Just for fun and education let’s look at the mega-caps. In a perfect world none of these stocks would be in my model portfolio, but let’s check to be sure.
I guess Intel (INTC) - $28 is the obvious “king of the hill” selling for book value and a 5% yield. Maybe this is a “value trap”, but I am attracted by the valuation. A good friend recommended this stock to me in 1984, so I have always followed its prospects. I think I know enough of the long-term story to own the stock, but it just might be too complex. Let’s compared INTC to 9 other mega-caps.
AAPL - $126 - I use the products, and at only 20x you can make a valuation argument. I remain concerned about all the China issues so I will pass. I am a China chicken.
MSFT - $229 - I was in a Goldman Sachs office the day the IPO was priced, I thought just another one product software company. I am concerned about the growth of the cloud, so pass.
GOOG - $89 - There are few smart value guys that own this stock. There is plenty of cash flow, but I am concerned about the anti-trust issues. My hero George Gilder wrote a whole book about this company’s long-term problems. Pass.
AMZN - $85 - If cloud services were not such a big part of profits you might convince me on this stock. Pass for cloud reasons.
NVDA - $147 - I wish I knew a little more. I am worried about exposure to the cloud and crypto. Maybe at some price there is value here.
TSLA - $114 - I think Elon is nuttier than a fruitcake, and I am not sure they really have the best battery technology. I want to look at the green energy industry, but give me a company not run by a crazy man.
DIS - $92 - Maybe this is just a simple sum of the parts story, but I am not sure who the logical buyer of ESPN is. This could be an easy miss, but I am cheering for DeSantis, so I will pass for political reasons.
META - $127 - At only 13x this could be a true value. A month ago I thought the Metaverse was a fantasy, but since then I learned about a company called Roblox. Now I understand the virtual reality space much better. My fear is the base business has to many problems. I want to learn more.
COST - $457 - I just cannot pay 33x for a retailer. The business model has far fewer problems than any of the stocks above, but the valuation is just silly.
All of these stocks, except COST, are down 40-70% from their highs, but that does not make them value stocks. It will be an interesting exercise to come back in a year and see what I missed.
For now INTC makes it into the model portfolio as a weak idea that will hold a spot until I find a better stock to buy. I want at least one technology name in the portfolio.
I think these 10 stocks are roughly 25% of the S&P 500. I wish I could completely ignore them, but there is something to be learned