The stock market faded into the close of 2022, locking in a negative return for the year.  While my Portfolio also recorded a negative return for 2022, I fared much better than the market overall.

As I’ve noted before, with my Portfolio being more value-oriented than growth-oriented, my out-performance during a negative year doesn’t surprise me.

My current calculations show a -9.13% total return for my Portfolio compared to a -18.11% total return for the S&P 500.  I’ll take that.  In the coming weeks I’ll update my average annual return numbers since I started my Portfolio.

For this last Portfolio Thoughts post of 2022, I’ll cover the usual items:

• Price Movement – I’ll look at my top advancers and decliners in my Portfolio during the past month.  Unfortunately, there was much more red than green in December.
• Top 10 Review – I’ll update my Top 10 Portfolios stocks and how they changed rank this past month.
• Weightings – I’ll examine the sector weightings within my Portfolio and compared them to those of the S&P 500.
• Watch List – I’ll share which stocks are garnering my interest as we get set to begin the new year.

Let’s get this started.  Here are my Portfolio Thoughts for December 2022…

 

Price Movement

Note – my price changes cover closing prices from 11/25/22 to 12/30/22.

So much for those back-to-back months of green in my Portfolio.  December turned my Portfolio red.  At least we can say goodbye and 2022 and hope for better results in 2023.

My ratio of stocks with price declines compared to price gains was roughly 3.5 to 1 in December.  Of my 59 holdings, 46 moved lower in price, while 13 moved higher.

Here were the stocks with the biggest moves to the upside and downside…

 

Of my 13 stocks that rose in price, only one advanced more than 10% (the usual threshold I monitor for).  In addition, only one other stock was able to advance at least 5%.  Thus, it was tough sledding in December (pun intended).

The top gainers in December were:

• Nike (NKE), jumping 10.43%
• Broadcom (AVGO), rising 5.51%
• Quest Diagnostics (DGX), climbing 4.95%
• Amdocs Ltd. (DOX), ascending 3.98%
• Procter & Gamble (PG), advancing 3.30%

Nike (NKE) popped on its earnings report, recovering more than it lost in the week leading up to the report.

A pair of Information Technology stocks made the top gainers list in Broadcom (AVGO) and Amdocs Ltd. (DOX).  AVGO bucked the downward trend that befell my other semiconductor holdings.

It’s now been 3 straight months of gains for Quest Diagnostics (DGX).  For Procter & Gamble (PG), it’s now been 2 straight months of gains after 6 straight months of declines.

 

Of my 46 stocks that fell in price, six dropped more than 10%, and another 11 stocks declined more than 5%.

My worst decliners in December were…

• VF Corp (VFC), freefalling 19.60%
• Medical Properties Trust (MPW), plummeting 14.90%
• T. Rowe Price Group (TROW), sinking 12.79%
• The Walt Disney Co. (DIS), dropping 12.13%
• Qualcomm (QCOM), retreating 10.94%

After a one month hiatus, it was once again another month with stocks from 5 different sectors topping my decliners list.

Both VF Corp (VFC) and T. Rowe Price Group (TROW) went from the top gainer list in November to the top decliner list in December.  That’s a turnaround of the worst kind.

The Walt Disney Co. (DIS) was on my top decliners list last month as well.  DIS might be making an appearance on my Watch List as a result.

Note – All my stocks in the following 4 sectors fell in December: Financials (5), Real Estate (4), Materials (3) and Utilities (3).  These holdings had nothing but gains in November!

 

Top 10 Review

There was no big movement in my Top 10 in December.  My biggest movers climbed or fell just 2 spots in the rankings – one of each.  There was also one new entrant into my Top 10.

Three stocks held onto the same ranking as last month, including the stock in my top spot.

 

 

After claiming my top spot last month, RPM International (RPM) was able to hold onto that #1 spot, despite a -6% return in December.

Reaching new heights in my Top 10 was Aflac (AFL).  It rose one spot to settle at #2.  I don’t recall AFL ever finishing this high before.  Its less than 1% loss this past month was positive relative to most of my other stocks, allowing AFL to climb in the rankings.

Qualcomm (QCOM) started 2022 in my top spot but after a difficult year it’s fallen.  QCOM was on my top decliners list this month, resulting in it slipping a spot to #3.

Staying in the #4 spot was AbbVie (ABBV).  With a gain over 1% in December, ABBV was able to maintain its ranking.  ABBV has posted gains in 4 straight months.

Procter & Gamble (PG) rose a pair of spots to lay claim to my #5 ranking.  PG had a good December, rising 3.3%, good enough for it to land in my top gainers list this month.

Falling one spot each to #6 and #7, respectively, were Pepsico (PEP) and Lowe’s Companies (LOW).  Both had a negative month, with PEP (-1.87%) faring better than LOW (-5.56%).

My new Top 10 stock was Broadcom (AVGO).  AVGO leaped from outside the Top 10 to the #8 spot thanks to an impressive 5.51% gain in a month where most stocks turned downward.  AVGO replaced BlackRock (BLK) in my Top 10.

The third of my three stocks to hold steady in their ranking was Nexstar Media Group (NXST).  NXST traded essentially flat for the month of December and continues to hold down the #9 spot.

Clinging to the last spot in my Top 10 rankings was Visa (V), which declined 2.82% for the month.  V was trying for its third straight month of gains during the year (which would have been a first), but couldn’t manage to do it.

Sitting just outside my Top 10 are the following stocks: BLK, Union Pacific (UNP), Johnson & Johnson (JNJ).

 

From the table above, my Top 10 holdings now comprise 35.56% of my Portfolio value.  This is a decrease of 0.14 percentage points compared to last month.

As for the dividend weighting of my Top 10, this ended the month at 30.61%, which is a gain of 0.40 percentage points compared to last month.  This rise is primarily due to AVGO replacing BLK in the Top 10.

If I keep investing outside my Top 10, I’d expect both these Top 10 weightings to drift lower, which I wouldn’t mind seeing.

 

Weightings

 

In general, for the Sector Diversification, I target being within +/-3 percentage points of the sector weightings of the S&P 500.  For the SuperSector Diversification, I target being within +/-5 percentage points.

The “Weight Diff.” column shows which sectors sit outside my preferred weighting ranges.  If I’m overweight a sector, it’s shaded green.  If I’m underweight a sector, it’s shaded red.  If I’m within my target weighting range, then no shading exists.

I made some headway improving my weighting differences in all my overweight sectors: Industrials, Materials and Consumer Staples.  I’m close to coming into my preferred weighting range in the Consumer Staples sector.

My largest December purchase was a newly established position in Accenture (ACN).  This helped me improve the weighting difference in my most underweight sector, Information Technology, by more than 0.5 percentage points.

I don’t think I made too much progress with regard to my bonus goals in 2022.  They involved reducing my weighting differences in both Information Technology (most underweight) and Industrials (most overweight), but I’ll review this in January when I post about how I fared in achieving my 2022 goals.

As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.

 

Watch List

Another market slide in December has brought additional stocks onto my watchlist.  Hopefully, I’ll be able to add some of these to my Portfolio in the early months of 2023.

I finally added a good chunk to my Information Technology holdings when I established a position in ACN in December.  This stock was on my radar and was something I mentioned in last month’s Portfolio Thoughts.

Let’s see if any of my mentions in this post become January buys for me.

 

Within my Portfolio, here are some stocks that I’m watching for possible additions…

Let’s start with the Information Technology names since I’m always looking to add in this sector.  QCOM and Skyworks Solutions (SWKS) are currently at levels where I’d buy.  I can’t say I need more QCOM since it’s already my 3rd largest holding, but I think it’s attractively priced under $110.  The same goes for SWKS while it trades around $90.

Another tech stock that I’d like to keep adding to is Microsoft (MSFT).  I’d like to see a price drop with this one, as it almost always seems richly valued.  I was able to add a share at $229 and another just south of $218 back in the first week of November.  I’d probably target adding more in that area.

Should Visa (V) drop below $200 again, then I’d consider adding some additional shares.  I’m still driving towards attaining a total of 100 shares… I’ve got a little more than 8 shares to go.

Lastly (for tech at least), I’d like to add some shares of Texas Instruments (TXN) and make this position a bit larger.  This is another stock that seems to always trade at a premium.  I’m targeting shares at $150 or below.  I don’t know if the stock price will fall to that level again (it did twice in 2022), but if it does, I’ll try to be ready to pick up some shares.

Medtronic (MDT) remains near the top of my buy list right now as I continue to want to build the position.  It’s still my smallest Healthcare holding and I could add $2K before it reaches the level of my 2nd smallest Healthcare stock, Bristol-Myers Squibb (BMY).  I’d like to add MDT below $76, but below $80 is acceptable to me.

Another stock that I probably don’t need more of is T. Rowe Price Group (TROW).  I like it here below $110, sporting a 4.4% yield.

CVS Health (CVS) has fallen quite a bit recently, hovering around $93 right now.  Should the stock fall below $90 then I could see picking up more shares.

I continue to see Comcast (CMCSA) as attractively valued.  Adding below $35 interests me as it would continue to lower my cost basis.

In the same sector, I’d like to add some shares of The Walt Disney Co. (DIS).  The stock got drubbed in 2022.  Adding at the current $87 level would also result in a reduction of my cost basis.

 

As for non-Portfolio stocks that I’m watching…

I’m still watching tech stock Corning (GLW) hoping it drops below $30.  That is my target level for initiating a position.  I was waiting for Accenture (ACN) to drop below $260 last month and the stock hit that level in December.  I subsequently started a position in ACN.

One new tech name that’s hit my radar is Apple (AAPL), especially with its price decline since mid August.  The stock price is reaching an area of interest, but I’d like to see it dip below $120 if I’m going to start a position.  Growth projections have moderated into the upper single digits over the next 2-3 years.

Cell tower REITs American Tower (AMT) and Crown Castle International (CCI) are close to my price targets, but haven’t reached them yet.  I’m still holding out for AMT below $200 and CCI below $130.

Lastly, there’s Dominion Energy (D).  The stock dropped below my $60 price target in December (got down below $58), but I was focused on ACN at the time.  Now the stock is back over $60, so I’ll wait for another chance.  My Portfolio is a bit underweight in Utilities, so establishing a position in D wouldn’t hurt.

 

Thoughts?

Are you expecting a better year for the stock market in 2023?  Please share your thoughts!