Investment Activity Review-August 2014

I didn’t make any trades on my portfolio in August. Maybe it’s that summer thing or maybe there wasn’t much incentive to make any moves given the inflated nature of the market. My general mindset continues to be that this market is too expensive and is ripe for a severe pullback. The 3 percent “correction” during the month has since evaporated and stocks continue to march up as Central Banks continue to print and flood the financial system with cash to keep interest rates low.

I spent most of the month instead going back and forth with myself on whether I should sell some stocks that done very well for me. Yes it’s a tough problem to have and I think in fact it is a much harder investment decision to make even if you are a very experienced investor. It comes down to how comfortable am I with the return and how greedy I am. Here are the decisions I was wrestling with. Normally I have established a criteria that any investment I take has to generate a minimum 20 percent return. When it crosses that threshold, I will re-evaluate and decide whether to sell and bank the profit or continue to hold.


Apple Inc

As of this writing, I was up 48 percent on the position. I started building a position back when every analyst and expert was slamming the company (which was selling 40-50 million iPhones per quarter and had over $150 billion in cash) saying it had lost its way. So I bought and held on and now it looks like it’s paying off. The question is now what? I still feel there is nothing fundamentally wrong about the company. The stock could very much keep going up. It’s generated a return that is well above my threshold. I really don’t have a problem selling it now but I keep thinking there may be some more upside as the company will be releasing the iPhone 6 in mid-September plus there are now rumblings that the iWatch may also be introduced, which could put the company on another elevated profit cycle. Historically the stock rises in the lead-up to a release and falls back, so I’ve been thinking that I should hold on to the position up to the release on September 9, and sell just before. By the time you read this, I may be already out of the position.


As of this writing, I was up 49 percent on the position. Again the fundamentals of the business appear to be pretty solid and it appears to be operating in a profitable position. Neulion seems to be a company that at some point is going to get gobbled up by a Google or a Netflix.  It seems like a company that can increase exponentially and so my first thought was to just ride it out. My position is fairly small so I’m not going to swimming in cash because of it but it could be very lucrative. At the same time, I’m looking at the whole technology sector and can see many similarities with the Dot Com days of 1999-2000. While the internet companies were obliterated, even the established leaders like Microsoft, Cisco, and Oracle saw their stocks plummet.  The thought keeps coming to my mind that even though, Neulion appears to be profitable it could still get thrown out with the bathwater in a correction. Right now I’m continuing to hold on to the position, but I wouldn’t be surprised if I banked the profit.  Again it comes down to how greedy I am.

 One of my weaknesses that I’ve been trying to correct is that I tend to sell my positions only to see them further increase. I’ve been trying to work on holding the winners longer and I guess holding Apple and Neulion has been an attempt to put that resolve into practice. So for I think I’ve been able to withstand the temptation.  I’m happy to book the profit, but I always wonder how much money am I willing to leave on the table? It is always one of the hardest investment decisions.