GOOG/BRK.B

End of year update

As mentioned previously, I have radically simplified my holdings into 8 long positions, the smallest being GILD. I also have a TSLA short (sized similar to FB). I have a bit of leverage through interactive brokers margin, but after accounting for assets I hold in cash-equivalents and TSLA short, I am roughly 100% invested in the market. 

The increase in GOOG reflects exercising employee stock options and the need to have more capital invested in GOOG to have the same economic exposure.

The relative reduction in Berkshire does not imply I'm less optimistic about it's future. It's just that the stock price got a bit higher lately (also as related to book value) and I'd happily add on any pullback.

While different companies merit different fundamental valuations, I was tracking the relationship between price of my two holdings: GOOG and BRK.B for some time, rebalancing somehow when any of those two stocks got out of favor. The chart below shows last 5 years of said relationships (2013-2017).

I'm still happily owning both, seeing bright future ahead of these two companies. I see the reduction as rebalancing, to maximize potential.

VRX is effectively a LBO play and GM is a self-driving bet, which should work out OK even if GM won't make a business out of self-driving cars, based on pure valuation. VRX's increase is a result of share price change (even though I trimmed # of shares) and I've covered GM previously.

Bitcoin

I'm watching bitcoin craze from the sidelines, as in my opinion there is no place in value investor's portfolio for an item with no intrinsic value. But I'm still interested in how it develops and I treat it as an indication of market being too greedy.

Whether this means that S&P 500 is also near peak is unclear though - I still think the prospects for economy are good and that there will be a continuation of efficiency gains that can help grow earnings at a good pace. But this might indicate that multiples like P/E will come under pressure.

I intend on staying fully invested as long as I find good opportunities. Recent rally of Valeant made me sell a good chunk of shares, but the dollar amount invested is roughly flat.
I liquidated a good portion of small & medium positions to simplify the tax reporting I will need to do for the next year. I intend to keep AAPL, BRK, FB, GM, GOOG, VER, VRX and TSLA(short). I find these reasonably or even attractively priced, having great competitive position and good or great long term prospects. Time will tell.