Stock picks for December – How I manage my money
If 2020 is a boxing match, then it’s certainly good news to be entering the twelfth and final round of the year before we stop for Christmas holidays. Continuing the same format as previous months, I’ll examine how my portfolio has been over the last month and what has been affecting it, I’ll talk about the investments I’ve made at the start of this month and finally a short re-cap on what has been going on on Revolut’s trading platform.
Diving straight into things and re-capping on where my portfolio is at for the end of November. It is as of today currently up 38.6% which is a further increase of 6.2% from the previous month (as a comparison the S&P 500 has only seen a YTD return of 14.9%). NIO (NYSE:NIO) continues to perform strongly but it is certainly not showing as steep price increases this month with it actually dropping off in the last day of Nov to around $50 a share and has dropped even further at the start of December with a day low of $38.43!
Virgin Galactic (NYSE:SPCE) has also been steadily climbing over the month but plans for a test flight have been postponed to December 11th due to COVID restrictions in New Mexico which must certainly increase pressure on the company to demonstrate it’s sub-orbital abilities. However should this go well then I expect it to be a great performer next year, especially as the next flight will feature Richard Branson if all goes to plan. Kroger (NYSE:KR) is my only poor performer for November having beaten profit estimates but failed to meet its revenue expectations with analysts during its Q3 results announcement dragging it down for the month.
Looking at Moneybox this has also performed well this month and is currently up 9.35% overall which is considerably better than the previous month as the overall fund price which underpins the global shares part of Moneybox has increased this month.
In terms of investments for this month, I have tried to create a bit of diversity with this one but have certainly not reduced the overall risk as it is still a start up. I had the opportunity to explore gaming and esports as part of my normal job and think this is a really interesting space and will really evolve over the next 5 years with some big potential upsides. So when I saw that Fnatic was funding on Crowdcube I decided that this would be a no-brainer for me. Firstly gaming is becoming one of the most watched forms of entertainment so plenty of advertising opportunities which will lead to additional revenues (I’m thinking football TV rights kind of thing) and secondly monetisation is below that of traditional sports meaning there are plenty of ways to grow and get fans to spend money. One way Fnatic are already doing this is through their own gaming products which I see as a good additional revenue stream for them.
The second investment for the month was in NIO (NYSE:NIO) which has had an interesting last 6 months of massive growth and then has seemingly fallen off in the first week of December (down 16% so far) which I think could be partly due to some legislation that has just passed through the US Senate which would allow the delisting of Chinese companies unless they meet audit standards in the US, as currently China doesn’t allow the regulators to verify the audit of such firms.
However it’s at this point I’d like to talk about a very useful concept in long-term investing called unit-cost-averaging where you create an average price for your investments in a particular company if you invest multiple times over a period of time. Take for example the share price of NIO over the last 12 months which has a range of $2.11 to $57.20 and now imagine the following scenario where you planned to buy $50 of NIO shares on the first day of trading every month which would give you the following table:
To work out the unit-cost-average you would then simply add up the price of all 12 purchases and divide by the number of purchases, in this case 12 which would then give you an average price of $17.02 per share.In the first half of the year you would get more shares for your money and in the later part of the year you would get less but it means from the 1st December NIO would have to lose 50% of its value before you risked losing any money due to the lower average cost of the shares of the year.
Unit-cost-averaging is helpful because over a longer period of time it will help you ride out the ebbs and flows of the stock market by creating an average for your investments which I think helps by giving you a break-even price that you can use to make decisions on depending on how a particular stock is performing in the market, but this should be viewed over the long term.
Finally then, looking into the month on Revolut I’ll cover the most traded and also most volatile. As expected NIO was the most traded for the month but actually fell out of the top 10 most volatile, falling to 15th this month as its price has dropped off a bit this month. With news of vaccines and approvals, the travel and entertainment industry have seen increased trading volumes with the anticipation that they’ll be able to recover as demonstrated by AMC (NYSE:AMC) who are 3rd and 5th respectively on most traded and most volatile for November.
Jumia, the online marketplace in Africa, has seen the most volatility again this month which means it’s seen a low of $7.92 and a high of $37.61 over the last 2 months which is an increase of 375% in 2 months! Moderna (NASDAQ:MRNA) makes its way into the top 10 most volatile on news of its vaccine effectiveness and application for emergency use. On the other end of the scale is Tiffany & Co who’s price has only moved 0.56% this month. Other slow movers for the month include McDonalds, Fitbit, Oracle and P&G which would need some more research but could make nice additions to a portfolio if you’re looking to reduce the impact of more volatile stocks on a portfolio.
So in summary for the month:
- My portfolio is currently up over 38% compared to the S&P 500’s 14%
- Fnatic has joined my roster of start up investments
- Unit-cost-averaging is a very good to ride out the ebbs and flows of the stock market over a long period of time
As always let me know your comments in the field below.
Thanks for reading!