2020 Free Lunch Portfolio
In December 2017, I co-authored an article in Forbes about The "Free Lunch" Portfolio, which combines the power of Uber Cannibals, Shameless Cloning and Spinoffs. An updated portfolio was published on the blog in December 2018. As a recap, our algorithms selected these 15 companies for 2019:
The Free Lunch portfolio was up 21.7% in 2019, vs. 31.2% for the S&P 500. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up 0.01% while the S&P is up 12.0%.
The Free Lunch is only 2 years old, so we can't draw any meaningful conclusions about its long-term performance yet. These are early days. Keep the faith. This is a long-term "set it and forget it" strategy. We don't recommend putting more than 10-20% of your nest egg into this strategy. And we think it only makes sense if you follow it for a decade, or two, or longer. Ideally, you would use this strategy in your IRA, so you wouldn't have to worry about realized gains.
The New 2020 Free Lunch Portfolio
We are now ready to rebalance the Free Lunch Portfolio for 2020. We made a few changes to the Shameless Cloning and Spinoffs strategies that we believe can select better companies and improve future performance. The changes are summarized below:
Here are the constituents for the upcoming year:
If you are a new investor to the Free Lunch Portfolio, you can just equal weight these 15 stocks (i.e., invest the same amount of money in each of these 15) in early January 2020.
If you are already invested in the Free Lunch Portfolio, and you rebalanced the Uber Cannibals in April 2019 with the New Uber Cannibals, then sell all of the 2019 Spinoffs and Shamelessly Cloned businesses except Alphabet, Berkshire Hathaway, Citigroup and Hilton Grand Vacations, and invest the proceeds equally among the 6 new kids. You can do this in early January 2020.
If you're investing in a taxable account, you may try to sell the losers (Hamilton Beach Brands Holding, DXC Technology and Delphi Technologies) in December 2019 to capture short-term losses and sell the winners (Charter Communications, Micron Technology and Varex Imaging) in early January 2020 to capture long-term gains.
These are the stocks to sell, along with their full-year 2019 returns:
As a reminder, the new Uber Cannibals get published every April, while new the Spinoffs and Shameless Cloning businesses are released in January. When we publish the new Uber Cannibals in April 2020, sell the Ubers that are no longer on the new list and invest the proceeds equally across the new Uber Cannibal picks. Then in January 2021, you'll rebalance the Spinoffs and Shameless Cloning ideas.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
12/23/2019 06:28:33 pm
Mohnish as you are now investing in India also request you to create free lunch concept in Indian stocks also.
2/23/2020 11:02:51 pm
vashikaran specialist Delhi
4/21/2020 10:16:15 am
Dear Sir, I also requested you for free dinner portfolio of Indian Stocks
12/24/2019 05:39:42 am
Any thoughts on Vodafone Idea?
1/9/2020 07:12:36 pm
Maybe it should be called the no lunch portfolio, as based on its performance you would be going hungry.
1/12/2020 05:18:27 am
1/22/2020 04:26:52 am
Do you mind if I quote a couple of your posts as long as I provide credit and sources back to your blog?
2/20/2020 02:48:23 am
I need your flow. This will be the wonderful teaches you what it is about the science of coronary heart disease and in relation to the debt problem.
4/21/2020 10:20:12 am
Dear Big B,
5/18/2020 09:14:45 am
Lmao, this guy is a joke. Everything he does, he copies and what he doesn't copy, like Rain Ind., sucks. We have many such "investors" in India who get the limelight by authoring a shitty book or making wild statements. No balls, no performance.
8/2/2020 09:14:32 am
I will not trust a stock picker and astrologer!
11/5/2020 09:54:55 pm
Mohnish Pabrai Sie is a very great Lecture, we all know that he is teach at Boston College before many years...And his discussion in this blog post very Inspirational...
12/2/2020 03:41:02 am
3/26/2021 01:22:48 pm
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Mohnish Pabrai is the founder and Managing Partner of the