Last week I posted a summary of my European and Japanese holdings here, together with a rationale for the creation and management of the fund. Here now are the US holdings with up to date performance figures. One point I’d like to make is that the apparently spectacular performance of the surviving holdings is balanced by the now discarded losers which have dragged on overall performance. This is a “run your winners” strategy, to which I periodically add new ideas as they emerge - and in greater proportion than I add to existing positions. The consequent diversification is a key part of the strategy.
A couple of other points to add:
The biggest winners were as expensive when I bought them as they are today. Yes there have been blow-ups, and expensive stocks fall hard when they disappoint. But quality wins out, in my opinion, over long periods. And you have to pay up to own it. My bank’s IT analyst has impressed on me that the cash flows generated by Big Tech allow them to constantly invest ahead of the challengers to dominate each new technology as it emerges. You only have to look at cloud computing (Azure, AWS, Google cloud) and AI (Microsoft copilot, Meta, Nvidia) to see this play out. The Mag7 and a few equivalents are expensive because they are the best companies in the world.
You will recognise a lot of semiconductor names here, and in my previous Europe and Japan edition. Aside from KLAC and ASML, most of those are relatively recent holdings as I’ve spent the last two years learning about the industry. There are still one or two that I missed out on, like Suess Microtec that I should have added earlier this month. The great opportunity for the more nimble investor lies in the cyclicality of the industry where, oversimplifying, shares typically halve just before they treble. Look out for such an opportunity, the greatest ever example of which is the trajectory of Nvidia over the last 2 years. Semiconductors are the picks and shovels of our digital world. And, other than a select few names, I invest in the picks and shovels of the semiconductor industry itself, the capital equipment makers that sell to the fabs and foundries, and in one of the two key providers of electronic design software. A look at the long-term chart of…
