HSBC - 12 Conviction Picks Beating The S&P Without Help From The Magnificent 7

2024-02-16 15:11:53 ET

Summary

• I created a U.S. stock portfolio in mid-2023 that has outperformed with a 24% total return vs 17% for the S&P 500.
• I address valuation concerns for the U.S. market and include dividend growers and international stocks in the portfolio.
• The conviction picks in the portfolio performed very well from June to the end of January 2024, with 8 out of 12 stocks delivering outperformance.
• This demonstration shows that you can build a very good growth portfolio while avoiding the Magnificent 7.

I recently reported on our U.S. stock portfolio that has offered a wonderful but surprising market beat from inception of 2015. The portfolio has a quality and economic moat skew with a large or mega cap bias. Many readers on Seeking Alpha and on my blog asked how I would build the portfolio for 2023 and beyond. In mid 2023, I put together a portfolio concept taking valuation into concern. Or let's say as a top concern. The greatest criticism of the U.S. cap-weighted stock market bull run is that it is driven by the Magnificent 7 and valuations are more than stretched. The high conviction stocks from my mid-year post (offering an attractive combination of valuation and growth) beat the market from June of 2023. In this post, I will take a look at the total portfolio concept, but will concentrate my analysis on the conviction picks....

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