Wednesday, August 26, 2015

Yowza, the Stock Market!

Normally I'm a very hands-off investor. I go for long periods without paying much attention while my various holdings drift up and down in value-- hopefully, mostly up! But in the last year or so, I've been putting more cash into the market, and paying a bit more attention. This is largely because I've had more cash to invest-- my own savings and the proceeds from selling my condo, and more recently, my mother's trusts.
I continue to mostly invest in a mix mutual funds, some just index funds and some with other mixes of assets-- nothing really sector-specialized, just some bond funds and others that are supposed to maximize dividend income. Then I have a few stocks that I've bought a few shares of here and there.

The last couple of days have been one of those times where I can't really sit by and ignore what's going on. I've been checking the S&P 500 multiple times throughout the day. As mentioned in the posts about my mom, I now have to worry that she'll think I'm mis-managing her money if the markets go down, and they've gone down a LOT in the past few days! I can handle seeing my own net worth plunge by $60,000 or more in the space of a few days, but that's nothing compared to dealing with my mother! :)
For my own investments, I'm trying to be strategic and cool-headed, so as Monday's big plunge was happening, I moved $25,000 into my E*Trade account so I'd be ready to act if it seemed like I could take advantage of buying low. At the end of the day, I thought things were down enough that it made sense to do some bargain-hunting, so I invested all the $25k. Tuesday morning, the markets opened higher and I was feeling like a genius! But as the day progressed on Tuesday, I began to wish that I'd waited another day as the markets ended up closing down even further. Oh well! Maybe not so genius after all...

I still try to keep an eye on the long term. I didn't sell off anything after the 2008 crash and my investments mostly recovered. I've had some things do very well in the last few years. But it's a bit depressing to see those gains wiped out again, and I do wonder what's in store for the next few years. A lot of people are saying stocks are generally over-valued, and I'm pretty exposed to that through a lot of my mutual funds. But interestingly, my individual stock picks don't seem particularly over-valued, at least not after Tuesday's close. I have shares in Ford, Bristol-Myers Squibb, Kroger, Xerox and KKR. The P/E ratios on these are mostly pretty reasonable-- all under 15 except Kroger at 18 and BMY at 54! BMY is up 113% from when I bought it in 2011, so I'm thinking I may sell it now. Kroger is up 197% from when I bought it so it's tempting to sell that one too. Whenever I've bought individual stocks, I've tried to find things that had a low P/E ratio and projected earnings that would suggest the price could rise-- that approach has worked well for me. Xerox was bought based on advice from a friend, the one time I've ever acted on that sort of stock tip-- that approach definitely did not work for me! Xerox has been down pretty much ever since.
I also like it when stocks pay dividends-- I figured out that I've reinvested almost $30,000 worth of dividends on my main E*Trade portfolio over the years. KKR is something I just purchased this week because the P/E ratio was very low and dividend quite high. I've never invested in a private equity company, or any sort of financial services company-- my other stock picking rule having been that I choose companies whose businesses seem more tangible and familiar to me. My most detailed knowledge of KKR has been from reading Barbarians at the Gate-- a fascinating book which I highly recommend, though it's not exactly flattering to KKR. So this pick goes a little against my grain but these private equity guys always seem to be raking it in like bandits, and I'm willing to try to ride along a bit!

Here's the current holdings in my main E*Trade portfolio if you want to follow along... this doesn't include a smaller Roth IRA portfolio or my 401K.

Symbol Qty
BMY 30  
BRLIX 3,082.075  
BRSIX 605.537  
BVEFX 277.961  
F 300  
ICENX 875.547  
KKR 200  
KR 200  
NOSIX 383.203  
PFODX 602.65  
PGNDX 674.272  
POMIX 427.673  
PONDX 1,000.777  
PRGTX 361.533  
RYTRX 326.781  
SFLNX 2,268.278  
SFSNX 601.965  
TINRX 604.23  
TRVLX 137.817  
VDIGX 437.085  
VEIEX 396.939  
VNYTX 787.866  
VWELX 1,155.685  
VWINX 1,129.674  
XRX 75  


LS said...

Oh man, I totally get where you are coming from.
I've been investing for a long time, and I can never ever get used to these large dips. Of course hindsight is 20/20 and I wish I had invested even MORE after the last recession. But while it was going on you think the sky is falling and things will never bounce back.

I too, stuck some cash in equities, bonds and international earlier this year -- I knew that the share prices were on the high end of their 52 week histories -- but I just was impatient to "fix" my asset allocation so I would be in less cash, and also was trying to move into more index / low-expense ration funds. Now of course I am giving myself a hard time for not seeing the signs...

Anyhow, I use Personal Capital and I like to track changes in my net worth more for informational purposes -- but YES, I have been refreshing and checking in during the day even (I usually only look after the market it closed)

The thing that sucks the most is, negative -5 or -6% isn't a lot when you first start out -- but after working / saving / investing for 2 decades, it becomes significant!

But yeah, gotta stay rational. I was even considering buying some ETFs that Short the S&P 500 as a hedge. But I'm not really good at timing the market so I'll stay away!

Thanks for sharing -- I'm glad you are back to posting again!
I wouldn't sweat your mom's money, she's got a long horizon so it shouldn't be an issue.
Leaving stuff in cash is just as risky in many ways, you don't want to lose out on gains or get beat down by inflation.

LS said...

So relieved we were back up yesterday!
I realize that a lot of these gains and losses are not real until you act on them. I guess my risk tolerance is lame! heh.

Anonymous said...

You know the Fed is looking to raise rates and Yellen thinks the stock market is/was overvalued
There's not much that can be done other than holding ETF's/(?) and pointing out the limits of investment opps

Glad to see you're posting :)