Ten Bagger

Peter Lynch who was very successful running Fidelity's Magellan fund from 1977 to 1990 popularized the term "ten bagger" (also 10-bagger or tenbagger) for a stock investment whose price goes up tenfold from your purchase price.  Earlier this year one of my stocks hit that milestone.  This was a first for me among stocks I had personally purchased (rather than inherited).  The company was Caterpillar (CAT), not perhaps the type of company people would expect to be a ten bagger investment.

I purchased CAT on August 21, 2013 at $83.4499 per share.  As with most of my stock picks I can't claim a lot of thought went into the selection.  I discussed the pick a little here and here.  The stock didn't do much at first dipping below 60 in January, 2016.  The CAT began a slow irregular rise.  But as late as April 2025 it traded below 300.

But then the AI data center building frenzy arrived.  This helped CAT in two ways.  They make the construction equipment needed to construct data centers and the electrical generators needed to power them.  It made for a good story and CAT stock took off.  It closed at 835.24 on April 23, 2026 putting the stock in ten bagger territory.  After falling back for a few days it continued up closing at 1073.46 on June 30, 2026.  This might have been a good day to sell as the next day it closed at 991.41 and has continued to fall from there.  It closed at 782.71 on July 29, 2026, out of ten bagger territory.  It came back a bit on a strong earnings report but has fallen again the last couple of days closing Friday, August 9, 2026 at 842.19.  So I decided I should post this while I could still claim ten bagger status.

The stock is still very richly priced.  While the data center boom will help CAT for the next few years it is questionable that it will cause the kind of large durable increase in CAT's earning power required to justify the current stock price.  According to wikipedia in 2013 CAT had revenue of  $55.66 billion, in 2025 it had revenue of  $67.59 billion. Revenue projections for 2026 are near $80 billion.  It should be noted CAT has bought back about 28% of their shares since 2013.  Still this doesn't seem like the sort of revenue increase would justify a stock price that is ten times higher than it was in 2013. 

Perhaps I should sell my shares but this would incur a large capital gains tax.  So I probably won't.  

Turbo Tax Erases my 2025 Tax Returns

Well this is kind of annoying to say the least.  I wanted to look up my Adjusted Gross Income (AGI) for last year, 2025.  So I started up my copy of Turbo Tax Deluxe 2025 which I had used to do my taxes.  I hadn't used it for months and when I started it up it requested permission to download some updates which I perhaps unwisely granted.  The download took close to an hour (perhaps a warning sign) and when it was finally installed and the program opened my return information (federal and state of New Jersey) for 2025 was nowhere to be found.  The program acted like a new purchased copy.

I eventually exited the program and looking around on my computer was still unable to locate any return information for 2025 except for a pdf copy of my federal return which Turbo Tax could not read.  I believe there should have been somewhere some *.TAX2025 files in some Turbo Tax format which would have contained all the information I had entered while doing my 2024 taxes. But apparently for some reason while updating Turbo Tax erased these files.

This may be a relatively harmless error in my case.  My returns are filed and I have received my refunds.  Hopefully no problems will arise and I will not need to use the program further.  And I do have paper copies.  But obviously this was an extremely bad thing for Turbo Tax to do which could have had much worse consequences.

2024 Portfolio Review

Overall my main portfolio and the market in general (as usual represented by VOO, Vanguard's S&P 500 ETF) performed similarly in 2024 compared to 2023.  In 2024 VOO was up about 24.89% compared to 26.13% in 2023.  And I was up about 18.20% compared to 15.66%.  So the market did a little bit worse and I did a little bit better but still underperformed by about 6.69%.

Breaking things down a little I was about 46.88% invested in VOO, 26.15% in individual stocks, 18.01% in ETFs other than VOO and 8.97% in cash (that is Vanguard's Federal Money Market Fund,VMFXX).  VOO returned 24.89% of which 1.54% was income.  My individual stocks returned 15.98% of which 3.13% was income.  My other ETFs returned 10.19% of which 2.69% was income.  And all of the cash return, 5.23%, was income.  Adding this up produces a return of 18.15% of which about 2.49% is income.  This doesn't quite match the actual return of 18.20% perhaps because I have made some approximations including basically ignoring interest on the dividends received during the year.

My improved relative performance is primarily due to my individual stocks returning 15.98% compared to 5.44% in 2023.  So still lagging the market but by 8.91% instead of 20.69%.  

In June I transferred some cash into the account.  In October I sold my entire CVS position at about 67.5 taking a tax loss as I had come to believe retail drug stores were a bad business.  This was a good decision in the short run as by the end of the year CVS had fallen to about 44.  But it has since recovered nicely and is currently over 90 up about 38.24% so the long run verdict is still open.  Also in October I made some buys none of which have done especially well.  I replaced CVS with VHT, Vanguard's health industry ETF, which is currently down about 1.42%.  I bought PEP, Pepsi, sort of impulsively and it is down 14.5%.  Perhaps I should have given more consideration to the potential reduction in demand for their products due to  growing adoption of the new class of weight loss drugs.  I also again added to VIG and SCHD two dividend growth ETFs.  They have done okay (up 15.79% and 14.43%) lagging the market but beating cash.  These return figures are all price only and compare to 27.54% for VOO over the same time period.