There’s an old saying — “Sell in May and go away…” As a Buy and Hold investor, I’m not one to really follow that type of advice, but I ended up going down that route (essentially) this year…
It was never by design, but as I alluded to in previous posts, my rationale for selling out of most of my stock positions was to build up a more robust emergency fund in the event of a major market pullback (or crash).
Currently, there’s a lot of turmoil in the air this summer, with Greece and its potential Grexit out of the Eurozone getting the most mainstream media play. But there’s more to it than that… You’ve also got Puerto Rico showing signs of insolvency and China experiencing a massive stock correction, with the Shanghai Composite Index selling off over 30% since peaking on June 12…
From CNN Money:
According to Bespoke Investment Group, China’s stock markets have now lost $3.25 trillion. To put that in perspective, that’s more than the size of France’s entire stock market and about 60% of Japan’s market.
Yikes! That’s some seriously scary stuff right there… So far, it’s already been one EVENTFUL summer… to say the least…
The following provides an updated table with all of my most recent trades. Since the last update, I’ve gone ahead and liquidated my holdings in Toronto-Dominion Bank (TD) and Coca-Cola (KO).
I sold TD for a small profit of $156.13.
I sold KO for a loss of $142.55. In total, I collected $150.20 in dividends (2 payouts) and call options. Essentially, you could say I broke even on this position.
Here is the full summary:
Year-to-date (YTD) I’ve collected $2,746.83 in trading income.
Originally, my dividend growth trading strategy was to keep an allocation of about $15,000 in the portfolio, spread out across 3 different companies. I wanted to keep trading periodically to collect some additional income.
Well, with the recent market downturn, it looks like my plan has been put on hiatus… Currently, I own positions in the following stocks:
- Union Pacific (UNP); 50 shares purchased at $103.40/share
- Norfolk Southern (NSC); 52 shares purchased at $96.60/share
- Walmart (WMT); 65 shares purchased at $76.04/share
I’m down and in the RED pretty substantially on all three stocks. So, as a part of my backup plan (by default), I will have to resort to being a traditional dividend growth investor (which I’m perfectly comfortable with)… Quite simply, because I probably won’t be able to exit out favorably any time soon, I will have to just kick back and collect dividend checks…
With my Alibaba (BABA) holding, I’m down over $7,000, and this stock just keeps on bleeding (down another 4% at $76.95/share as of this morning).
It looks like I will have to be even more patient with that stock…
The markets have mostly traded sideways this year, but it looks like the market pullback that most dividend growth investors have been longing for has finally arrived.
I’m not sure if we’ve yet reached “back the truck up” territory, but many stocks are looking ripe for the picking.
Global uncertainty tends to have that kind of impact…
I don’t have a crystal ball so there’s no way for me (or anyone else) to know what lies ahead. And although I feel like the market valuations certainly look far more attractive now than when I sold out of my positions (mostly in May), I’m going to remain a little more patient and wait to see how everything unfolds…
In other words, I still don’t feel an immediate urge to jump back into the markets.
With that said, I’m still keeping a watchful eye on the stock market, as I do see a lot of developing “bargains”. Oil and energy are down big; the Vanguard Energy ETF (VDE) has shed over 28% in the last year. The best-of-breed integrated majors like Chevron (CVX) and Exxon Mobil (XOM) are looking increasingly more attractive by the day (with dividend yields now sitting at 4.5% and 3.5%, respectively).
Oil and energy may still have ways to fall, but these prices look like a complete steal relative to where they were just one short year ago. Last summer, I vividly remember when CVX was trading at over $130/share and analysts were clamoring that it was a SCREAMING BUY! So, if you were contemplating a purchase back then… Looks like you’ve got a wonderful opportunity to add now and perhaps even further into the near future!
In addition, the mining industry has got to be the most hated sector of all right now. Junior mining stocks like Market Vectors Junior Gold Miners ETF (GDXJ) are down over 46% from year-to-year. It is very interesting to observe that in spite of all the global unrest that exists, gold and silver and other precious metals are stuck in a persistent downtrend. When the SHCOMP is down 30% in less than one full month and Greece banks are going on “holiday” (I can’t believe they are actually calling bank shut downs that!), should the price of gold and silver really be setting new 52 week lows?
The price of silver is down another 5% this morning… WOW!
You know what they say about buying low and selling high… Right now, there sure looks to be very limited remaining downside left in precious metals, with potentially limitless upside potential. Precious metals reached an apex back in 2012, and have been in bear territory ever since.
Perhaps, there’s one last blow-off bottom in store before the start of another secular bull run?
In any case, things are starting to get interesting in the markets!
What do you think? Are you loving (or hating) the latest market pullbacks? Buyer, seller, or standing on the sidelines? What stocks are you watching carefully?