One of the things that we never got taught in school was how to build a stock portfolio. We got taught that equals squared.
I could tell you the periodic table back to France, but when it comes to investing and picking stocks, no one even mentioned it. What I want to do in this video is teach you how to create a stock portfolio and then eventually grow it into something big. Obviously, the end goal is that our portfolio gets big enough so that we don’t have to work again and we can just use our stock income to cover our expenses. That’s the end goal. But in order to get there, you have to start somewhere. And what you really want to do is start right now. So I’m going to construct a portfolio throughout this video to give you an idea of how to balance that well with a risk, with growth opportunities and with a range of different investments. Now, the thing that I wanted to say off the bat was don’t just copy these investments, go and do your own research on them. And if you end up liking them, well, then of course you can buy them. But do your own due diligence, please. So the thing about building a portfolio is that you have to know how to balance sets. One of the biggest mistakes I see beginner investors make is they only buy stocks that can 10x 20 X in terms of price. The thing they don’t realize is these stocks also have a huge amount of risk attached to them. So what they end up doing is building an extremely risky portfolio. You need to balance risk with any portfolio. Every seasoned investor will tell you that. Now, the great thing about buying Berkshire Hathaway stock is straightaway you’ve built a strong backbone to your portfolio. And that’s because Berkshire is the investing firm run by the greatest investor of all time, Warren Buffett. So if you own Berkshire Hathaway, the stock, you immediately own some of the greatest companies in the world, Apple, Coca-Cola, Bank of America, Geico, Duracell and any other investments that Buffett decides to make. Basically, it’s a hands free way of being an investor in the companies that Warren Buffett decides to invest in Buffett’s.
For those who don’t know, he’s considered one of the most successful investors in the world. His net worth is eighty five point six dollars billion, all done through smart investing. So he’s not exactly the dumbest investor to back with your own money. Now, some of you may argue that Buffett’s an older gentleman, intends to invest in those companies that are more mature in nature. That’s true. A good way to balance this out is through ARC’s innovation fund. The head investor and founder of this fund is Kathy. Would Kathy she invest in disruptive companies, companies that have the potential to change the way the world works? So she’s made a lot of money from stocks like Tesla, Spotify Square. It’s those innovative companies. The mix between her way of investing and Buffett is a smart way to have in a portfolio in a great way of balancing risk right from the get go. Now, another great investor that has really been killing that since he started his fund is someone called Chamar Pollycarpus. Here, he’s achieved a return of thirty two point nine percent with his investing fund. And he’s been an early investor in Tesla, Amazon Square, Bitcoin and a range of other high growth investments. It seems like everything that I’ve seen him bet on has done well. That’s the reason that I follow him, because he’s got proven results. Anyway, one of the stocks that he’s just taken public is a stock called so far, so far as one of those companies that is new but has the potential for high growth. Because if you think about it, one of the sectors that has not been overly disrupted is banking. Shopping got disrupted. Everyone does that. Online education, we all use our computers to learn. Now, cars, people are starting to buy electric. But when it comes to banking, that’s been the same for hundreds of years. It seems this is where Sophi comes in and allows customers to operate all of their banking needs online. It follows a new type of banking structure called a neo bank. That just means a bank that is purely digital. So far, they dominate the neo bank sector.
They’re responsible for 90 percent of all new neo bank account creations. So rarely has a great chance of being the head company that disrupts banking. If it achieves this goal, it’s a lot more than a 10x stock. In a portfolio, it’s important that you also have those companies that have stability to them, those that have years and years of a great proven business model. Alibaba is one of those companies. It’s in a thriving industry, e-commerce. Their earnings have gone up by five times the amount in just four years and that one of China’s biggest businesses. One of the things I like most about Alibaba stock right now is its price tag. The stock is down 20 percent from their high, meaning you can buy a great business for a reasonable price. One of the questions that you should ask as an investor is what are the next generation stocks? And what I mean by this is what stocks are going to be the next Teslas or Netflix or Amazons and Facebook’s who had some of the highest returns over the past decade. What will be the stocks that will do this? But over the next 10 years, a potential sector that may do this is the genomics sector. Why? Because this sector has the capabilities of carrying diseases. Let’s just look into your genome. Hang on. You’ve got a problem there. Let’s edit that out and cure whatever disease you’re born with. That’s the world changing capabilities that the sector has. And CRISPR Therapeutics is one of those companies that is looking to do just that, develop therapies derived from genome editing technology. Right now, the stocks valued at 15 billion dollars in terms of market cap. But let’s say they start growing this technology and curing diseases. They could be as big as a company like AFV, 200 billion dollars market cap. So it’s another one of those potential 10x stocks. There’s no guarantee, but there is the possibility. But you guys know me when it comes to building up a portfolio, you need balance. General Mills is a perfect company for this because it has a weather tested business model. It’s been around for over 150 years and has paid dividends without interruption, 422 of the recent years. Its business model is not one of those that will get blown away in the wind. We can just say that there are a US based food company with big brands like Cheerios, Yoplait, Lucky Charms and hundreds of others looking at the stock they’re currently selling for fifty six dollars a share, generating earnings of three point ninety. As you can say. They also pay a pretty solid dividend of two dollars, giving a yield of three point six percent. Those are pretty good numbers considering the market that we’re in. Now, I know a lot of people are going to lambast me for this choice, but let me explain myself. Bitcoin does not need to be a massive position in one’s portfolio. It can be a very small say, even one percent of it. But I think it’s silly not to own Bitcoin because Bitcoin is one of those assets that there is no limits on how much it can go up. If you bought Bitcoin just five years ago, it’s gone up over 10000 percent. So let’s say stocks crash, the economy collapses, civil unrest takes place. Bitcoin might be that one asset that saved your portfolio. Whenever you buy a stock, arguably the two most important numbers that you should look at is price and earnings, is the stock selling for a good deal? And are they generating nice profits? Centene does well on both of these metrics. If you look at their earnings, it’s grown at a 19 percent annualized rate since its IPO in 2005 and a 31 percent write from 2013 to 2019. And if you look at their price, they’re currently selling for just over sixty dollars a share with a PE ratio of seventeen.
So that one of those stocks that hasn’t gone up dramatically over the past year and with their earnings growth, that’s a nice price to get on that. So I’ll quickly just explain what Santayana’s that the largest Medicaid managed care organization in the US, they focus on health care, their focus on insurance. So do expose your portfolio nicely to those two sectors. And I’ll leave a link in the description on a video that goes over in more detail. I don’t really have the time to fully do that in this video. That’s if you’re interested in the stock. So this portfolio is starting to come along very nicely, where an owner and the old school Warren Buffet style of investing with Berkshire Hathaway, where an owner and the new style innovative investing with Kathy Woods, I invest. We have our hands in the Chinese market, Alibaba, the genomics sector, CRISPR, the food industry, General Mills, the health care sector. And we even hold some nice growth opportunities. And so far, I am a little bit of bitcoin. One sector that I think we’re missing is real estate, as Bruce Flatt recently said, probably the greatest discounts out there between what you would see as value and price is in rates and real estate securities. Brookfield Property Partners is a great way of taking advantage of those opportunities because they invest in a wide range of properties. These include office, multifamily residential retail hospitality in North America, Europe and Australia. So there are a strong, diversified real estate company. The stock sells for just seventeen dollars a share. So pretty much anyone can afford them and they have a massive dividend of seven point seven percent. The one thing that we do need to watch out for is can they get their earnings back on track after the pandemic? If they can, this will be a great deal at this price. So as you can see with this portfolio we’ve built from the ground up, not just focusing on one sector, but on a wide range of them.
We’ve got growth, we’ve got stability, we’ve got real estate innovation, diversification, some of the most important things that a portfolio needs. But please, please do not just directly go out and copy this portfolio. Don’t buy any of these stocks until you’ve done your own research. These are merely suggestions of opportunities that I see in the stock market.