been relatively stable.

Crypto Carnage

Cryptocurrencies across the board are down huge. All my crypto holdings got smacked. Altcoins like Dogecoin are down 31% year to date. Ethereum is -40% year to date. Bitcoin is -21% year to date. Crypto exchanges like Coinbase and Robinhood are feeling the pain as well. I was overweight cryptocurrencies, but thanks to the recent 20-40% pullback in all my holdings, I am no longer overallocated. 5% of my net worth is in crypto, slightly more than the typical 3% recommended allocation. My allocation was significantly higher before the most recent crypto winter. Still want a crypto exposure going forward even though it hasn't been fun holding the past 3 months.

Reflection

Through the first 45 days of this year, the market seemed flat for the US indexes. However, under the surface there has been lots of movement in both directions. If you're holding software or data center stocks, you are feeling pain. I felt it via my Oracle shares, which are taking a beating recently. Not to mention Duolingo, which is now my worst mistake as an investor. However, it's not a loss if I don't sell. Down 60%, I'm willing to wait a while to see if they can turn it around. I was mega bullish on both these companies the past year and whiffed big time. I committed more capital than I should have to these two losers, but I am fine with waiting for them to bounce back. Thankfully I didn't go too far overboard with the position sizes, but my timing to buy was suboptimal. If things don't improve within the next 5 years, they might be ripe for tax loss harvesting. I don't believe the fundamentals are broken in either business.

Nonetheless, I won't let it stop me from swinging at the next pitch. If anything, these mistakes have sharpened my focus. They remind me that I will mess up sometimes. It's better to be very selective of where I take risks, especially with single stocks. Best to stick with my plan and only go for my highest conviction companies. Lately that's been international stocks, value stocks and small caps. Regardless, I feel like I am better diversified than ever, and it has helped to know I'm allocated to international, value and small-cap stocks while my blue chip large-cap stocks have been stagnant.

disclosure: all investments have risk, invest at your own risk. I'm not a financial advisor and this is not financial advice.

My Evolution as an Investor

As we wind down the final days of 2025, I've begun assessing my portfolio in a deeper nature. I've been taking stock of my portfolio's characteristics across dimensions like sector diversification, growth vs. value, large caps vs. small caps and US vs. international equity exposure. I made a classification of each my holdings across these dimensions with the help of Bing Copilot (ChatGPT under the hood). What I've found has surprised me in some ways and confirmed what I already suspected. I will now comment on my findings below, then conclude with the actions I plan to take now that I've considered my portfolio against typical benchmarks.

Sector Exposure

My stock portfolio is heavily overweight in the information technology sector at 33% estimated exposure. This makes sense because I have typically favored tech stocks in the past when I chose to pick stocks. However, compared to the S&P 500, which is concentrated at approximately 35% in the information technology sector, my allocation does not seem that extreme.

I'm also heavily underweight in sectors like health care, financials, industrials and real estate. Basically, I've discovered I need to divert new investment funds into these sectors and stop buying so many tech stocks. This will bring stability and diversified returns to my portfolio in the long run. This will influence what I buy in 2026. Thankfully, I wasn't so naive to buy exclusively single stocks and have begun allocating more into broadly diversified ETFs and mutual funds, which helps to move smooth out my overallocation to tech stocks.

Growth Vs. Value

A big surprise is that I found I am more overweight in growth stocks vs. value stocks than I anticipated. 69% of my stock holdings are in growth stocks. Only 6% of my stocks are classified as value stocks. Another 25% of my holdings are allocated to "blended" funds or stocks that are a hybrid between growth and value. The blended portion of my portfolio is estimated to be slightly tilted towards growth (~55%), but with meaningful value stock exposure (~45%).

I assumed I had a higher allocation to value stocks than I actually did. This finding has led me down a path towards researching value tilted funds to boost my value stock exposure. I consulted Bing Copilot, who recommended growth exposure of 45% and 25% value stocks. I am aiming to reduce growth stocks by 15-20% and boost value stocks 15-20% towards these baselines in 2026.

Large Caps Vs. Small Caps

My portfolio currently has a slight tilt to overweight large cap stocks at 90%. My small-cap stock exposure is currently underweight at 10% of my stocks. This is not far from the target allocation suggested by Bing Copilot, 85% large caps and 15% small caps. Therefore, I plan to trim my large cap stocks or funds and buy a small-cap fund to raise my exposure by 5%.

US vs. International

I am overweight US stocks at 83% of my stock holdings. Conversely, my international exposure is underweight at 17%. There are different schools of thought on how much international equities you should hold. Based on your goals and how aggressive you want to be, anywhere from 20% to 40% is the typical recommended international stock allocation. I've chosen 30% as my goal allocation. Therefore, I'll look to increase my international exposure by 13% and reduce US stock exposure by 13% in 2026.

Reallocation Plan

Bing Copilot recommended two ETFs that seem like a logical fit for me, VBR (Vanguard Small-Cap Value Index Fund ETF) and IJS (iShares S&P Small-Cap 600 Value ETF). Given that I am underweight small caps and value stocks, a small-cap value tilted fund seems to be a logical choice for new funds. I think I am "killing two birds with one stone" by allocating to small-cap value.

Additionally, I am researching international funds with low fees. Bing Copilot suggested ETFs and funds like SCHF, SCHC, FTIHX, VXUS and IXUS. SCHF and and SCHC are an example of how you can split out large-cap and small-cap international stocks into separate funds. Both are developed markets. The other 3 funds all contain both "developed" and "emerging market" stocks. Developed markets mean countries like Germany, Japan or Canada, whereas emerging markets are countries like China and Brazil. I want to have exposure to both these subsectors of international stocks. I was intrigued by VXUS, which is a Vanguard ETF that has a low cost 0.07% expense ratio. Seeing that I was substantially underweight international funds, I already have begun buying international funds to reach my current exposure of 17%. I recently bought two international Schwab funds, SCHF (0.03%) and SCHC (0.08%). I'm not sure if I will continue buying these funds or switch to an "all in one" fund like VXUS. I kind of like the idea of being able to tilt my developed vs. emerging market exposure by buying a specific fund for both types of international stock category.

In addition to investing new funds, I plan to trim some of my information technology single stocks, cut some of my growth funds and reallocate. It has been enlightening to see where I have gaps in my portfolio. Now I get to do the fun part, plugging in those gaps with value, small-cap and international oriented funds. I may also add to my existing small-cap and value stock holdings. I'm not done buying single stocks. However, I've realized I can bring more diversified balance to my portfolio by strategically allocating to themed equity holdings that fill in my missing allocations with lower risk. This assessment has me feeling bullish on myself heading into 2026. The data from my assessment has given me informed targets to move towards. My evolution as an investor has transformed into a deeper understanding of what it means to have a diversified portfolio. Happy new year. May we all prosper in 2026 and beyond.

How Stocks Are Like Fantasy Football

As both an investor and fantasy football participant for many years, I often remark how similar they are. This is a post I've been kicking around in my head for a while and finally decided to write.

Fantasy football begins each football season by players paying "dues" into a league pot. This is paid out to the top 3 places in my 10 team league. The action begins each year with a draft of players. There are many high profile players like Christian McCaffrey, Jonathan Taylor and Jamarr Chase that go in the early rounds due to their projected production over the course of the season. These players are similar to blue chip stocks like Nvidia, Apple and Microsoft. When drafting a player, it's easy to infer from last season's performance that they are going to have another banner year. Often marquee running backs can wear down as they get older, causing injuries that affect performance. If you drafted Christian McCaffrey in 2024, the #1 overall consensus pick, you dealt with injuries all year and had a tougher season than you expected. As is often said in stocks, past performance does not guarantee future returns. The biggest winners of the past may follow with slow decline in the later stages of a company's lifecycle.

In fantasy football, there is a free agent pool of players that are not currently "owned" by any teams. They can be added to your team by swapping out another player on your roster. Similarly, there are a lot of stocks out there that can be added to your portfolio, but only a small number will give coveted market beating returns. The best gains are made from finding overlooked players that have more value than the consensus opinion, yielding more points than they're projected. This is true of stocks as well. Finding undervalued companies is the best way to make exceptional returns.

Constructing a roster of players is similar to building an investment portfolio. You don't want to be too dependent on the production of 1 or 2 players. Diversification across your wide receivers, running backs and tight ends is important. You also need depth because your players can get injured. That's when it's important to have a servicable backup at each position. Otherwise, you'll be left picking from the scraps in the free agent pool. But sometimes we can find a diamond in the rough. A player who gives outsized production against their projections. This season, one of those players for me was tight end Jake Ferguson. I had drafted George Kittle, a highly touted playmaker. He injured his hamstring in Week 1. I picked up Jake Ferguson from the free agent pool and it has been the pickup of the season so far. These types of moves are similar to finding a small cap stock with great fundamentals and outlook. This is how you can achieve outsized returns and beat the market.

When selecting a player in fantasy football, it's important to consider the upcoming matchups on the team's schedule. Additionally the weather can play a factor, especially for quarterbacks, wide receivers and kickers. These factors are like the macroeconomic environment and competitive pressures to consider when selecting a stock. We need to research and think hard about how these forces might impact the company we own. We might pick a great company, but external forces limit their ability to execute. When a player is not executing, we need to constantly evaluate why that is not happening. Should we give them more weeks to see if their production increases? Or should we switch to a player that is already producing? This is true for stocks also. If a stock is not producing returns, how long should you wait? This is one of the hardest decisions to make in investing. There's nothing more frustrating than cutting a player for your squad, only for them to surge in points after you part ways. Sometimes stocks are like this also. They'll do nothing for years, only to moon after you cut it. Often we should "water our flowers and cut the weeds", to paraphrase famed investor Peter Lynch. This means the stocks we should buy are usually the ones that have already performed well, rather than going fishing for a comeback or turnaround story. The best opportunities are usually already good performers, but not always! We should be vigilant in our search for value stocks, priced under their actual value.

In both stocks and fantasy football, it's important to build up a watchlist of stocks to keep an eye on. Players can become more valuable or suffer production from other players getting injured. Your watchlist is where you hope to see opportunities when other teams cut a player who has not done much recently, or a young player can gain traction and become a part of your team. When a stock on your watchlist suffers a large drawdown, you might consider getting in at a discount.

In fantasy football, there are "experts" who put out rankings of players, sit or start lists and top waiver wire pickups each week. In stocks, the equivalent are financial analysts and firms who assign ratings and price targets to the stocks they cover.

Additionally, the geopolitical developments and government policies sometimes impact a company's performance. Stocks do not exist in a vacuum. Similarly, referees may intervene or assist a player's success. Players must abide by the rules and hope not to become a victim of human error. However, bad calls and bad luck are inevitable in the game of football and investing.

I hope you enjoyed this brain dump of the parallels between fantasy football and investing. Both require research and strategy. Both require monitoring the data, earnings reports, stats and production output. Both can make you money. One is a hobby with a possible payout of a few hundred dollars for me and the other can open a new world of financial freedom. That's the biggest difference between them!

2025 Reflections

It has been a crazy year to be an investor. The emotional stock market roller coaster has brought good times and bad. The good times were set to roll in January, only to "roll over" in March and April. We saw the bottom of a 20%+ index drawdown. My net worth was sliding lower and lower until "liberation day" marked a local bottom. From that point on, the bounce was on in May, June and July. It felt great riding that wave back up.

In the fall, the market continued to melt up. Many called for a pullback in October, citing its seasonally historic weakness for the stock market. The market held steady until November arrived, and then the selloff commenced. This despite the fact that November has historically strong stock market returns.

Now we sit at the end of November, with many gains having evaporated over the past 3 months in higher beta growth stocks. Where do we go from here? I wish I knew, but is it too much to ask for the traditional "santa rally"?

In spite of the recent pullback, I'm feeling fine. I have a diversified, more focused portfolio than ever before. I also banked a large amount of profits in August, September and October. In hindsight, it was a good time short term to take some profits. In my case, I recently completed the purchase of my first home. This was the reason I sold a lot of stocks when the market was still riding high in August and September. Many of my stocks have since decreased from prices I sold at. It is necessary to cash profits from time to time so that when a market drawdown inevitably hits, it eases the pain knowing you took some capital off the table.

I feel great after completing this maneuver. I am a long term investor who has made profits in the stock market. I struggle with recognizing when to take profits occasionally. In this case, my decision to buy a house forced me to free up capital at a local top. I still believe in my investments long term, but I have a feeling that I cashed in some profits at a relatively good time to sell. Occasionally, we need to take profits. But we shouldn't lose sight of possible "never sell" opportunities like Nvidia or Tesla. These businesses will likely continue compounding long after you take profits. However, I did cash some Nvidia, Microsoft and Tesla shares for example. In most of these cases, I didn't sell out of 100% of my shares, so I maintain some long exposure. Nvidia is currently my top single stock position, followed by Microsoft, then Tesla. I sold at least 10-25% from most of my long positions to fund the house. I even convinced myself to sell a chunk of Bitcoin at $108K, which was hard to do at the time. Even after divesting some Bitcoin, I have high exposure to cryptocurrencies at nearly 8% of my net worth. Now only 59% of my net worth is correlated with stocks, and 8% in crypto, down from approximately ~88% stocks and ~12% crypto before I bought the house.

It wasn't all profit taking to fund the house. I succeeded by taking a little bit from every asset I have. I sold some losers like Pinterest, Chainlink and Shiba Inu cryptocurrencies. They're all down 30%+ in the past few months, so I'm happy I sold out a small loss or breakeven. I cashed out of Ferrari shares just above breakeven, which was a good move after they plunged under $400 recently. Sold more than half of my Ford and Coca Cola dividend stocks for gains. Reduced exposure to long term winners like Spotify, Alibaba, Roblox, Costco, Cloudflare and Crowdstrike, by taking profits. Traded around some Meta, MercadoLibre, Nintendo and Reddit shares to book short term profits. Sold out completely from Amazon, since I have plenty of Magnificent 7 exposure already with the S&P 500, Microsoft and Nvidia. Closed out my Paramount shares completely for more marginal profits. Tax loss harvested losers like Crocs and Figma to reduce my payments to the government next year, but am still long. In another harvest of tax gains, I sold half of my small Chipotle position at a loss. Sold Disney shares for a little profit and reduced the position by 66%. Reduced my SOXX ETF semiconductors position by 90% after it performed very well from the bottom in April. Sold 45% of my S&P 500 fund for marginal gain. All of these decisions freed up capital to purchase a home and stock it with necessities. To fund the house, I drew liquidity came from both my winner and loser investments. The source of funds were not an overly big contribution from any one holding. I was able to draw it in a distributed manner from my portfolio over a span of 3 months to accomplish my goal.

2025 was a marquee year for me. I now have a wife and purchased my first house. My wife and I have a permanent place to live. I now have an estimated 32% of my net worth in my home's equity. I still have a significant exposure to individual stocks at 40% of my net worth. Including my retirement mutual funds and ETFs, approximately 59% of my net worth is currently exposed to the stock market. I feel happy because the house will save us huge amounts versus rent payments, and instead we can spend that money to improve where we live. Not to mention I am more diversified in real estate. I've already felt the benefit of this diversification because of the recent market dip that arrived in November. Thankfully my house's value doesn't move in correlation with the recent stock market pullback.

All in all, I'm feeling grateful. Cashing out of the stock market at a relatively high tide gave me the liquidity to improve the way I live while maintaining my exposure to the stock market. That's something we can all strive towards. That's why we take the risk of investing.

Is User Interface an Effective Moat?

I have been thinking lately about whether or not exceptional user interface provides an effective block against being disrupted by competitors.

I've been buying Duolingo stock now that it's been cut in half in value within a span of 3 months. The narrative that has seemingly driven down the price was sparked by Google's release of language learning courses generated with AI. Duolingo has also recently expanded its course lineup rapidly thanks to the use of AI.

The question is, does this narrative have merit, or is it short term stock price noise? Google itself was seemingly threatened by the same narrative earlier this year. Since it suffered its own drop, it has rebounded in remarkable fashion.

My hypothesis is, yes, exceptional design and quality user experience does provide some effect of a moat. Why? I started to think about using AI chatbots and what I personally like to use and why.

A few years ago, after Chat-GPT was released I adopted Bing Copilot as my primary AI chat service. At the time, Google's Bard seemed to have a drop in quality. Later on, they released Gemini, which has become their flagship model with over 2 billion users of Gemini-powered AI overviews in its search product.

Before Gemini, I preferred Microsoft's AI copilot because it seemed to be the highest quality responses outside of using Chat-GPT directly with OpenAI. However, my usage habits slowly changed over time. Gemini was easily delivered in a convenient desktop app with a more fluid user interface. I wasn't able to find an app of similar performance for Bing Copilot. Instead, I used the bing.com website for queries.

Google's user interface seemed to be the better of the two options, and I now rarely find myself hitting up Bing. Google's answers were delivered quickly and effectively. Because of the ease of use in design, I think they won more of my search queries, even though I knew Bing has Chat-GPT under the hood.

Back to Duolingo. Google's new AI generated courses are visible from within the Google Translate app. I checked out a course to assess if I think they have the potential to disrupt Duolingo. Pair this with new live audio translation services and maybe you don't even need to learn a language anymore. But here's the thing: some of us actually do enjoy devoting a few minutes a day to reviewing a language lesson on Duolingo's app. Finally, after Duolingo's "dead duo" social media campaign, the exit of multiple leaders from the social media team makes this a trifecta of FUD against the green bird. People love to kick this stock while its down also. Sometimes, these are the exact opportunities where you can make market beating returns in a stock.

I do not think this is a serious disruption threat. I believe the market is overreacting in the short term. Based on my beliefs, I've doubled my Duolingo share count.

I believe Duolingo has the edge that Spotify has against Apple Music and YouTube. The edge that Gemini had against Bing in my personal opinion. Better user experience. Duolingo's app is more fun, more artistic and has a more established network. I believe it will be difficult for Google to disrupt Duolingo.

So far in 2025, both Duolingo's Q1 and Q2 earnings were smashed out of the park. The stock went up double digits after both reports. Maybe I should have took more profits, but that's how it often goes with stocks. I think this one will do well in the long run.

I don't know what the price of Duolingo will do in future, but I believe the surprise appearance of multiple possible negative catalysts point to a short term paranoia gripping investors and causing them to doubt the future of this company. I might be wrong. It's happened many times when I decide to pick stocks. Google is definitely capable of disrupting other companies with AI. On the flip side, they might not ever get traction with their own educational software. I believe Duolingo will succeed. I see an exceptional user experience, 696 million daily active users, and healthy paid subscribers growth. How many users will Google's language learning courses have in 6 months? In 1 year? In 5 years?

Duolingo management raised its full year guidance, but noted that Q3 will be "reflective of long term investments" on the Q2 earnings call. That suggests things could get worse before they get better.I have conviction to sit on my shares for a long time and see how things play out. As always, do your own due diligence. This is not financial advice.

Stock Positions I Recently Closed

I've begun a major consolidation of my investing portfolio. Since I am raising money from my portfolio to buy a house, I have been selling larger amounts than I typically would. At the time of writing, I have built my cash position to 56% of my goal needed to pay and close the deal to become an owner of my first house.

I've opted to draw funds from a mix of top performers and underperformers. I've so far taken only a small portion of the best performers. In some of my underperformers, I've chosen to sell out completely of some of them that are smaller holdings. Since these are very small positions, so these do not represent much capital in the context of my whole portfolio.

Here is the list of underperformers that I no longer own:

RIVN

I had poor timing to enter Rivian near $23. I bought more at $14. It basically has slowly declined since 2022. The business is executing their plan, but it's tough to get excited about a business that is losing thousands of dollars per car they sell. I closed out at a $350 loss. Small position that I couldn't justify holding any longer after holding for 2 years. I hope they succeed, but it seems like this could take a long time before profits arrive. It's possible they might never turn that corner. Maybe they will.

PINS

Pinterest has a lot of good qualities. Social media pairs well with ad revenue. Growing monthly active users. Popular with the highly desired Gen Z youths segment. Building AI ad tools for businesses to market on their platform. I always thought I'd see this stock pop but it didn't materialize. I would get back to breakeven, only to be down 30-40% on the position 6 months later. This happened multiple times. I closed out for ~$300 loss. Now it will probably see that upward price movement that I waited 4 years to never see. One problem was my initial entry was in 2021, an ill-fated year for stock picking. I bought the dip, but not enough to ever get into serious profits on a position that never rose above $2,000.

FSLR

I feel like I personally saw the importance of solar energy in our future. Unfortunately the current government policies are threatening renewable energy in the United States. This year has been particularly ridiculous. Solar stocks continually have their government subsidies threatened to be taken away, then given back every week. Such are the times. I decided that I didn't want to hold solar stocks in this turbulent environment. Could First Solar go higher here? Absolutely. Could it go lower? Definitely possible as well. I've determined this company to be the "best bet" in solar in my book. Regardless, I closed because it feels very volatile holding solar stocks right now. I sold out more or less at my cost basis, booking a slight profit.

PSKY

I'm finally completely out of Paramount stock. I made a decent return playing the Skydance merger, which took about 6 months longer to close than I expected thanks to extra vetting from the government. After the deal went through, I sold my remaining shares from $14.61 to $16.81. In retrospect, the merger ended up being a not so great deal for class B share investors and I probably would have been better off buying more S&P 500 index. I did enjoy the experience of pariticipating in a buyout as a shareholder and learning how to tender my shares. I sold nearly the maximum of 60% of my shares in the buyout. The fundamentals seem better than ever with Paramount+ growing subscribers, popular TV shows like "Yellowstone" and "Landman", and sizeable stack of movie intellectual property. Then, throw in the recent mega UFC broadcasting rights deal and I feel the stock is more compelling than it has been in the past 10 years. I made some money. Now I'm out of it. If the new executive team executes well, it wouldn't surprise me to see the stock above $20. On the flip side, if the "legacy media" downward trend continues, this stock could find itself under $10.

Additionally, I closed out two positions that performed well but were small positions. I sold in an effort to reduce the total number of stocks I'm invested in.

VST

Vistra Energy is a very promising company in the very hot energy trend. They operate in the natural gas and nuclear energy spaces. I rode the stock from $140, added a few shares at $110, back up to over $200. I sold because I only held 10 shares and feel there is a strong chance of retracement to the $150 level or below. Or maybe it will keep on mooning. It was one of the best performers in the S&P 500 in 2024. I closed out for a $600 profit, successfully trading the shares for a profit in less than a year and riding the greater energy demand trend. If shares dipped back under $150, I'd consider getting back in long.

AAPL

Apple is a philosophically conflicting company for me. While I recognize they will likely continue to execute their game, sell lots of phones and reap profits, I do not approve of how they go about their business. Apple is no longer a technological innovator. They are collecting rent on their past success via unfair app store practices and other nefarious activites, like creating a rift between iPhone users and Android for years by refusing to support RCS messaging. Therefore, I cashed the final 5 shares in my portfolio and will play the upside in my S&P 500 fund. It wasn't much of a position, but in the name of consolidation and looking for better opportunities, I took profits. I'm no longer holding Apple shares.

Portfolio Reflection

My portfolio holdings now consist of 38 individual stocks, 12 cryptocurrencies, 3 mutual funds, 2 ETFs and a 401(k) target date fund. At the end of 2023, I was holding 52 stocks. In that time, my portfolio has churned considerably. I've sold other stocks and added new stocks. The core has been stable, with some new 1-3% positions added.

I've decided that I want to hold less stocks. Maybe the stocks I sell will go on to become great stocks, but I can't stick with them when I believe there are better opportunities elsewhere, or others where I have higher conviction.

My goal is to get down to around 15-20 individual stocks in my portfolio, in addition to my other funds and ETFs. I will be happy if I can achieve that, because keeping up with the earnings reports of 40-50 stocks is like a full-time job during some 2-3 week spans every quarter. After following 50 companies for a few years, I feel it was beneficial to see the difference between how top tier companies and lower quality businesses handled recession fears, tariffs and operational problems. I think the reps I took following so many companies will help me better assess the companies I own in the future. With that said, I look forward to consolidating further into my highest conviction stock picks.

Selling Investments to Buy a House

Up to this point in my life, 97% of my net worth has been invested in stocks and crypto. I've begun planning for my first home purchase. It is a strategic move to hopefully save money vs. renting and bring more stability for my wife and I. In this post, I'll share some key calculations I made to assess if I could do this.

After looking at houses in our local market with my wife, I've determined I can buy the house in cash. It is about 33% of my net worth including all furnishings. The house is abroad, in my wife's native country. So it benefits from lower housing prices and cost of living, which makes it easier for me to buy.

I want to pay in cash because interest rates on a loan are relatively high. I don't want to make a monthly payment on a mortgage. I don't want to pay thousands of extra dollars in interest on borrowed loan money. Therefore, I've decided to convert part of my stock portfolio into a house. I might be able to secure a loan and achieve an investment return higher than the loan interest. However, cash helps facilitate a deal and moves us into the house faster also.

Sadly, this means I will need to part ways with some of my most favorite companies, or at least downsize how many shares I'm holding significantly. I plan to trim my most bullish long holds like Nvidia, Microsoft, Tesla, Spotify and Cloudflare. I'm going to liquidate parts of my Bitcoin, Ethereum, Solana, Dogecoin and Cardano longs. These assets will continue to be in my portfolio, but reduced approximately 10-50%. However, I believe this is ultimately a good exercise for me not to fall in love with my stocks, book some profits and diversify elsewhere. I realize that the best returns tend to come from holding assets over time, but sometimes life is not about seeking the optimal return. A home brings obvious benefits like a place to live or a source of rental income. With that said, there is substantial risk that I will regret selling the stocks if the stock market continues to rise. Historical data says it likely will. The opportunity cost of taking money from stocks to invest in real estate may be huge. If that is the case, at least I'll still have 66% of my stocks in the game.

Liquid vs. Non-Liquid Assets

First, I did some calculations of my "liquid" vs. "non-liquid" assets to assess if I could actually buy a house without emptying all of my current liquid investments. After tallying up my retirement funds and IRAs, I found that 24% of my net worth is not available without invoking a substantial penalty. Therefore, I consider these funds to be not accessible at all. I plan to roll over the 401(K) into my custody later this year. Additionally, my managed Roth IRA will likely be rolled over within the next few years.

Next, I tallied up my liquid assets, which consisted of two sources: my investment brokerage and cryptocurrency holdings. In total, they represent 76% of my net worth.

Confidence Ranking My Portfolio

Second, I made a confidence ranking of all the liquid assets I'm holding in my brokerage account and cryptocurrencies. This simply means a list of each asset in a single column. Then in a 2nd column, assigning a number starting with 1,2,3 for my highest conviction 3 holdings for example, continuing to assign a number until all assets are ranked. In a third new column, list each corresponding asset's current market value.

In a fourth column, I applied a Google Sheets nested IF formula to assign a sell weight based on my conviction rank in each asset:

=IF(B2<15, 0.25*C2, IF(B2<30, 0.5*C2, 0.75*C2))

This formula applies a weighted ratio based on the confidence rank (cell B2). It applies a heavier weight to the assets I have lower confidence in. In this example, C2 represents the market value of the asset in my portfolio as of today. The formula is applied to all my assets by "dragging down" the formula into a column with a reference to each of my assets' market value and confidence rank.

I shifted the weights and confidence intervals around in different columns, then summed up the resulting market values. So each column becomes a new projection of what I can sell from each asset and the total amount raised. I've estimated nearly all my costs, so I know approximately how much we'll need get the house set up.

Major Portfolio Changes Coming

This will be a tough exercise to complete. Up until this point, I've been very slow to make changes in my portfolio. Typically, I would only sell the minimum amount needed to cover a necessary large expense or taxes. Therefore, I will need to chop some positions down substantially. Many or all of the positions I've shared in the past will likely be significantly reduced in order to raise the funds to buy the house. This is a sacrifice I have decided I want to make in order to improve my quality of life, reduce annual rent and eliminate moving expenses.

In some cases, I might sell 100% of an asset, but I prefer to distribute the impact across my entire portfolio. I want to keep exposure in as many of my holdings as possible. However, the benefit of the confidence ranking is that it shows your conviction in hierarchical format. The lower conviction holdings are more likely to be sold off. The Google Sheets formula I used applies this desire progressively across my entire portfolio, based on my conviction.

I might regret making a big move like this someday. Or maybe I'll be satisfied with how it all works out in the end. After thinking it through and crunching the numbers, I think I'm ready to buy a house.

Portfolio Moves

BUY

These are stocks I bought this year, 2025. Most were bought in dollar cost average fashion as prices fluctuated throughout the year.

MSFT

It is often cited as a "tech ETF" in itself due to diversifed revenue streams, key OpenAI partnership, and incredible executive team. Github, Github Copilot, Azure cloud computing growth, AI infrastructure play. Not to mention its gaming operations. I have committed more capital here than anywhere else over the past 5 years. I have other dividend stocks like Costco, Coca-Cola and Ford. This stock is worth mentioning as a "buy" in my book because of the dividend stream. Unfortunately, I didn't buy any more whole Microsoft shares YTD, which was a missed opportunity. However, I have bought in the past. I always reinvested my dividends so I am always buying fractional shares. I buy Microsoft 4 times a year, every year thanks to reinvesting my quarterly dividend. Halfway through 2025, I've reinvested $125 of dividends back into Microsoft stock.

NVDA

A top 3 high conviction hold if not #1. Picks and shovels for the AI revolution. Hyperscalers pay Nvidia for AI. Data center revenue is on fire, up 73% year over year according to their Q1 earnings report. I beefed up my long position, picking up shares from $95 to $147. I paid $12/share for 50 shares in 2021 (5 shares pre-split). That's what I'm still holding from my first buy after stock splits. Good enough for a 13x return. Staying long.

ORCL

One of my highest conviction holds outside of Microsoft and Nvidia. I got in last November and added more shares in January. They're the hyperscaler no one remembers until they need AI cloud computing capabilities delivered in a sensible and straightforward way. Enter Oracle. Add in that they're buying nuclear reactors, data centers and signing billion dollar deals, with a burgeoning backlog order book and you have a wealth of possible catalysts coming in the future. From their Q1 earnings call: "we will build and operate more cloud infrastructure data centers than all of our competitors combined".

NTDOY

After buying at various times since 2021, I added more Nintendo ADRs in anticipation of the runup to their Switch 2 release after seeing the signs of successful console launch. My intuition was rewarded, as the ADR price is up 49% year to date. I boosted my ADR share count by ~33% in March, April and June after the launch. I have high confidence in Nintendo to ride the Switch 2 console and continue rolling out new games like Donkey Kong Bananza to galvanize the fan base. It will continue to leverage its intellectual property. The new Florida "Super Nintendo World" theme park opened for business in May at Universal Studios. Plus Super Mario Bros and Zelda movie releases are coming. Nintendo seems to have many positive catalysts ahead. Nintendo is creating new generations of fans beyond its past consoles like the Super Nintendo, N64, Gameboy, Nintendo DS, Wii and the original Switch. This is an impressive company, the more you learn about it. I'm enjoying having this international stock in my portfolio. Includes added bonuses like a stake in The Pokemon Company and the Seattle Mariners baseball team, plus a semi-annual dividend. I have been loving the "Nintendo Today!" app to keep up with happenings. It makes you realize the depth and breadth of their IP. It also showcases how good they are at building hype with events like Switch 2 previews and "Nintendo Direct". For example, the Donkey Kong Bananza Nintendo Direct seemed to make a big splash to draw attention to the game before it released. These type of successful, high profile game releases will drive more console sales. Drag x Drive, Metroid Prime 4, Kirby and the Forgotten Land, Pokemon Legends Z-A and Hyrule Warriors: Age of Imprisonment appear to be the big draws coming up.

RAYJ

In addition to Nintendo, other Japanese equities are very intriguing to me. The RAYJ ETF raises my international exposure via Japanese growth stocks like Mitsubishi, Kawasaki, Hitachi, Sanrio, Asics, Toyota, Ryohein Keikaku, Disco Corp and many others. I like this as a diversification play away from the US hyperscalers and S&P.

RDDT

Reddit is a guilty pleasure for me. I spend way too much time there. They seem to have a mine of fodder for AI to train on in their forums. They reported that in Q1 of this year, their data licensing business grew 66% year over year. They also recorded their first quarterly profit since their IPO. Additionally, their ads business is an opportunity for growth. Often I find if I use an app or product nearly every day, it is a signal that it might be a good investment. But then again, I could have drawn the same conclusion about Stack Overflow 10 years ago and it would have turned out to be incorrect. In January, I bought some shares at $185. In April, I bought more at $87. I continued adding on the bounce since April. As it stands, I'm holding the position at breakeven.

DUOL

Speaking of apps I use everyday. Duolingo seems to be growing their MAUs and Duolingo Max paid subscriptions at a good clip. Their app makes learning an addicting habit. The stock is highly valued, but I'm willing to make the bet based on the past few earnings calls. I'm on a 131 day Spanish streak. Using the product, I'm enjoying it. Their artistic execution makes learning more fun. Per their Q1 earnings report, Duolingo added a record number of DAUs, surpassing 10 million paid subscribers. They are rapidly expanding their course offering with the help of AI. I bought the dip in March, but regret that I didn't trim profits when stock sharply rose above $500 after its most recent earnings report. It's now hovering around $360. Maybe it's smart to keep the shares. I feel this could be a good stock long term, given what I have witnessed so far.

FUBO

I bought more Fubo TV since the merger deal with Disney was announced. It hasn't been great adding more since the initial pop off the deal news in early January. I believe that this will go higher once the deal with Disney closes. Fubo was making moves before they struck an agreement with Disney, so I added more to a winner. Hoping it pays off in the future, but so far 2025 has not been great outside of the first week of the year. I like the stock as a play on streaming and live sports.

SOUN

Soundhound AI's voice technology is feeding American businesses' hunger to deploy agentic AI. Companies like Oracle, Alibaba, Meta, Amazon, Google and Microsoft are spending aggressively to win on the infrastructure side of AI. Soundhound is a way to play the application layer. Customers of their voice tech include Five Guys, White Castle and Casey's General Stores.

EL

I'm sized small into a rebound stock. Now that I'm married I have realized the opportunity in the women cosmetics and beauty industry. Estee Lauder is a familiar name that is bouncing as of late. I rolled the dice with a $500 starter position. I'm up 20%, $108.69. Going well so far!

HOOD

Similar to EL, I'm following a hot hand in the market. Robinhood is one of the fastest moving "momentum stocks". It's gone up a lot, but I decided to play a small position here also. So far, I'm up 14%, $79. Like Estee Lauder, if it ever has a pullback, I'd consider adding more. Or maybe I'll add on the way up. That's the way to do it for some of the best stocks.

SWPPX

Buying the best 500 US companies via an index fund. I added more S&P 500 index in April near the bottom near peak panic in April.

REDUCE

I sold part of my positions in stocks like RBLX, COIN and NET because they went up after being down for years. In others like SPOT, RACE and MELI I'm trying to jump on a train that has been humming along. In some cases, I was doing more pruning than big sells. Often, I sold off my higher cost lots in pieces at different times as the shares continued rising this year. The share counts represent what was sold only since January 2025 to now. I had to decide which stocks to sell in order to pay an abnormally high tax bill this year.

RBLX

Happy to see this stock finally lift in price after years in the dumps. I wish I bought and held more, but feel good with the shares I've kept. I intend to hold on as Roblox seems to have improving fundamentals every day. In this Q1 of this year, they had 8 million daily active users, with the average user spending 2.4 hours per day on Roblox.

Sold: 33 Shares

Remaining: 27 Shares

NET

The edge computing layer of the internet. Cybersecurity. I was overweight Cloudflare for a long time and am finally taking profits and trimmed my shares I bought from $125 to $200 before the drop. It was one hell of a ride from buying in near $200 in 2021 to the bottom in 2022 where I bought as low as $39. In the end, I have a multi-bagger. The price has gone 5x those $39 shares to $199! Only Tesla, Nvidia, Spotify and Coinbase have achieved better returns for me. Cloudflare is going to win at AI by being an internet advocate and mediary between the hyperscalers and the web.

Sold: 66 Shares

Remaining: 40 Shares

CRWD

Crowdstrike is another cybersecurity champion in today's stock market. They handled last July's blunder with grace. It seems all is well for the leader in endpoint security. Long term, the stock looks great. Its valuation demands perfection, but thus far they've delivered the goods. One of the strongest Cybersecurity companies in the stock market.

Sold: 7 Shares

Remaining: 13 Shares

COIN

Cryptocurrency is here. Bitcoin can't be ignored. This company will be at the forefront of bringing crypto to the people. The stock rebounded from its all-time low of $31, thanks to the US government's anti-crypto policies that have since reversed in support for cryptocurrencies. I scooped shares along the way, but this one was a super volatile ride that made it extremely frustrating at times. Like many of the stocks here, I could have made more. I decided to take small profits from unrealized gains and sell some higher cost trading share lots at their cost basis on the way up. Nonetheless, long conviction rewarded my portfolio with another multi-bagger.

Sold: 9 Shares

Remaining: 11 Shares

SOXX

Trimmed my semiconductors ETF investment after it rebounded huge since April, like many stocks. This was a small amount of the position, approximately 4% of my stake. Still very bullish on semiconductors and their role in the AI trend. This ETF has all the big names like Nvidia, AMD, Taiwan Semiconductor, Intel, Kla Corp, ASML and more.

Sold: 2 Shares

Remaining: 45 Shares

CROX

I like the Crocs product and business concept. Footwear has a huge total addressable market. I see their product everywhere I go. I think this is a possible "value stock". Buying here is a reasonable valuation for a successful footwear phenomenon. It is a business with strong management. I like the stock. We'll see where it goes. I lightened the position because it has not moved much lately, and think there are better opportunities. I still believe there is some bite left in this stock.

Sold: 9 Shares

Remaining: 45 Shares

COST

Costco stock has been good to me since I bought my first share in 2023. I took some profits from $949-$1034 per share. The business is so impressive to me. I'm a fan and a shareholder. Sometimes I get to visit by knowing someone who is a member, what a treat. The $1.50 hotdog is a shining beacon of corporate strategy at its finest. The Costco team is crushing it and people love the store. I'm going to be a shareholder, maybe forever.

Sold: 6 Shares

Remaining: 9 Shares

BABA

I felt a bit overweight in this Chinese stock. So far, I'm in the green with profits on the position. This is the Chinese hyperscaler infrastructure play. It has a better case that it is undervalued compared to the US hyperscalers. I'm bullish on Baba and could see it being a $200 stock someday. Staying long my ADRs and collecting my dividends.

Sold: 18 Shares

Remaining: 75 Shares

META

Sold a chunk of Meta shares to raise money. Bullish on their ads business and ability to use AI to improve its effectiveness. Meta is flashing cash to build an AI superteam. Who knows how itwill shake out, but Meta will be there competing with AI. Lightened position because I needed extra cash. Facebook, Whatsapp and Instagram: 4 billion people use at least 1 of their apps a day according to their Q1 earnings call. I believe we will see Meta stock at $1000 per share someday.

Sold: 3 Shares

Remaining: 7 Shares

GOOG

I chose to make a slight trim of shares I bought at $180 before their earnings report. I regretted it because the sentiment has flipped somewhat bullish recently. This sell is more about leveling this to even with my Meta and Spotify investments. YouTube ad revenue is running up. Search revenue is still growing. Playing in the data center space. Cloud computing grew 28% year over year in the most recent quarter. Gemini has 450 million users, including me. Waymo is growing, solidifying Google's leadership in autonomous taxis. All bullish indicators. Google is still winning. They're investing in Anthropic. The trillion dollar question is what will happen to their profit stream of search in the future, which will need to be defended against new AI competition.

Sold: 4 Shares

Remaining: 26 Shares

AMZN

Another hyperscaler. Also investing in Anthropic. Has Zoox in the autonomous taxi space. Zoox began testing in Los Angeles, the sixth location for Amazon’s self-driving technology. The godfather of e-commerce with an ads business and streaming. Bezo's baby. C'mon it's Amazon! Yet another cloud computing competitor in AWS. Lots to like. I added 3 shares in April at $171. In July, I sold 3 shares that I bought in my taxable brokerage at $228. Essentially my share count remained the same, but my cost basis was reduced by approximately $150 with this maneuver.

Sold: 3 Shares

Remaining: 14 Shares

RACE

Ferrari makes one less car than the market demands to always ensure a full order book. They mentioned their order book is "covered" through 2026 on their Q1 earnings call. I like that it's an international, European equity. I already am heavily invested in several automakers and lightened up at all-time highs to raise funds.

Sold: 1 Share

Remaining: 3 Shares

SPOT

I decided to lock in some long term profits around $500. I sold 5 shares around $485 at the cost I bought them at in an attempt to trade short term. Should have held them all! I ended up buying back 2 shares recently. Hyper bullish on this stock. They recently reported that in Q1, free cash flow was up 10x over the past 3 years.

Sold: 10 Shares

Remaining: 17 Shares

MELI

This e-commerce and payments company runs like water through South America. I was overweight at the beginning of the year, so I used it as a source of funds for living expenses. I'm wishing I kept more MercadoLibre shares, but have conviction to keep what I have and add on any big dips.

Sold: 5 Shares

Remaining: 2 Shares

DIS

Disney's theme parks are a cash machine. Its streaming service is now profitable. Its intellectual property is loved globally from Mickey and Minnie to the Pixar universe and beyond. In 2024, it had the top 2 theatrical releases with Deadpool and Wolverine and Inside Out 2. Marvel is still a big draw. They are finalizing a deal with Fubo to solidify the live sports offering in addition to ESPN. I had bought more heavily the past few years, and felt overweight here, so I've reduced my share count now that stock has bounced up above $120.

Sold: 18 Shares

Remaining: 43 Shares

O

Realty Income is a REIT that won't blow you away with growth. The monthly dividend income is a fun twist on investing. I lightened up on my taxable brokerage position, and bought some in my Roth IRA where the dividends will enjoy tax advantages.

Sold: 27 Shares

Remaining: 75 shares

TM

Have been holding Toyota ADRs for years. I trimmed my higher cost lots, but will remain long. Since 2020, Toyota has sold more than 52 million cars at an average price of $32,000. The quarterly dividend is a nice bonus also.

Sold: 10 Shares

Remaining: 20 Shares

PINS

Pinterest shares have always shown promise to me. After 4 years, it has yet to come to fruition. I'm still underwater on my shares. I took out some of my invested capital at cost more or less for this reason. The promise is still there, with a company that is actively using and developing new AI capabilities. Pinterest posted a record 570 million global monthly active users in Q1, up 10%.

Sold: 10 Shares

Remaining: 40 Shares

AAPL

I have been holding a small bag of Apple shares, because its cellular ecosystem is fine tuned to reap profits. It still seems like an obvious long to me. However, the obvious problem with the stock now is that they have no AI momentum. They're behind. I am not holding much Apple individually, but have more exposure in my S&P 500 fund. I took 1 share off because I don't like how the company operates with developers and its app store practices. Plus, they missed the boat on AI.

Sold: 1 Share

Remaining: 5 Shares

FSLR

Trimming on my solar allocation. Solar is facing some negative headwinds thanks to President Trump's big beautiful bill. Staying long First Solar as my only solar investment.

Sold: 6 Shares

Remaining: 10 Shares

TSLA

I caught the wave of Tesla finding profitability from 2019 to 2021. I'm trimming my exposure by taking profits after a wild ride the past 6 years. I'm keeping the rest as a long term hold. I will be monitoring the robotaxi expansion and optimus progress dilligently. Hopefully auto sales will pick back up to help support its unconventional valuation. Tesla isn't just a car company. It will be so much more according to Elon. Never bet against Elon.

Sold: 99 Shares

Remaining: 106 Shares

REDUCE 100%

I picked these stocks as my weakest, and chose to close out and harvest tax losses.

XYZ

I got fed up with Block after buying the top in 2021 and buying the dip since. I sold out at a loss. Complete exit. Not much good to say about Square, I mean Block, after holding for 4 years. Good riddance. After I sold out, it was added to the S&P 500, so I guess I will ride the upside in my S&P fund if it ever materializes.

Sold: 20 Shares

Remaining: 0 Shares

ENPH

My solar stocks have mostly gone down and decreased the value of my investments. I believe in solar, but the industry seems to settling out with winners and losers. I decided to close out my entire position in Enphase Energy. I couldn't justify staying invested with low conviction when so many better companies are out there. Earnings reports seemed to always disappoint. Took a loss and closed out this solar bet.

Sold: 40 Shares

Remaining: 0 Shares

Conclusion

Past performance is not indicative of future returns. These stocks and my convictions are not financial advice. Research, learn and invest at your own risk. Good luck.

Entering and Exiting a Position Slowly Over Time

Often investors make the mistake of the "all or nothing" fallacy. I consider this to be the error of thinking you need to go "all in" heavy all at once, and sell out for profit by exiting a position.

My investing reality does not function this way. I find I will often buy and sell stocks intermittently over time, lowering or buying more and raising my exposure based on recent events, earnings reports and price movements.

Sometimes it becomes clear that a company has negative headwinds, so I might lighten up. Otherwise, if a trend like AI presents itself as an opportunity, I tend to lean in to that trend.

Today, I bought more Spotify. It's the first time since I added more shares at $403 in Nov. 2024. I sold 3 shares earlier this year at an average of $500 to lock in profits, but have since wanted to invest more in a winning stock.

I've now bought Spotify stock in a range of $75 to $685 per share. Up at this high level, I'm not adding heavily. I picked up 2 shares, 1 of which was the first in my Roth IRA. My share count is now up to 17. I was aiming to bring Spotify to an invested capital level on par with my Meta and Google investments. In my view, this is a high conviction hold that has earned its spot among tech's elite companies. However, such a high price implies risk should their impressive growth slow. I may regret adding Spotify at such a high valuation. Or maybe I'll wish I added more, which tends to happen with this international technology stock.

The business looks strong, with estimated over 700 million monthly active users. Sometimes, we should look to add to our winners. In my opinion, Spotify has proven it is a winner. Their gamechanging music streaming model growth story and focus on a best in class music player product has paid off. Assuming the executive team is able to continue its stellar performance, I believe the stock is going higher. Just one month ago, it reached all time high of $785. I bought this stock today at $100 less than its market price only 30 days ago. It seems the business can support this lofty valuation and has the potential to grow even more.

On my Tesla investment, I've been lowering my cost basis, trimming profits by selling shares I bought at higher lots along with the original lot of shares I bought at $17. I have "house money" riding in the stock. I added and reduced my position at various times. I sold 76% of my total Tesla stake over the past 3 years, locking in a tidy amount of profits. I want to hang on to my last 100 shares for a long time.

Companies like Nvidia, Oracle, Microsoft, Amazon, Google and Meta have become a measuring bar for me. Do I think this can achieve better returns than the "hyperscalers"? If not, I probably won't add or maybe might lighten up a position. Typically, I will only do this when I need to pay taxes or raise cash for living expenses.

In fact, the only stock I've never sold a share of is Microsoft. This is very rare, but it has been my highest conviction play in the past 5 years. It worked out great, with some lucky timing to catch the AI trend. This is more exception than the norm. Typically, I will be leveling a stock position over time in line with where I see suitable levels of invested capital versus other stocks.

The ETF Bias

There are tons of financial professionals and retail investors out there who drink the ETF kool-aid. Most parrot the same general rhetoric: "don't touch individual stocks, you'll get burned". Everyone knows that ETFs and mutual funds are a safe bet. Don't mess with individual stocks, DCA into index funds. We've all had this hammered into our heads countless times when we consider investing.

The ETF bias tries to convince you that individual stocks are too risky. A 3 fund approach is a common strategy. Ultimately, you want to hold a mix of large/small caps and domestic/international stocks. If you are approaching retirement increase how much is in bonds, money market funds or treasury bills. This target allocation can be achieved with both passive funds and individual stocks.

I propose that the financial industry has a bias against individual stock picking, perhaps because it is difficult to succeed. However, financial pros and bogleheads often write off stockpicking as being like going to the casino.

The truth is that it's easy to lose money by picking a bad stock at the wrong time. I've picked plenty of losers. But if you choose well, you can ride a stock's momentum for a long time, beat the market and make gains multiples higher than a passive approach. With stockpicking, you might need to be more dilligent in taking profits to reduce your downside risk. This active nature is not desirable to fund oriented investors. For those who don't mind the time to be hands on, this gives more granular control of your risk exposure.

Don't get me wrong, you should own the market. My 5th largest position currently is an S&P 500 index fund. I'm not suggesting we should abandon ETFs and mutual funds. Instead, keep your eyes open to stocks that are set for a 15-20 year run of an ongoing growth trend. Investing is not "all or nothing". You can take some small shots at a company that has the potential to give multi-bagger returns. Don't let the ETF bias convince you to buy the market and stay 100% passive. Find a Netflix before it disrupted the media game. Find an Apple when it drops a smartphone that changed the cell phone market forever. Get into Nintendo before its Switch 2 becomes the greatest selling console of all time. These types of moves plus some lucky timing can win.

I'm currently long at least 5 stocks that beat the market over the past 5 years. My bets on Cloudflare, Nvidia, Microsoft, Spotify and Tesla all beat the market in that time span. If I listened to the "play it safe" crowd, I would have missed out on these multi-bagger gains. Sure, Microsoft and Nvidia are two of the largest companies in the S&P 500 so I'm still somewhat correlated there with the S&P 500. I'm happy to have higher exposure to these incredible companies in the early innings of the AI trend.

Of course, for some investors they view researching companies and trying to assess their quality as unnecessary burden. I view it as an activity that I enjoy that makes me money when I excel. While I appreciate the "set it and forget it" nature of index funds and ETFs, I find the challenge of stockpicking to be like an enjoyable hobby. Personal finance truly is personal. You should discover where your risk tolerance falls on the spectrum. I might have survivor bias from some lucky picks, but I stand on my ETF thesis. Don't let the ETF bias convince you it's impossible to pick stocks and win.