June brought a month of decisions on whether to hold or sell a few positions in my portfolios as they had crossed my personal return threshold. For every stock that I buy, I have built into my decision framework to re-evaluate the stock should it cross the 20 percent return level. This is my personal comfort level of profit I would ideally like every investment to make and I would suggest or encourage other people to seek a similar return level as everyone has their own risk tolerance/comfort zone. 20 percent for me is an adequate and significant bite sized return in that it is well beyond the inflation rate so I am protecting the purchasing power of my savings and enhancing it significantly. I also believe in investing that the first 20 percent of returns is also the easiest to generate, especially if I feel the stock is under-appreciated by investors despite it being a solid, profit-creating business.
Sold position in iShares India ETF (Ticker: INDY) for 28.3 % gain
I bought into the shares in September 2015 at the time where the Indian Rupee was crashing and there was all kinds of hand-wringing about the Indian economy. At the time the BRIC countries were coming under pressure. It was also the time when Indian rock star politician Prime Minister Modhi came in with the promise of a more pro-business style of Government. There have been false start from that perspective but he economy and stock markets have recovered nicely in the last few years. I think that at end India is better positioned than China to be a global economic superpower. It has a very educated populations, speaks English, and has embraced an entrepreneurial culture. They are not happy to sit an just do low value work in call centres and programming code. They want to move up the economic value food chain. Given how volatile Emerging Market stocks can be, I was quite satisfied to bank a 28 percent profit on the position. I plan to keep it on my watch list and I would comfortable buying back in on.
Sold position in Visa (Ticker: V) for 45.4% gain
In investing we should avoid falling love with the stocks we own. We should always try to take the emotion out of our decision making. It’s hard to do. If I had to weigh in on identifying a stock that I “love”, I think it would have to be Visa. It’s got so many good things going for it. It’s the dominant payment processing company on the planet. It’s everywhere. Even with new payment technologies emerging it is has its hands on almost every transaction. It generates ridiculous amounts of cash and for a financial company, it has no debt! No debt! I’ve held it a few times and each time it has delivered the returns for me. In this case I bought a position for my son’s RESP account because I want the portfolio to have really solid, blue-chip, high quality assets. Again it delivered. Many times I kept taking pause and questioning if I should sell out and each time I said let’s hold on a bit longer. There was nothing negative in the business that forced me to sell the stock. I just decided 45 percent profit is a nice chunk of change to have in my kid’s account. I’m keeping it on my watch list and should the stock get taken down and the fundamentals of the business remain intact, I’m happy to jump back in.
Sold position in Guggenheim Water ETF (Ticker: CGW) for 23.2% gain
I commented in the past about how one my long term investing ideas is water stocks. I still believe that the great world conflict will be driven by water, and more specifically the lack of it. Water stocks re considered utility stocks much like electricity or energy. I’ve over the years made sure there was a component of water related stocks in my portfolios. In my case, I decided to buy a basket of water related companies as I just didn’t have the time to do a deep dive. I found the CGW ETF appealing because it had a broad global focus. In my case of holding the CGW ETF, again I was happy to take the profit and come back in at another time at a lower price point.
Sold position in iShares Europe ETF (Ticker: XEH) for 22.5% gain
When I first bought into the iShares Europe ETF in January 2015 the ECB announced it was implementing their own version of Quantiative Easing,(ie printing more Euro’s to keep interest rates low and stimulate the EU economy that was going through a serious slowdown). I though the results would be the same as the US Federal Reserve experience when they adopted a policy of flooding the market with money, which is to inflate asset prices like European stocks. Last year I decided to add more shares after the Brexit vote as I believed that the European Central Bank, to maintain stability would keep the QE policy would for even longer. I bought in at low milestones, and sure enough European stocks have rebounded nicely. Could Euro stocks run higher? Absolutely. I’m fine with the return I’ve got so far and I’m happy to bank the profit. If the market were to pull back again, I would consider buying back in.
Can you tell I’m sounding like a broken record yet?
Added to position in General Electric (Ticker: GE)
I opened a position of GE for my son’s RESP account. Again the goal is to hold solid, best of breed, blue chip stocks that I thought would grow in value over the long period. I owned GE in my personal portfolio and sold it to bank the profit (again following my strategy). GE has been undergone a significant makeover as it is now a purely industrial/healthcare/energy company. It has sold off all its financial companies and now is a true conglomerate with subsidiaries that are best of breed in important industries like health sciences, aerospace, and renewable energy. The stock has been taking a hit the last year or so and fell below $26 at one point, so I decided to buy some more shares to average down the cost, which is now at $29. It’s out of favour as investors seek to associate themselves with the Facebook’s and Googles of the world, but it is still a significant player to our current and future infrastructure.
Wash, Rinse, Repeat
This is what it is. Investing is truly an iterative and frankly boring process. Buy low, underpriced, high quality assets and hold them until they generate a meaningful return for me….rinse and repeat. When they cross my magic line, I take pause and revaluate the investment and try to make a thoughtful decision. It is this strategy and ideology that has allowed me to make a lot of good investment decisions. I’m not hitting any homeruns and I won’t be retiring anytime soon, but I feel like with my ideology and strategy that I can hit a lot of singles and doubles which will allow my money to grow meaningfully and protect my purchasing power and I’m OK with it. It works for me. You need to find you your own magic line.