After having all the ingredients necessary, we should always put them in the right quantities. In this article we will just play (in a logical way) with the proportions allocated for each of the 10 (at the moment) stocks and obtain the best ANR we can (or the best potential of recovery).
And just to help you find the whole list of stocks and why we choose each one of them, this is the previous six articles to this mini-series:
- Stocks Flavored Pie (I) – Setting up the direction
- Stocks Flavored Pie (II) – Airlines, the fastest way to travel
- Stocks Flavored Pie (III) – Take the train or rent a car?
- Stocks Flavored Pie (IV) – What can be better than a cruise? Maybe going to Disney World
- Stocks Flavored Pie (V) – Don’t forget to book your night!
- Stocks Flavored Pie (VI) – A man has to eat!
The Equal Shares
Each of the 10 stocks we have, is set to be invested in a proportion of 10%, which is the basic allocation I can think of. Doing that, will give the last ANR we saw in the previous article and that was 6.08%
I am not sure I would like this ANR, but it has a good prospect of growing, it’s equal for everyone, as we are investing the same amount of money in stocks that cost 12 USD like the ones that cost 2k USD. When (and if) they will recuperate, I think this will be a good PIE for the recovery. It has a nice balance between the stocks that already recuperated the pandemic drop and the ones that still struggle.
Fair and Square
For this simulation, I took last evening price (when I looked last time) of each stock, made an Excel Template, and calculated the allocation of each one of them, from the total sum.
And if I calculated correctly, at a total of 3500USD (which is the total price, for 1 stock, of each type), these are the proportions to set in the auto investment strategy, to have a match with 50USD (or what our deposit will be).
Following this plan, with a small roundup or round down to the quantities, we get an ANR of 8.65% but the growth potential is smaller. Why? Because we are investing more into a stock that is already 2280 USD with a small probability to explode, that is a stock that is currently 20.30USD and has the potential to reach 60USD.
This PIE is fair and square, as the ones that contribute the most to the total investment are the ones that also get the most allocation (you work more, you gain more?). This is a more stable pie, as we are tending to invest more in the overperforming or more powerful stocks, than the ones that are a bit of a gambit.
Again, guys, these are my opinions and don’t represent the stock of the market. It is just the price I see these stocks going to.
The little eat first
Using the same Excel table, we try to make the stocks to be kind as the same price, by manipulating the price, so we can put a bigger proportion where I think there’s more room to grow. We will also manipulate the price looking at the Technical Analysis of each one of them ( I will look on each chart, as they are already in the articles).
I see that McDonald and Starbucks already have reached their post pandemic level (and even suppressed it), Bookings is in the same situation, Airbnb is still a bit overpriced and will go down further on, Carnival has a lot of room to grow, Disney is at an ATH, Pacific Rail is on an ascended trend and at an ATH, SIXT is almost at the post pandemic level, Lufthansa has room to recuperate and Southwest Airlines is close to recuperate everything.
To make it work, I gave 200 points to the companies that recuperated their loss post-pandemic and are at ATH. 250 points go to the companies that have room to grow, or I wait a correction on them and 300 points to the ones that are still in trouble after the pandemic and have the biggest room to recuperate.
Following the formula, we have the smallest ANR obtained until now, because we are investing more in underperformer stocks, but with a higher potential to grow.
This is the PIE, where the little ones have room to eat and grow big and it’s more inclined to a gambit. This is the PIE I would like to select for my investment.
Let’s put it in the oven
First thing first, we will rename the pie from Rebound- PIE to Tourism-PIE (I think it’s more appropriate considering what stocks we picked and then I will update the ratios to the last formula.
I think I will go between 6months to 1 year with this composition (if nothing else occurs) and see how it performs. If I see there is no recovery on my bets I will change to the highest ANR (The fair and square).
In the second part, I will set the same goals as the ones we did for the ETF PIE (in A whole new world article), but this time, with an initial deposit of 0USD. And we get a return of 7.59K USD, smaller than the 9.01K from the ETFs. But this is just a projection and I hope we will win with the rebound.
Small problem, apparently I need an initial deposit of 12USD. Oh well….
Now, the plan is as follows, after the auto-invest finishes buying stocks (which will be on Monday the 10th), I will add the other 53USD I have free in the account, so the whole sum is invested.
For you guys who liked the miniseries and want to copy trade the same settings, here is the link to this pie: Turism-PIE.
I had fun writing this and I hope you enjoyed it also. It is possible we will see some future updates dropping to this mini-series and I will definitely let you know. But it will be easier for you if you will use our subscribe buttons to join our mailing list.
If you really enjoyed it, I appreciate all the possible likes and shares.
Thank you again, you are awesome!
Disclaimer: I am not a financial consultant, all the information you find here are my decisions, I taken at that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money.