April was calmer in terms of investment decisions compared to the past few months. With markets zigging and zagging at a much more frequent rate now, opportunities to buy some stocks and ETF’s have presented themselves. At the same time there have been some opportunities to bank some healthy profits. That’s the way markets go. Opportunities don’t set a time to arrive. They show up when they want to. That is why it is always it’s critical to have an investing playbook that reflects your investing ideology so when those moments arrive, you are not just staring at your toes wondering what to do. In April a couple of opportunities came up that I really didn’t have specifically on my Wish List, but they fit into some of core investing ideology in terms of exposure to sectors I would like to be invested in. In this episode I walk through investment decisions I made in April.
As an Investment Coach, I spend a good amount of time working with people who are new to investing. Often one of the first questions I get from someone who is new to investing is "I want to learn how to invest are often in the form of: What stocks should I buy?" or "I have $10,000 I would like to invest. What stocks should I buy for the next 10 years?" I've been asking myself lately, why people believe that default position for investing must involve buying and selling stocks? The reality is buying and selling Facebook or bank stocks should not be your first thought when it comes to investing. In this episode, I try to figure out why people have this mindset and how it can have a devastating impact on your investing experience.
This is the third and last in a series of episodes where I walk through my investment decisions I made in March. In this episode, I share my thought process that lead me to buy shares in Southwest Airlines.
In Part 2 of my Investment Decisions series podcasts for March, (iTunes, Google Play, podcast, mind map video) I walk through the thought process that led me to my decision to buy some shares in Big Lots.
After the mini-meltdown in early February, stock prices boomeranged and made back a good chunk of their losses. In some cases the bounce was pretty big and it forced me to make a few decisions. There were a few days where the market tanked pretty big and I used them as opportunities to open some new positions. Like the previous month, I've decided to break down my decisions into 3 parts. In this post episode (blog post), I will review my decisions to buy more shares and sell some shares. The other two episodes will focus on my decisions to buy shares in Southwest Airlines (blog, podcast, mind map video) and Big Lots (blog, podcast, mind map video).
RANT ALERT: Another annual Real Estate Wealth Expo has made its way through my home town. This year some serious star power was on display. Baseball players, Pop Musicians, and Dragons were regaling attendees and their slightly open wallets with tales of how to escape the rat race and live the 6-49 lifestyle. People leaving these events usually seem to feel they are on their way to financial independence or at the very least got a good cardio workout. Unfortunately the whole thing is a scam. My rant is not about the concept as Real Estate Expos like this are just the latest iteration of get-rich-schemes that prey upon the gullible. What got me concerned was the response by people, especially on social media.Read More
I've referred often to the stock market as the Teflon Stock Market because it seems that any small or major socio-political-economic event that gets occurs is casually brushed off by investors. Nothing seems to stick to this market. The day the Mad King got elected the market went down 1500 points but after digesting it, it went on to set record high's on an almost daily basis. I also think about how much technology has changed investing landscape and wonder if these elements are creating a situation where bear market cycles are getting shorter and shorter. Have we reached a point where we can say that we will have very little in the way of stock market "crash"? I offer some takes in this episode and try to dive in a bit on this concept.
It seems any conversation about stocks these days involves something about Amazon or Apple or Facebook. I remember back in the day when it was Walmart and Microsoft that were the toast of business. Like Microsoft and Apple, they were deemed to be indestructible and now even though they are still significant businesses, they don't carry the same level of cache. What happened to Microsoft and Walmart was nothing different for most companies. Companies, especially dominant one's lose their some of the mojo or comparative advantage. In this episode I share some of the reasons that cause companies to regress. They are worthy of keeping them in your back pocket if you are evaluating any of the big companies.
In this final instalment of my Investment Decision series podcasts, I shares my thought process that went into buying shares of Priceline (now called Booking Holdings) during the February mini-meltdown. When the market was going haywire in early February, I was watching to see if any stocks that I had on my wish list, were suddenly attractively priced. Priceline was a stock I've had on my wishlist for long while but I had never been willing to pull the trigger and get into it. During the mini-meltdown, the stock had made a big move downward, so I reviewed my notes to see if the fundamentals of the business were still intact. As always, for every stock that I am evaluating I utilize my 8 question framework. You can also read the accompanying blog post here as well.
Previous instalments of the series
In this third instalment of my Investment Decision series podcasts, I shares my thought process that went into buying shares of Baidu during the February mini-meltdown. When the market was going haywire in early February, I was watching to see if any stocks that I had on my wish list, were suddenly attractively priced. Baidu had made a big move downward, so I reviewed my notes to see if the fundamentals of the business were still intact. As always, for every stock that I am evaluating I utilize my 8 question framework. You can also read the accompanying blog post here as well.
UPDATE: In June 2018 I sold my shares in Baidu for a 23.1% gain (net of Foreign Exchange). The stock was prodding along in the low $220's and got as low as $214 but then it popped and I eventually sold at $271. I thought the stock moved pretty fast and crossed my 20 percent return threshold that I thought maybe it's good to bank the profit now and buy back in if it were to pull back lower, which given the volatile nature of the stock is more than capable of. I still like the company and many of the points I spoke to in this mind map video are still in play.
Previous instalments of the series
In part 1, I shared my investment decisions to buy more shares in stocks I already owned as well as my decision to sell a portion of my short position on the S&P 500 index. During February I also took advantage of the pullback in share prices to add a few new stocks to my portfolio as I felt they had now become attractively priced. I will share my evaluations for each stock, all of which involve answering the 8 questions, I ask each time I am analyzing a stock. My first new stock that I added was Walmart. You can also read the blog post here.
As we finished January it looked like the stock market could do no wrong. Investors were all-in on stocks. Investor sentiment was downright giddy. Cash positions were at generational lows. Everything was awesome.
Then February arrived.
The first few weeks were dramatic. There were days when the Dow Jones Industrials were down 1500 points. 500-800 intraday swings were almost becoming normal after literally a year where there was nary a price change greater or less than 2 percent. There are so many reasons being cited. At the end it was a stressful month for investors.
For me it was shopping time. I was looking to buy back into some broad market ETF’s but the price falls were not deep enough to justify. So I’m happy to wait. As bad as watching the markets go down 1000 points, the reality is it only represented a 2-4 percent drop. Put this into context, on Black Monday in 1987, the Dow Jones Industrials went down over 20 percent. THAT is a crash. What happened in February was a flesh wound…if that. Context. I had my list of stocks and it was just a matter of jumping on the one’s that were taking a big time beating. A few did pop up and I jumped in.
I made quite a few moves and so I decided to break them down into a series of podcasts. In Part 1, I’ll share the decisions involving buying more shares of stocks and ETF’s I already own as well as selling. In Parts 2, 3, and 4 I will share my thought processes that went into buying some new stocks.
In the second part of my review of Morgan Housel's terrific presentation at the MicroCap Leadership Summit, I share his takeaways on the remaining two historical cases he cites that can teach us a lot about investing (Part 1 here - iTunes, Google Play). In this part of his presentation he talks about State of the Union speeches and the Wright Brothers.
I have to be honest, I'm getting a bit of bro love for this Morgan Housel of the Collaborative Funds. He just keeps hitting his blog posts out of the park. I may be projecting a bit of Confirmation Bias here and I'm fine with it because go to the heart of what I do as an investment coach. I've referred to his posts many times here and I recommend you check out his blog. A lot of times, we can learn more about something when we view them from a totally different perspective. Housel demonstrates this in an excellent presentation he delivered at the MicroCap Leadership Summit where he examined 5 seminal events in history and parsed out some takeaway learning points that can be applied to the investing realm. It's a fantastic presentation full of learnings and I wanted to share them with you. It turned out there was so much insights to gain, that I had to break the podcast down into two separate episodes. In Part 1, I offer some takes on his cases involving nuclear power plants in Austria, the war on cancer, and 9/11.
Three years ago I decided to try an experiment. I setup an account with one of the big Robo Adviser firms and invested $5000 of my own money into it. My goal was to go through the process and blog about my experience and more importantly, try to find if using this type of service can generate better returns than if I did it myself or used a traditional adviser. I said that we need a good five years to really get a handle on how effective these services are compared to traditional wealth management services. Well, we’ve now crossed the 3-year anniversary of my ROBO account, so let’s take a look at how it’s doing now.
We start a new year with hope that the investment decisions we make will lead to positive outcomes, hopefully this year, but if not then at some point in the future. The year has started off with a bang as the markets around the world have surged and continue to set records. In this episode, I share the thought processes I was using that lead to my investment decisions this past month.
- Added to position in Nutrien (Ticker: NTR)
- Added to position in Imperial Oil (Ticker: IMO)
- Added to position in Spider US Financials ETF (Ticker: XLF)
- Sold shares in Nike (Ticker: NKE) for a 22.5% gain (factoring in currencies)
While my core investing ideology revolves around buying quality businesses, I also try to structure my portfolios to have exposure to certain business themes that are evolving in business. In the past, I've developed themes in the areas of water stocks, luxury/discount retail stocks, and even investing in a world of Trump. We live in a time where having the most market share does not necessarily translate into being the leader in the market. Market share is nice but if you can control the distribution channel in how products are accessed by customers, you can build a durable competitive advantage, which is something Warren Buffet loves. If you wanted to sell a product, you would need to go through the gatekeeper who would charge you a fee to get into their operating system (OS) or ecosystem. Traditionally that would have been a department store or some kind of physical retail store in a mall. This is changing. The distribution channel in the 21st century has become online. The Internet.
Whoever can offer a compelling online platform/ecosystem/operating system will have a durable competitive advantage as consumers will stick to and out of convenience be loyal to an operating system. Consequently, the stock market will put a premium on those companies that own the OS for a specific sector or industry.
In this podcast, I set out to try to figure out who the next great stocks are or could potentially be the companies that will own the OS for the Pillars of Companies I often refer to when I try to figure out what stocks to buy.
Over the last 20 years the biggest disruptor in investing has been technology. Technology has enabled more people to access investing services in variety of ways from executing trades, to accessing investment research, to tracking the status of their investments in real-time. It has also lowered the costs of investing. At the same time technology has also enabled some bad investing behaviour. In this episode, I offer some hot takes on how a new service by one of the leading online brokers could potentially enable investors to engage in behaviour that could negatively impact their portfolios.
At first I thought this podcast was going to go into a full rant on the investment industry but the more I thought about it, the more my frustration is not with the industry but with individual investors. Some recent surveys about investors engagement have revealed some worrisome trends especially in terms of reading their investment statements. This despite recent changes that have mandated investment firms to be more transparent in how they present financial results to their clients. In this episode, I throw down some takes and issue a call to action for investors to get more engaged in their investments.
One of the values I feel strongly about as an investment coach is that I practice what I teach…and be transparent about it…good AND bad. It’s one thing for me to coach people how to make better decisions and develop and teach courses on how to buy and sell stocks and ETF’s. It’s another thing to model the behaviour. Throughout the year I’ve shared and tweeted (#trade2017) with you the investment decisions I’ve made throughout the year. Well it’s that time of the year where we set scroll down the page and see what I what I did right AND more importantly what I did wrong (and believe me I did some stuff I'm not happy about)…and did I gain any insights that will help me become a better investor?