Roughly three years ago, I decided that I was going to build my Stocks and Shares ISA and Self-Invested Personal Pension (SIPP) around four well-known stocks. My view at the time was that, going forward, the world was likely to become more technology driven, and I saw these stocks as a great way to play that theme.
So what were the stocks? And how have they performed over the last three years?
My four big bets
The four companies I built my investment portfolio around three years ago were Apple, Microsoft, Alphabet (Google), and Amazon (NASDAQ:AMZN).
I was very bullish on all four at the time, so I made them my largest portfolio holdings.
|
Stock |
Three-year share price performance (%) |
|
Apple |
55% |
|
Microsoft |
77% |
|
Alphabet |
46% |
|
Amazon |
13% |
In terms of performance, they’ve done well overall, returning an average of 48% (excluding dividends), or 14% a year.
Microsoft’s been the best performer due to its exposure to artificial intelligence (AI) but Apple and Alphabet have also produced strong returns.
These returns have propelled my portfolio higher and put me closer to achieving financial independence.
Taking a long-term view
It’s been a bumpy ride though. In 2022, all four stocks fell heavily. Amazon, for example, dipped about 50%.
As a long-term investor however, I’m comfortable with share price turbulence. If investors want to pocket big long-term gains from the stock market, that’s the price of admission.
I’ll point out that instead of panicking and selling them when they fell in 2022, I bought more of all four stocks at lower prices. So when they rebounded in 2023, my ISA and SIPP did really well.
My portfolio today
Now today, I’m still building my portfolio around these four companies. I think they all have a lot of potential in our digital world.
However, Nvidia‘s also come into the mix. As a long-term investor, I want to have a lot of exposure to the chip designer, as it’s at the heart of the AI revolution.
Of all these stocks, the one I’m most excited about right now is Amazon. Its earnings are ripping higher at the moment. This year, analysts are forecasting earnings per share growth of more than 50%.
Meanwhile, it’s positioned itself well to benefit from the AI boom. With its new ‘Bedrock’ service, it can help companies make their own large language models like ChatGPT.
One other thing to note about Amazon is that it’s much less owned by portfolio managers than Apple, Microsoft, and Alphabet. So I think there’s potential for new buyers to come along.
The risk here is a downturn in consumer spending or enterprise spending on cloud services. This could slow growth.
Taking a medium-to-long-term view however, I’m really bullish on the stock.
With the company’s valuation near all-time lows right now, I think this ‘Magnificent Seven’ stock has the potential to hit $250 in the medium term.
The post 3 years ago I built my ISA and SIPP around these 4 stocks. Here’s what happened appeared first on The Motley Fool UK.
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Ed Sheldon has positions in Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool UK has recommended Alphabet, Amazon, Apple, Microsoft, and Nvidia. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2024
