Intellectual Exercise

What portfolio would I own if I thought the Big Beautiful Bill would pass soon enough for the Republicans to easily win the 2026 mid-terms, and make it likely that Vance was the winner in 2028? My GDP forecast would be for 3%+ growth, and with no recession in sight.

I would keep my agriculture stocks, my energy stocks, my cyclicals, and my weird stocks Iridium and Nexstar.

Everything else must go. I own these stocks only because I can see less rosy political and economic outcomes.

5 of my new 13 stocks have market caps under $1 billion.

I would be a happier person if I owned this new portfolio. I would feel I was using my stock picking skills to their maximum possibilities. Right now some cyclical stocks are very cheap. Stocks like Pepsi, AES, or Kinder Morgan are “second best” ideas that are only OK because the economy is so scary.

I actually owned a portfolio like this in the late 1990’s. One consultant looked at it and said, “ I have never seen a portfolio like this before”, I said thank you.

Keepers:

1. Tyson

2. Nutrien

3. Corteva

4. Iridium

5. Nexstar

6. RXO

7. Brunwick

8. Thor

9. Gentex

10. Halliburton

11. Matador

12. Teck

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New Additions:

1. Oxford Industries - Tommy Bahama

2. Norwegian Cruise

3. Pursuit Attractions - unique hotels

4. CarMax

5. SAIA - trucking

6. Mohawk Industries - carpet

7. Louisiana Pacific - siding

8. Steel Dynamics

9. Atlas Energy Solutions - fracking sand

10. Celanese - commodity chemicals

11. American Eagle - retail

12. MKS - electronic test equipment

13. Magnite - advertising

no gold, no consumer defensive, still no banks, no healthcare, no REITS, little technology

Could you get away with this portfolio as an institutional investor? I would doubt it. What about in a mutual fund? Maybe, but Morningstar would say nasty things. As an individual could you live with the “tracking error”? I think with a very strong stomach, and a few bottles of antacids, you could survive.

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