December results were a spoiler for what would have been a very respectable showing for 2018. The 2 for 1 portfolio shed 7.5% of its value in December, giving us a 2.4% overall gain for the year. As pitiful as that seems, I’m not complaining. When compared to 2018 overall market returns, 2 for 1 had an outstanding year. The Vanguard 500 Index Fund, my preferred real-world benchmark for comparison purposes, was down 5.3% for 2018, giving 2 for 1 a 7.7% lead over the market, about three times our average annual outperformance.
There were twenty-one 2 for 1 or higher splits in 2018. Over the course of the year, we bought four of them and moved one (EXPO) to the bottom of the list because we already owned it. Most of the rest were passed over because they were too small. We bought one 3 for 2 split and one 6 for 5 split. We bought four companies we liked in spite of the lack of a split of any kind. Boards of Directors seem to have backed away from stock splits over the last several years and the slow-down in split announcements has forced me to innovate. However, there will probably continue to be a few splits from time to time and, as long as the portfolio is heavily weighted with those companies, we will continue to benefit from the stock split advantage.
