Every time I make a run
Girl, you turn around and cry
I ask myself why, oh why
See, you must understand, I can't work a 9 to 5
So I'll be gone 'til November
Said I'll be gone 'til November, I'll be gone 'til November
Yo, tell my girl, yo, I'll be gone 'til November
I'll be gone 'til November, I'll be gone 'til November
Yo, tell my girl, yo, I'll be gone 'til November
January, February, March, April, May
I see you cryin', but girl, I can't stay
I'll be gone 'til November, I'll be gone 'til November
And give a kiss to my mother
Lyrics by Wyclef Jean
Gone 'til November
Many investors are finally learning that stock markets do not go straight up. I've blogged that when the market was at its hottest, I was getting calls and text messages all day. Everyone was right and every stock they bought went straight up. I just hope that you took some of those profits off the table. Remember, we are building wealth and for some of us generational wealth for the first time and our goal is not to gamble. I learned the hard way many years ago that big gains should be pocketed or banked when you can and I use a crude but simple formula for selling some shares. If I've purchased a stock and it's gone up well, what's wrong with taking my initial investment OUT, then taking another 20% out, and finally letting the rest ride. Example:
Investment: $10,000
Say this Investment Goes up to 30% and you have $13,000 in your account
Sell $12,000 ($10K Initial Investment and $2K Profit Banked)
$1,000 - Let it Ride
I appreciate the calls when you get it right but I also want to hear about how you stacked your chips at the top.
How did this work out for me? Well, I had help last year and a little bit of luck this year. Some of my largest positions were bought out. Again, a stock getting bought out is like a sports player getting a maximum salary offer from their team or being traded in free agency for a higher salary! So for me, I was luckily able to bank most of my gains. I somewhat listened to my own book because if you recall from a recent article, I showed some discipline and in October 2021 I moved 75% of my retirement account into safety. A few months ago, I moved the remaining 25% to safety as well. I know you want to know exactly what I moved them into. Well I surprisingly found out I have an Inflation Protection investment in my retirement account. If you're wondering whether this helped or hurt, it turns out that from the highs of Q3 2021, my stock portfolio was down roughly 10%...not great but less than what the market fell. That is about as much as I can ask for. In my personal portfolio, I learned that it was built in a barbell fashion and this was great when I wanted to take risk and not so great when the market turned down. I basically had half of my portfolio in what you may call value based safer stocks and roughly the other half were in the high flyer technology stocks.
Positive Positions:
Tegna - is being bought out so even while the market is down this position has not moved materially and should not until the acquisition is made in Q2 2022. I've actually played the ARBITRAGE and added to this position in a down market. This means I buy the stock as there is still a difference between the current price and the acquisition price. I monitor this stock closely but my last update was 87% of the shareholders just approved the merger so I think investment which I own in my personal and retirement account has a high likelihood of closing.
Negative Positions:
ROKU - I'm glad I traded options against Roku because it was a very hot high flyer and as it went higher I made income trading against my position. Now as the market has dropped, that income trading is all I have to show for it, because Roku has fallen big time.
Spotify - Spotify has fallen as well and the losses have been big.
When times get tough, I begin to move back to the basics. I look for trends that should work during these times and in my riskier personal portfolio this is where I consider buying stocks. Sometimes I simply do nothing at all. But here is what I'm doing:
1) Watching Warren Buffett - When the market is falling and people are scared, he has been cautious and now entering back in. But what is he buying or adding too, see this summary below:
a) I find it interesting; he is jumping into Paramount a stock I recently indicated had jumped on my radar because it was trading at a discount: Feb 2022 - Paramount Post
b) My Breakdown of Warren's Q1 Buys / Additions:
2) I am trading aggressively and trying to actively get out of any stocks that will not make up a core part of my portfolio.
3) I've been more active than I've been in a long time. I've been trading:
Oil: Occidental Petroleum, Devon Energy
Arbitrage Plays: Twitter
Stocks that Benefit from Hard Times: Treehouse (maker of store brand products)
I copied Buffett and targeted Oil plays and want to build larger positions here as a hedge and I see he copied me by focusing on Arbitrage plays. I continue to buy Tegna until they get bought out and even purchased Twitter which hope Elon Musk will stop his shenanigans and agree to the original buyout of roughly $54. But is looking at Activision Blizzard, the video game maker, because he too is trying to identify high probability trades that will likely get bought out. I don't want high risk trades at this point and this could be why we both are looking at Arb plays. VMware may be one here shortly as Broadcom has been supposedly slidin' into it's DM and there are a few others bubbling out there.
I've spent way too much time on this post and have to get back at it, but a quick brain dump of what I'm thinking at the moment. Enjoy, trade safely, and #getthebag
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