March 2023 Log | GOOG

I've been buying US stocks continuously since 2021. While I did take a course, the first two years were a bit chaotic — following market sentiment and buying randomly. Fortunately I listened to my instructor and held a solid portion of dividend stocks, which meant the 2022 bear market didn't hit me too hard. DRIP auto-execution and some Sell Put premiums even added a bit of cash. That said, I reviewed my holdings and realized my growth stock allocation was too heavy, and I hadn't been keeping strict records of buys and sells. Starting with this post, I'm going to do this properly.

March 2023 Events

1. Accelerating inflation pushed central banks to keep raising rates, causing investors to shift toward bank financial products and dragging down the bond market.
2. Years of low interest rates led some asset owners to increase commitments to illiquid investments. Rising CDS quotes — see this report from Wealth Magazine.
3. The largest bank failures in 15 years: Silicon Valley Bank (SVB) and Signature Bank.
4. Credit Suisse liquidity crisis: UBS acquired Credit Suisse in an all-stock deal with the Swiss National Bank providing "substantial liquidity assistance." (Warning signs had appeared a year prior, so the impact may have been limited.)

Buying Growth Stocks at Fair Value

Ticker	Company	Original %	Max
GOOGL	Alphabet	2.73%	4%

GOOG — Alphabet (Google)

1. Google Earnings Summary

   From the annual report, main business lines ranked by revenue contribution:

   • YouTube: ads & subscriptions
   • Google Network: AdSense & AdMob (mobile ads)
   • Chrome: Search
   • Google Cloud
   • GCP
   • Workspace (Gmail, Docs, Drive, Calendar, Meet)
   • Google Play
   • Google Maps

   The report makes clear that advertising still accounts for the vast majority of Google's revenue. But Google itself — along with analysts — knows ad revenue has plateaued and is gradually decelerating, which is why in recent years they've focused on building non-ad revenue streams, e.g.:

   • Google Play earns revenue from app sales and in-app purchases.
   • Hardware from Fitbit wearables, Google Nest home products, and Pixel devices.
   • Subscription revenue via YouTube Premium and YouTube TV.

   Personally, I use at least one Google product almost every day — whether on desktop or mobile. Even if the Microsoft + OpenAI partnership has some impact, the Google ecosystem has become irreplaceable for me. I'm especially excited about the future monetization potential of Google Maps; I've already noticed new features in the interface like property price comparisons and icon overlays. As a shareholder, I look forward to seeing that develop.

2. Why buy Google now?

   Yes, growth hasn't been as explosive as pre-2021, and the AI rollout stumbled. But overall financials remain solid, and from Q4 2022 onward the company has been executing consistent buybacks at an average price of around $94. I'll wait for the Q1 earnings report in late April to reassess. For now the stock sits within fair value, so I'll continue buying in tranches — max position not to exceed 5%.

New Addition: Buy and Watch

Ticker	Company	Original %	Max
BLK	BlackRock	0%	5%

Both had been on my radar for a while but fell off without getting added. This month I did a full review and found the current pricing attractive. Detailed notes to follow.

BLK — BlackRock

1. BlackRock Recent Earnings Overview

   BlackRock is the world's largest asset manager. Beyond managing pension funds and foundations, they also manage sovereign institutions like central banks, plus insurance companies, financial institutions, and third-party fund issuers.

   Unlike T. Rowe Price (TROW), BlackRock also offers ETFs — most notably the iShares family, which is the largest ETF issuer globally by AUM, ahead of SPDR (SPY) and Vanguard (VOO).

   The business model overlaps with TROW, but BlackRock has a larger market cap and stronger financials despite a slightly lower yield. They just published Larry Fink's annual letter, touching on recent inflation, the bond market, and bank failures. The financials are nearly perfect — strong ROE and ROIC. As an asset manager rather than a bank, they're less exposed to deposit and rate risk, and their reputation generates a seemingly endless stream of management fees.

2. Why buy BlackRock now?

   P/B has been declining since the start of 2023, now approaching the 10-year average after crossing below the 5-year average. Yield is around 3% but the price is still a bit high, so I only bought one share. BlackRock's own strategists say the bottom hasn't been reached yet — if it drops to the 10-year trend line I'll add again.

Current Portfolio Allocation

Type	Approx. %
Dividend stocks	10.5%
Dividend growth	35%
Growth stocks	45.1%
ETF	5.4%
Cash	4%