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Over the last 35 years and more, my investment strategy has evolved considerably. Today, I consider myself a veteran value investor, looking for undervalued stocks and high cash dividends. But this isn’t the only approach my wife and I take with our family’s equity. After all, from 2009 to 2021, growth stocks easily outperformed value stocks by sizeable margins.
Value Stocks and Growth Stocks
Beginning in mid-2022, my wife and I are building a new family portfolio to generate future dividends and capital gains. Initially, we bought a selection of undervalued FTSE 100 and FTSE 250 shares for their income-producing properties.
But a portfolio based solely on value/dividends/income can underperform the broader market for extended periods. This is especially the case during periods of excessive exuberance, as was the case in 2020-21.
So my wife and I decided to buy some large-cap US growth stocks to balance out our new portfolio. And this led us to invest in four ‘American Goliaths’, all among the world’s largest corporations.
Four US tech giants
On October 13 of last year, the U.S. S&P 500 index and heavy technology Nasdaq Composite The index hit its 2022 lows. And while these indices were rallying, my wife bought four US growth stocks for our family portfolio in early November.
These technological titans were Alphabet, amazon.com, Appleand microsoft corporation. Not coincidentally, these companies are the four largest publicly traded companies in the United States. For me, buying these businesses was like making a big bet on the return of corporate America in 2024.
When America’s current financial concerns — high inflation, rising interest rates, and slowing growth — fade away, I expect these four companies to lead the next recovery charge.
performance so far
For the record, our gains on these stocks so far have been minimal. Here’s how each has performed to date:
| Alphabet | +1.7% |
| amazon.com | -3.2% |
| Apple | +0.9% |
| microsoft corporation | +9.2% |
The outstanding winner so far has been Microsoftwhose shares have risen almost a tenth in four months, meanwhile, Apple and Alphabet (Google’s parent company) have made modest profits. And the colossus of online retail Amazon has delivered a small loss of paper to date.
The overall gain across the four growth stocks is 2.1%. This is a fairly modest return, given the volatility of US tech stocks. I have long sought a stake in these tech leaders, but avoided buying these overinflated stocks during the 2020-21 ‘everything bubble’.
This is a long term game.
All four stocks are down considerably from their 2021 highs. Here’s how each has performed over the past 12 months:
| Company | 12 month change | Market value |
| Alphabet | -29.0% | 1.2 trillion dollars |
| amazon.com | -34.8% | $972 billion |
| Apple | -7.4% | 2.4 trillion dollars |
| microsoft corporation | -11.9% | $1.9 trillion |
After these four tech mega-caps fell precipitously, it almost felt like we were buying value stocks, rather than growth stocks. For me, I was buying these companies at a discount, despite their relatively high valuations and little to no dividends.
By my usual value criteria, these stocks still look pretty expensive. But experience has taught me that US tech stocks have a long track record of delivering market-beating earnings growth. So my wife and I plan to hang on to these four mega-cap innovators for many years to come!
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