Tag Archive: Fidelity Contrafund


Which Californian would you rather have running your business: Tim Cook or Gavin Newsom?

Taking into account that Covid-19 indiscriminately hit both Apple and the State of California at the same time in the same place, which entity performed better under nearly identical circumstances?

Under Governor Gavin Newsom’s watch, California with the nation’s highest income taxes (13.3 percent at the apex) and an average sales tax of 8.66 percent recently reported its record $21 billion surplus is now an unprecedented $54.3 billion deficit … that’s a staggering $75.3 billion switch if you are scoring at home. Nonetheless, the state found $75 million in the form of a pander payment to California illegal aliens.

Will they be eligible to vote … some day?

As the chief executive officer of $260 billion Apple with $44 billion in cash reserves, Tim Cook just announced the reopening some of Apple’s national stores this week with many more to follow. The company achieved a 37.8 percent gross margin and 14.3 percent to the bottom line in FY 2019, returning quarterly dividends of $0.82 per share for its shareholders.

As a member of the growing California Diaspora and a best-in-breed investor, who would Almost DailyBrett choose as a responsible fiscal steward?

Hint: Apple shares are up 7.25 percent this year, despite the Corona virus. As CNBC’s Jim Cramer repeatedly has proclaimed, he is only interested in a stock’s future. Share prices are a leading … not trailing … indicator of future performance.

Apple is a leader. California is a laggard.

The same is true with other best-in-breed publicly traded companies including Salesforce.com, Gilead Sciences, Lululemon Athletica, McDonald’s, Microsoft, Nike, NVIDIA and Starbucks. Is the present iteration of California anywhere close to … best in breed?

If California was publicly traded, would a responsible investor select the Golden State or no state income tax Texas and/or Florida?

As the former press secretary for the former Governor of California George Deukmejian (1928-2018), my love for the Golden State is true … your author loathes the present crew in Sacramento. Just ask Tesla boss Elon Musk.

Peddling A False Choice

The bull statue on Wall Street and the True Value hardware store on Main Street are not mutually exclusive.

The countless suggestions of a Berlin Wall type of divide between the two streets is a false choice. Even the stately The Economist fell into this trap.

The reason is simple, millions of investors who live on Main Street, the side streets and the suburbs. Gallup reported that 55 percent of Americans own stocks and/or stock based mutual funds … before Covid 19. America’s Investor Class certainly took a hit with the virus, but there are tangible results indicating without any doubt that investors are coming back, money is coming off the sidelines … heck the NASDAQ is up for the year.

Those who project the end of Capitalism may even be the same to predict the Republicans were the Whigs of the 21st Century, heading for extinction. Whatever happened to these rocket scientists?

Many in America’s investor class are fond of ETFs or Exchange Traded Funds and other versions of mutual funds. Your author is an investor in Fidelity’s Contrafund with $112 billion assets under management (AUM). The fund invests in large caps including Facebook, Amazon, Microsoft, Berkshire Hathaway (think Warren Buffett), Adobe, Google …

Cash needs to be a significant portion of any responsible portfolio, which should include a mutual fund or two.

Almost DailyBrett must pause and ask the investor class (anyone who would care to listen), how about being the manager of your own mutual fund (no fees or commissions)? Why not build a portfolio with your own selection of best-in-breed stocks (e.g., Apple)?

To some, this approach may be too risky. To others, do you really need a paid-by-you investment advisor to tell you that Nike is the number athletic apparel manufacturer in the world? Why not buy the stock when the next inevitable dip comes around?

Buy Low Sell High.

For the most part, America’s Investor Class radiates out from Main Street. To suggest that Wall Street needs to be reined in and economic freedom should be curtailed by those who determine the so-called Public Good is contrary to the best interests of millions investing for retirement, a child’s education, a dream house or a new business.

It takes a free market to raise a child.

Wall Street is Main Street.

P.S. Be careful about investing in The State of California.

https://www.economist.com/leaders/2020/05/07/the-market-v-the-real-economy?

https://www.cnbc.com/2020/05/07/california-faces-a-staggering-54-billion-budget-deficit-due-to-economic-devastation-from-coronavirus.html

https://www.apple.com/newsroom/2019/10/apple-reports-fourth-quarter-results/

State and Local Sales Tax Rates, 2020

https://www.cnbc.com/2020/04/15/california-to-give-cash-payments-to-immigrants-hurt-by-coronavirus.html

https://almostdailybrett.wordpress.com/2019/06/20/californias-growing-diaspora/

What Percent Of Americans Own Stocks?

State Individual Income Tax Rates and Brackets for 2020

Mark Parker of Nike is also one of my mutual fund advisors.

Ditto for Marc Benioff of Salesforce.com

Let’s not forget of Dennis Muilenburg of Boeing.

Can’t tell you how many times Almost DailyBrett has been told to invest anything and everything into mutual funds.

For the record 70 percent of your author’s Charles Schwab portfolio is held in mutual funds, the largest amount managed by William Danoff of the Fidelity Contrafund.

Having made this point, let’s take a contrarian stand.

Why can’t investors create their own mutual fund comprised of individual and diversified stocks within their own portfolios?

Whoa … aren’t you the investor taking on too much … risk? Shouldn’t you diversify?

The humble answers are “not necessarily” and “yes.”

As legendary investor Peter Lynch once said: “Know what you own, and know why you own it.”

When it comes to investing and in the spirit of Lynch’s axiom, Almost DailyBrett follows these self-formulated rules:

  • Never invest in a stock in which you personally detest/loathe the lead executive (e.g., Oracle’s Larry Ellison)
  • Buy shares in firms you personally use or have a 100 percent understanding of how the company makes money (e.g., Apple).

For example, ever cutesy Scott McNealy of extinct Sun Microsystems once labeled Microsoft’s Steve Ballmer and Bill Gates as Ballmer and Butthead. McNealy would have been funny, if his company stock wasn’t trading at the very same time at $3 per share.

Whatever happened to Scott McNealy? His company was devoured by Oracle.

Another example: your author won’t touch Bitcoin because even though it is the choice of money launderers around the world, the crypto currency is not associated with any country and there is zero logical explanation of how it makes money.

Isn’t Tim Cook A CEO?

Why is Tim Cook my mutual fund portfolio manager?

Doesn’t Cook run the largest capitalized – $1 trillion-plus – publicly traded company in the world? Absolutely.

Almost DailyBrett clearly understands that Apple is not a mutual fund, but still it offers the complexity, confidence and diversity of a mutual fund.

Apple plays in the hardware (i.e., smart phones, tablets, wearables, PCs) space. Ditto for software (e.g., iOS) and services (e.g., iTunes). Think of it this way, Apple has as many if more investors as any mutual fund … including mutual funds themselves – both buy side and sell side institutional investors – and 75 million shares recently bought by Warren Buffett too.

And who runs this diversified enterprise with the expectation of $60 billion to $62 billion on the top line in the next (fourth) quarter? Revenues grew 17 percent year-over-year. Gross margin remained steady at 38 percent. EPS jumped year-over-year from $1.67 to $2.34 and dividends grew from $0.63 to $0.73.

The dilemma for every Apple investor, particularly today, is when is it time to ring the register at least for a portion of the shares? Almost DailyBrett does not hear very many bells clanging.

There is little doubt that Apple is tearing the cover off the ball. Apple has proven it is not necessarily the number of smart phones sold – even though these mobile devices are an absolute must for our lives – in many ways it is the average sales price, climbing closer to four figures for every unit.

Back to Danoff and Fidelity Contrafund. Today it has a reported $130 billion in assets under management. Cook counters with $1 trillion in investor confidence in Apple’s shares.

Which “mutual fund” manager would you choose, if you could only select, one?

And for diversification, you package Apple with Boeing (U.S. commercial airliner and defense aircraft innovator and manufacturer) …

And Nike, the #1 athletic apparel manufacturer in die Welt.

Finally, Almost DailyBrett has bought Salesforce.com nine times and sold eight times for a profit. To describe Salesforce.com as business software company seriously understates its business strategy.

With all due respect to Satya Nadella of Microsoft, Salesforce.com is THE Cloud pioneer selling software as a service (SaaS) to enterprises around the world.

Let’s see: Apple, Boeing, Nike and Salesforce.com in the Almost DailyBrett mutual fund.

Is your author right? Only time will tell. Will this “mutual fund” adjust and change its holdings? No doubt.

Here’s the point: As Ken Fisher of Fisher Investments would say, it’s time to “graduate” from pure mutual funds.

There is risk associated with selecting stocks for your portfolio, but isn’t that also the case for mutual funds? Some think that mutual funds are no brainers. Not true, and let’s not forget the fees.

When it comes to my “mutual fund” portfolio — AAPL, BA, NKE, CRM — the only fees yours truly pays are $4.95 per trade.

Not bad, not bad at all.

https://fundresearch.fidelity.com/mutual-funds/summary/316071109

https://www.apple.com/newsroom/2018/07/apple-reports-third-quarter-results/

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