Investing Update: 2nd Half Game Plan
What I'm buying, selling & watching
If I’ve learned anything in the past 18 months it’s to just stay invested in the stock market. Maintain a consistent long term strategy of staying invested.
I went back to look at what I did during the COVID crash back in March 2020. On March 20th I started to buy. I consistently bought stocks then until mid November. I had a feeling this fit the old investment saying “The time to buy is when there is blood in the streets.”
The bottom of the COVID crash came on March 23. Since that point the market has roared back to return over 100%. Below is a two year chart of the S&P 500.
This brought back memories of what I did back in 2008. The same analogy stood at that time when there was panic and everything was being sold off. Even if stocks you own are going down, that is the time to buy more shares. History is on your side. Both times did turn out to be what has been characterized as lifetime buying opportunities. We just have to make sure we are prepared and trained mentally to take advantage when those selloffs or crashes occur in the future. Because they will.
Here is a S&P 500 chart dated for my lifetime. As you can see the crashes of 2008 and 2020 were speed bumps. Don’t let any good correction go unbought. Maintain your long term vision.
Moves I’ve Made
General Motors (GM) - With the market consistently sitting near all time highs it’s getting hard to find many undervalued stocks. I feel that GM is still one stock that’s undervalued and I’ve been adding to my position. For example, one of the pieces I look at is the P/E (price-earnings ratio) of GM vs others in their industry. GM has a 9 P/E compared to Ford (F) 14 P/E, Toyota (TM) 12 P/E, Volkswagen (VWAGY) 12 P/E and Tesla (TSLA) 645 P/E.
Draft Kings (DKNG) - The closer we get to the start of the NFL season the more I want to own this stock. Anytime it drops below $48 I just continue to buy more shares. This stock has some of the highest long term upsides.
Apple (AAPL) - One thing I’ve changed is I no longer hold any cash in my actively traded account. I’ve transition to using my Apple stock position as my place to go when I want money to add to or buy a stock.
It’s my largest holding that I started buying in 2005. I’ve trimmed and trimmed the position to keep it under my maximum allocation to any one stock. But the stock continues to do so well that it seems all I do is trim it. Why keep trimming and dumping the money into cash? Being invested is always better than having it sit in cash where it’s technically losing value due to inflation.
2nd Half Plan
Make sure what you own, you still want to own. I took a look at all the stocks and mutual funds that I owned. Then I asked myself one question.
If I didn’t own any shares of this currently, would I buy it today?
Everything that I own I said yes to. Even if I hesitated my plan was to sell it. With so much at their highs this is a perfect time to sell and get rid of positions that you don’t want.
Update your shopping list. Every stock I own I have certain price points where if they fall to those levels, I will buy more shares. Then my watchlist of stocks are listed in order of how much I like them and price points where I would look to start a position. This was an enormous help when the COVID crash occurred.
Rebalance to maintain discipline. It’s important to make sure that the percentages of your portfolio in certain stocks are in line with where you want to be. I maintain a maximum percentage allowed in any one stock. There are a few stocks that I have a higher percentage versus the others. That’s because I have a very strong belief in those companies. Therefore I want to take more of a risk in them.
Review your automatic contributions. This is a great time to update any automatic contributions you have for your 401K, IRA or any retirement account. I make sure that my contribution levels are where I want them. This fits right with rebalancing within these accounts. At the start of each year and also midyear, I do a thorough top to bottom review of all my investments. If you have a financial planner you should be doing this with them.
Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion.