From Panic to Diversification: A Spanish Investor's Journey
A 25-year-old Spanish investor reflects on his first year, moving from a risky Santander-heavy portfolio to a diversified mix of 16 stocks.
English · Original discussion in Spanish · Published
From -10% Losses with Santander to a 16-Stock Portfolio
Nearly a year after his first purchase, this 25-year-old investor measures success not by euros earned but by mistakes corrected. He started in March 2020 with Santander taking up 50% of his portfolio and American Airlines as the second pillar, two bets he now describes as starting "in the most reckless way possible." The market correction hit hard: the portfolio fell to -10%, and panic led him to sell several positions at a loss. A year later, he manages 16 stocks, mixing growth and dividend plays, with one fixed idea: holding them for 20 to 30 years.
Starting with Santander at 50% of the Portfolio
The initial phase was a series of poorly timed sales. American Airlines was sold at a loss after seeing it plummet unchecked, although it later traded at $20 when purchased at $14. With the Spanish bank, there was more patience: most of the position exited at €2.43, limiting the damage from having invested half his assets there. The protagonist admits that the criticism he received then felt arrogant, but today he accepts it as valid.
One uncomfortable conclusion remains: research came after investing, not before. That reversed order is what turns a drop into a forced sale.
How Much Does a 16-Stock Portfolio Return?
The current snapshot orders positions by weight and lists specific entry prices: Alibaba at $196 —his biggest bet and, in his words, the crown jewel—, Disney at $100, Shell at €14.35, the Video Games and eSports ETF at $25.50, Pfizer at $36.5, AbbVie at $81.7, Logista at €15.26, Intel at $54, Skyworks at $98.80, Verizon at $53.80, Iberdrola at €8.55, Red Eléctrica at €15.55, Coca-Cola at $44.95, and Johnson & Johnson at $137.8.
Results vary by sector. Disney has accumulated a 65% gain; Pfizer, bought long before the vaccine, is down 12%. The targeted dividend yield is also uneven: Logista approaches 8%, Red Eléctrica pays 6.50%, AbbVie 5%, Verizon 4.14%, and Pfizer 4%.
The stated goal isn't a quick fortune. He would sign up for an 8-10% annual return and aims for dividends to eventually match rental income. The contribution plan for the first year: between €10,000 and €12,000.
Diversify: Prudence or Mediocrity?
Here lies the fundamental disagreement. One school argues that spreading capital across 16 stocks only guarantees mediocre results, that individuals don't manage millions like funds, and that three good companies are enough to get rich. Opposing this is the argument that such strategies work in talks but not in practice: Berkshire Hathaway's listed portfolio exceeds 40 companies, and the conglomerate owns dozens of non-listed firms.
The technical nuance of low beta also appears: dividend-paying companies tend to move less than the market and have accumulated better risk-adjusted returns in recent crises, challenging the theory that lower risk necessarily means lower returns. Against this stands the classic warning: picking three stocks and getting all three right looks too much like gambling.
Warning on 150x P/E Ratios and Trending Renewables
The example cited is a renewable energy firm that has surged in value, trading at multiples of 150, 200, or 300 times earnings. The skeptic's reasoning is relentless: a quarter with 40% growth will arrive, and the stock will fall 40%, because the same analysts who praised it will then talk about margins and competition.
The precedent mentioned is a company that six or seven years ago had 20 times less revenue than now yet was worth more on the stock market. The sarracena: growth is magnificent over two years but leaves many corpses along the way.
Logista, Unilever, and the Fine Print of Dividends
Tobacco distribution contributes 90% of Logista's profit, a weight the company wants to reduce gradually. Pressure from socially responsible investment funds, combined with low trading volume, keeps the price depressed, opening the door to buy a mature company cheaply. However, Imperial Brands retaining 50% of the capital is disliked.
Unilever appears on the watchlist, positioned attractively after eliminating its dual headquarters: with a single tax domicile in London, dividends should arrive without withholding tax. For investors using foreign brokers, there is also paperwork: forms to declare money abroad and the obligation to report to Hacienda (Spanish Tax Agency) what the broker does not communicate, according to this participant.
There is a position marked for medium-term exit, Shell, due to lack of future in oil, and possibly Grifols, which he sees as stagnant and heavily indebted.
And here the analysis stalls. With an 8-10% annual target, a 16-stock portfolio and a global index might end up in the same place; the difference is whether the selection effort adds value or just adds worry.
Nearly a year after his first purchase, this 25-year-old investor measures success not by euros earned but by mistakes corrected. He started in March 2020 with Santander taking up 50% of his portfolio and American Airlines as the second pillar, two bets he now describes as starting "in the most reckless way possible." The market correction hit hard: the portfolio fell to -10%, and panic led him to sell several positions at a loss. A year later, he manages 16 stocks, mixing growth and dividend plays, with one fixed idea: holding them for 20 to 30 years.
Starting with Santander at 50% of the Portfolio
The initial phase was a series of poorly timed sales. American Airlines was sold at a loss after seeing it plummet unchecked, although it later traded at $20 when purchased at $14. With the Spanish bank, there was more patience: most of the position exited at €2.43, limiting the damage from having invested half his assets there. The protagonist admits that the criticism he received then felt arrogant, but today he accepts it as valid.
One uncomfortable conclusion remains: research came after investing, not before. That reversed order is what turns a drop into a forced sale.
How Much Does a 16-Stock Portfolio Return?
The current snapshot orders positions by weight and lists specific entry prices: Alibaba at $196 —his biggest bet and, in his words, the crown jewel—, Disney at $100, Shell at €14.35, the Video Games and eSports ETF at $25.50, Pfizer at $36.5, AbbVie at $81.7, Logista at €15.26, Intel at $54, Skyworks at $98.80, Verizon at $53.80, Iberdrola at €8.55, Red Eléctrica at €15.55, Coca-Cola at $44.95, and Johnson & Johnson at $137.8.
Results vary by sector. Disney has accumulated a 65% gain; Pfizer, bought long before the vaccine, is down 12%. The targeted dividend yield is also uneven: Logista approaches 8%, Red Eléctrica pays 6.50%, AbbVie 5%, Verizon 4.14%, and Pfizer 4%.
The stated goal isn't a quick fortune. He would sign up for an 8-10% annual return and aims for dividends to eventually match rental income. The contribution plan for the first year: between €10,000 and €12,000.
Diversify: Prudence or Mediocrity?
Here lies the fundamental disagreement. One school argues that spreading capital across 16 stocks only guarantees mediocre results, that individuals don't manage millions like funds, and that three good companies are enough to get rich. Opposing this is the argument that such strategies work in talks but not in practice: Berkshire Hathaway's listed portfolio exceeds 40 companies, and the conglomerate owns dozens of non-listed firms.
The technical nuance of low beta also appears: dividend-paying companies tend to move less than the market and have accumulated better risk-adjusted returns in recent crises, challenging the theory that lower risk necessarily means lower returns. Against this stands the classic warning: picking three stocks and getting all three right looks too much like gambling.
Warning on 150x P/E Ratios and Trending Renewables
The example cited is a renewable energy firm that has surged in value, trading at multiples of 150, 200, or 300 times earnings. The skeptic's reasoning is relentless: a quarter with 40% growth will arrive, and the stock will fall 40%, because the same analysts who praised it will then talk about margins and competition.
The precedent mentioned is a company that six or seven years ago had 20 times less revenue than now yet was worth more on the stock market. The sarracena: growth is magnificent over two years but leaves many corpses along the way.
Logista, Unilever, and the Fine Print of Dividends
Tobacco distribution contributes 90% of Logista's profit, a weight the company wants to reduce gradually. Pressure from socially responsible investment funds, combined with low trading volume, keeps the price depressed, opening the door to buy a mature company cheaply. However, Imperial Brands retaining 50% of the capital is disliked.
Unilever appears on the watchlist, positioned attractively after eliminating its dual headquarters: with a single tax domicile in London, dividends should arrive without withholding tax. For investors using foreign brokers, there is also paperwork: forms to declare money abroad and the obligation to report to Hacienda (Spanish Tax Agency) what the broker does not communicate, according to this participant.
There is a position marked for medium-term exit, Shell, due to lack of future in oil, and possibly Grifols, which he sees as stagnant and heavily indebted.
And here the analysis stalls. With an 8-10% annual target, a 16-stock portfolio and a global index might end up in the same place; the difference is whether the selection effort adds value or just adds worry.
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (105 replies).
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